Renowned chemist Raphael Mechoulam had no idea when he became rector of the Hebrew University of Jerusalem that his prestigious position would include being physically bound to his chair by a rope.
Much less could the future Israel Prize laureate know that the burly activist manhandling him was the future finance minister of the Jewish state.
It was 1981, and the activist, an international-relations student named Israel Katz, was protesting what he described as Arab students’ campus violence. It was the beginning of an illustrious public career that this spring landed 65-year-old Katz tantalizingly close to the political top – and also to the economic abyss that yawns underneath.
RAISED in a modern-Orthodox farming family in Kfar Ahim, 10 km. east of Ashdod, Katz still lives where he grew up, but now defines himself as traditional, rather than Orthodox. His political path, however, has been anything but unorthodox, if one discounts that prank at Hebrew University that cost him a year’s suspension, but also earned him some fame: among Lefties, as a right-wing thug, and among Righties, as a gutsy patriot.
Katz thus proceeded smoothly into the unsung world of political hacking, cleverly joining Ariel Sharon just after his political stock had plunged following his forced resignation as defense minister in the wake of the First Lebanon War.
While at the embattled Sharon’s side as he crafted his political comeback, Katz displayed some similarities to his boss: both were tall and overweight, both were farmers, both were paratrooper officers, and both were perceived as unrefined bulldozers who while striving toward a goal were prepared to run over much of what stood in the way.
The one trait Sharon possessed and he lacked, charisma, Katz offset with the diligence that is a prerequisite for political field work. That was how he painstakingly built the “Sharon Camp,” the party base with which Sharon first restored his standing within Likud, and then became a thorn in prime minister Yitzhak Shamir’s side.
Having accomplished this by visiting numerous party branches and meeting countless activists, Katz laid the foundation for his current status as Likud’s party boss, a distinction reflected in his position for the past 16 years as Chairman of Likud’s Secretariat.
At the same time, Katz also evolved on the governmental side. When Sharon became minister of trade and industry, the party activist became a ministerial assistant, morphing by 1988 to deputy director-general.
The thirty-something Katz thus began learning how the government works, more than a decade before his 21-year legislative career began. That training period proved priceless when he became a minister himself.
First, as Sharon’s agriculture minister, Katz unified four bureaucracies overseeing agricultural exports, thus cutting overhead and raising exporters’ income. At the same time, Katz inserted Likud activists into public offices, triggering a police investigation that resulted in a recommendation to indict him, and in an attorney-general’s decision not to press charges due to lack of incriminating evidence.
Katz’s climb was therefore ready to continue when Sharon’s plan to retreat from Gaza challenged his protégé to make a choice, for or against his boss’s controversial scheme. Katz decided to back the plan, but at the same time initiated the referendum among the party’s membership. In what was a victory for Katz, the referendum was held, and in what was a defeat for his boss, disengagement was rejected.
Worse, for Katz, Sharon’s secession from Likud in fall 2005, and his abrupt incapacitation shortly afterward, caught him politically off-guard and biologically vulnerable. Having turned 50 several weeks before Sharon’s departure, and having decided not to join Sharon’s new party – Kadima– Katz was by spring 2006 an aging backbencher in the opposition.
The four years he now spent with a shrunken Likud faction led by then-opposition leader Benjamin Netanyahu would prove rewarding.
Having returned to the government following Netanyahu’s return to the premiership in 2009, Katz became transportation minister, a position at which he arrived administratively experienced, politically empowered, and emotionally ripe.
With others repeatedly changing and losing positions around the cabinet table, Katz was a pillar of stability, serving a full decade in the same challenging office. Having multiplied Israel’s highways, railways, and interchanges; launched the construction of Tel Aviv’s subway, and reduced flight prices with his “open-skies” deregulation, Katz earned respect, even among Likud’s rivals, as an able executive.
The political road that all this slowly paved led haphazardly to the Foreign Ministry, where Katz arrived in February 2019 after court appeals challenging Netanyahu’s simultaneous holding of multiple cabinet portfolios made him relinquish what now fell in Katz’s lap.
As a diplomat, Katz was compelled to function in Netanyahu’s thick shadow. Other than denting relations with Poland by asserting “Poles suck antisemitism with their mothers’ milk,” he left no imprint during his year in the Foreign Ministry. Even so, Katz’s two-dimensional resume of a politician and executive was enhanced by a third dimension, diplomacy.
And so, when it came time for Netanyahu to appoint the current government’s finance minister, he considered his public campaign promise to appoint former Jerusalem mayor Nir Barkat on the one hand, and Katz’s clout on the other, and decided to ignore his promise to Barkat and appoint Katz.
Katz, who said last year he will run for Likud’s leadership “after the Netanyahu era,” now found himself staring at the political top, from the brink of the economic abyss
ISRAELI history suggests that Katz’s new position makes him a shoo-in for Netanyahu’s succession.
David Ben-Gurion was succeeded by his finance minister, Levi Eshkol; Ariel Sharon was succeeded by his finance minister, Ehud Olmert and Olmert was succeeded by Sharon’s previous finance minister, Netanyahu.
In terms of his aims Katz is clearly walking up the same path. His prospects, however, are entirely different from those of his predecessors, none of whom arrived at the economy’s helm at a time of global economic mayhem quite like that which the corona pandemic has spawned.
The crisis is acute on both the macro- and microeconomic levels. The worst repercussion is obviously in the labor market, where a previously minimal 3.9% jobless rate swelled to 25% in the wake of the lockdown before Passover, more than twice Israel’s historic record.
The government’s initial response, delivered by Katz’s predecessor, Moshe Kahlon, was a NIS 88.4 billion stimulus and compensation program, including new health spending, unemployment payments, tax deferments, and emergency payments to shuttered businesses.
Meanwhile, the crowding restrictions’ easing in May saw the return to work of some 275,000 furloughed employees. However, one-fifth of the workforce remained unemployed, a dangerous rate both economically and socially. The eruption of the pandemic’s second wave in June, and the consequent renewal of crowding restrictions, dispelled previous assessments that the jobless rate would drop to 10% by summer’s end.
Worse, the stimulus package caused a NIS 46.2b. budget deficit for fiscal 2020’s first five months, nearly the size of the deficit for all of 2019, which was NIS 52.2b.
These numbers’ meaning has been devastating not only to thousands of middle class households, but also to major companies and tycoons, most notably national airline El Al and energy magnate Yitzhak Teshuva.
El Al was in trouble before coronavirus, having ended 2019 with a $60 million net loss, reflecting its failure to adjust to the thriving low-cost flight industry’s competition. Now the pandemic’s grounding of El Al’s fleet proved fatal, even after the company fired 17% of its workers, furloughed 90%, and cut salaries by 20%.
El Al won’t vanish – its owners, headed by the Borovich family, are negotiating a deal whereby it is likely to end up re-nationalized. However, the iconic carrier’s demise contributes to an already pervasive sense of economic angst.
The same can be said of Teshuva, a self-made real estate baron and one of Israel’s richest businessmen, who is the main shareholder, through Delek, of Israel’s offshore gas fields. Having invested in other oil drills from the Northern Sea to the Gulf of Mexico, he has been victimized by the pandemic’s dramatic pressure on energy prices.
By May, with his largely leveraged foreign investments threatening to make him insolvent, Teshuva did manage to reach a haircut deal with his creditors. Still, like El Al’s situation, his predicament is an emblem of national perplexity in the face of the pandemic’s economic cost.
Down in the field, thousands of Israelis who live off of the tourism, entertainment, events, and dining industries have been devastated, even after the government allowed eateries to partially reopen, and wedding halls to hold events of up to 250 people.
Katz’s attitude in the face of the crisis has been to confront the Health Ministry’s epidemiologists and demand maximal economic reopening, even if this meant taking big medical risks.
Having for now been in his position hardly two months it is obviously too early to assess his impact, other than to note that he has extended by two months payments for the unemployed, which ordinarily are limited to six months. It is not too early to say that Katz’s success or failure in his next task, to deliver larger and faster payments to paralyzed small businesses, may decide whether or not he will someday become prime minister.
In other words, while Katz’s impact on the corona economy has yet to unfold it is already clear that corona’s impact on his career will be decisive.
With the public demanding salvation, and jobless demonstrators outside his office fuming at his colleague Minister-without-Portfolio Tzachi Hanegbi – who dismissed as “bullshit” talk of jobless people going hungry – Katz is now where the biblical Joseph was when famine’s victims came to him demanding food.
The analogy is, of course, flawed. Yes, like Joseph, Katz is the economic czar and the political viceroy, but unlike Joseph, Katz enjoys no divine intervention, he was given no seven good years in which to brace for the bad ones, and his aim is not to serve the king, but to succeed him. ■