What political upheaval?

It was high time for the Israeli political system, sclerotic and increasingly corrupt, to be shaken up. Unfortunately, the recent political upheaval launched by Ariel Sharon's departure from the Likud looks more like the rearranging of the deck chairs on a sinking Titanic. However sensational the rearrangements of political alignments may seem, they will probably not address the paralysis inflicting our public life, which the prime minister cited as his chief reason for leaving Likud. While political realignment may relieve a political deadlock it will not necessarily affect the two major causes for government paralysis: a bureaucratic stranglehold over government and the freezing effect an increasingly activist judicial system has on it. For several decades now our party system has been torn apart by the ceaseless struggles between conflicting vested interests (mostly the parties' central committees and Knesset members). As a result, party cohesion disappeared, while the bureaucracy and the judicial system, claiming to represent a selfless, collectivist "public good" have greatly extended their power. They now virtually dictate the execution of policy no matter what the government decides. But by extending their powers, the bureaucracy and the judicial system also became enmeshed in irresolvable contradictions. The bureaucracy's tendency to hold on to power by preserving the status quo has created insurmountable barriers to individual initiative. Hence the ever-growing paralysis of public life, and also the growth of corruption, which has become indispensable for "getting things done." The new political alignments are not going to change any of this, and might even make matters worse. Kadima, Sharon's "new" party, is rife with personal and ideological contradictions that only Sharon's absolute authority keeps at bay. Its stars are an odd assortment of Likud pols totally dependent on the Sharon dynasty and a bunch of Labor has-beens. Kadima's already stale ideology mostly repeats the old mantras of peace and security based on the two-state solution. It keeps ignoring the fact that for the foreseeable future the Palestinians are not ready to establish a viable state based on a functioning economy and civil society. This means that Kadima will continue to maintain the same thoughtless status quo, reacting only belatedly to such challenges as the Iranian bomb and the growing radicalization of the Palestinian polity instead of anticipating them. As for the "New" Labor under Amir Peretz, it does, alas, have a vision. But it is a dangerous throwback to Israel's socialist days, when a rapacious elite of bureaucrats and oligarchs commanding the economy kept it backward and led it to ruin. The core of Peretz's economic vision is to significantly increase the minimum wage. Higher wages, he believes, will increase consumption and engender economic growth (he never heard of inflation, apparently). Peretz would reverse the recent reform in financial markets, reinstituting, among other "progressive" measures, designated government bonds, with guaranteed interest for pension funds. He would force all workers to join his Histadrut and would make sure that profits of successful companies are "shared" with the workers. Otherwise, he asserts, he too believes in "free markets." Except for Binyamin Netanyahu, Likud was obsessed with the single issue of a Greater Israel (which it has botched by relying on state power rather than building a national consensus for settlements) is left with no vital role in Israeli politics now that most of the public and even many of its stalwart supporters have shifted position as a result of so many years of peace process indoctrination. Likud's best hope it to let Netanyahu infuse it with a new sense of mission based on his remarkable achievements in economic reform. Shinui, a pro-market party, stimulated great hopes for change. Unfortunately, it took too negative an approach, focusing on hatred for haredim rather than on a positive reformist agenda. As great as was the hope for change, so is the disappointment. If there is a silver lining on our dark political horizon, it is the fact that the takeover of Labor by a boss of the monopoly unions may change the terms of our political debate. Israelis may well question whether Peretz's promises to reinstate policies that only pretend to help the poor while making their situation progressively worse are really the economic policy needed at a time when the country is undergoing a positive economic revolution. The surprisingly swift success of Netanyahu's financial market reforms; the fact that the breaking of the destructive bank duopoly did not take six years, but just weeks, and that contrary to the banks' predictions foreign financial interests paid far above market prices for the two banks and the provident funds sold recently, are the first signs of the success of the economic reforms in introducing true competition and a more efficient use of savings and investments. Already growth has exceeded 4% and unemployment is falling. But the election season's populist distributive politics pose a danger to this economic success. When practically every politician is jumping on the anti-poverty bandwagon, it is likely damaging welfarist policies will be reinstated. One can only hope that economic growth will meanwhile be so strong and convincing that it will make such damaging populist policies irrelevant. The writer is president of The Israel Center for Social and Economic Progress. dorondun@netvision.net.il