The Tyranny of the Arrangements Law

Israel has democracy. And it has a legislature, the Knesset. But somehow, it feels like we have neither. It is democracy in chains. Why? One answer is found in the theater of the absurd known as the Financial Arrangements Law. We have an annual government budget debated and democratically approved by the Knesset. But, in fact, we really don't. On April 17, 2006, Israel's 17th Knesset was sworn in and its first session was on May 4. In only 556 days (in and out of session), many of the 120 Knesset members have been incredibly active. They have proposed 3,009 bills. This averages to 25 bills per Member of Knesset. How many Parliaments in the world have such energy? Seems that Israel's democracy is alive and well. But most of those 3009 bills sink without a trace. Even the bills that are passed by the Knesset in three readings are often not implemented. And many of them meet a horrible fate - shot down by the Financial Arrangements Law. On Sunday, August 12, at a cabinet meeting, the ministers approved the 2008 government budget. The vote was 21 for, 5 against; the cabinet ministers from Shas and Yisrael Beiteinu voted against. On October 13, the Knesset approved the budget by a vote of 59-12. But a letter written on August 8 by Labor Knesset Member Orit Noked to Defense Minister Ehud Barak, head of the Labor Party, reveals the truth. Noked, a lawyer and member of Kibbutz Shefayim, noted that the true 2008 budget is embodied in a thick document known as the Financial Arrangements Law (hok hahesderim, in Hebrew), comprising 219 pages with 370 voting proposals - twice as bulky as last year's law. This bill is prepared by Finance Ministry officials. "There is a serious flaw in the democratic process," Noked writes. The ministers received this crucial document only a week before the Cabinet meeting. There was far too little time for the ministers to study it seriously. Essentially, they voted blindly. Noked noted another, more serious, anti-democratic flaw. The original Financial Arrangements Law 2008 canceled five important bills passed by the Knesset, she noted, including ones that legislate 12 compulsory years of education, cheaper electricity prices for the poor and a new hospital in Ashdod (Israel's only major city without one). The Finance Ministry believes in fiscal responsibility. Israel can't afford these luxuries, it says - even though the booming economy generated 7 billion shekels ($1.75 b.) in surplus unexpected revenues. Let the Knesset Members pass all the bills they want. With their fingers in the dike, the Finance Ministry and its Financial Arrangements Law keep many of them from being implemented. As far as I recall, on March 28, 2006, I voted for a political party. I did not vote for the Finance Ministry economists. Yet the latter are the true legislators, whether I like it or not. They decisively shape the budget and my fate. And like Noked, I do not like it one bit. Knesset Speaker Dalia Itzik is also upset by the way the Knesset was made impotent. "Today there is no parliamentary oversight [of the government]," she told the daily newspaper Haaretz. She wants to set up a Knesset committee headed by Michael Eitan (Likud), regarded by many as incorruptibly honest, to oversee implementation of laws and make the government implement those it disregards by means of the Financial Arrangements Law. Even the Finance Ministry realized it went too far. On November 5, it retreated. Finance Ministry Budget Director Kobi Haber, Speaker Itzik and Knesset House Committee head David Tal have come to agreement that 70 percent of the clauses in the Financial Arrangements Law will be removed, to be debated separately by the Knesset in 2008 - including establishment of a new hospital in Ashdod. Some chains have been broken. I take little comfort in this deal. Anti-social measures such as deferral of a minimum wage rise, cancellation of compulsory education through grade 12 and imposing health insurance payments on housewives still remain. And next year, this entire tragi-comedy will be repeated. We will have democracy - but it will again be in chains. The writer is academic director, TIM-Technion Institute of Management, Tel Aviv. TICKER • Bank of Israel's Supervisor of Banks, Rony Hizkiyahu, published new rules governing commercial bank charges for routine activities. Reforms include consolidation of disparate fees under a single title, puttng a stop to multiple charges for similar actions with different names. A uniform fee will be set for all transfers, regardless of the location of accounts involved. Hizkiyahu predicted banks may lose hundreds of millions of shekels of yearly revenues. • The Consumer Price Index (CPI) rose 0.1 percent in October, accor-ding to the Central Bureau of Statistics and has risen 2.4 percent since the beginning of 2007. Most forecasters expect that annual inflation for 2007 will fall within the government's 1 - 3 percent target range and that Bank of Israel Governor Stanley Fischer will keep Israel's prime interest rate steady at 4 percent. • U.S. pharmaceutical giant Merck will initiate drug development and commercialization operations in Israel, joining Israeli chief scientist's program for cooperation between Israeli firms and multinational companies. The agreement will enable Merck Serono, the division for small molecules and biopharmaceuticals, to cooperate with Israeli start-ups to develop pharmaceuticals. Merk will be granted rights to buy the drugs or market them internationally. The Industry and Trade Ministry will finance half of the research and development costs of these companies. • The Tel Aviv Stock Market shadowed trends in the Far East and U.S. stock markets, experiencing a brief climb followed by renewed losses in mid-November, in response to effects of the subprime mortgage crisis in the U.S. and climbing oil prices felt around the world.The TA 100 index returned to its mid-October level of about 1150, after nearly reaching 1200 at the beginning of November, reflecting a 9.5 percent rise relative to early September.