Reality Check: Why does Israel Bonds still exist?

Established in 1951 by Ben-Gurion, the organization raised much-needed capital for the young Jewish state.

ben gurion 311 (photo credit: R.M. Kneller)
ben gurion 311
(photo credit: R.M. Kneller)
As someone who’s traveled extensively at other people’s expense, including that of the Israeli taxpayer, and stayed at some particularly luxurious hotels, I suppose I have more in common with Prime Minister Binyamin Netanyahu than I would care to admit. And yes, I’ve even used a hotel’s drycleaning service (one shirt), for which the German government picked up the tab.
But were the details of these trips ever to face the same scrutiny as those of the prime minister, I like to think I would not share the embarrassment felt by Netanyahu, and not just because you wouldn’t find any bills for pedicures.
This isn’t because I don’t enjoy the good things in life – I had a memorable single malt whiskey and Cuban cigar in a five-star hotel the Foreign Ministry booked for me in Sydney during a lecture tour of Australia and New Zealand – but because the rules governing these trips were very simple.
The hosts, be it the Israeli government, a foreign government or whoever, made it clear what they were paying for; any extra expenses (particularly single malts and cigars) were on me; the trip was approved beforehand by my employers; and, much to their regret, no members of my family came along.
When somebody else is paying the bill, it’s very easy to get used to a luxury lifestyle and begin to regard it as a natural right, and not an occasional perk. We saw this in Netanyahu’s defense of his expensive travel arrangements, when he argued: “There is a standard for trips. The standard for previous prime ministers and previous presidents is acceptable, and is no different from Clinton or Blair. Others did not fly charter or stay at youth hostels.”
I wonder what Netanyahu made of the news that British Prime Minister David Cameron took his wife on a two-day vacation to Spain last week at what was described as a “mid-market hotel” to celebrate her 40th birthday, flying with easyJet, where you pay extra per suitcase and food costs. There are daily easyJet flights from Tel Aviv to London, but somehow I just can’t see Bibi whisking Sara away for a romantic break in the UK capital via this no-frills firm.
BUT THE issue is not so much Netanyahu’s extravagant travel demands and insistence that his wife accompany him everywhere he goes – this is something to which we’ve grown accustomed and reluctantly have to accept as part of the Netanyahu package.
The question is whether the prime minister accepted improper funding for his foreign trips; here, his defense that “everybody was doing it” will not be enough to spare him from the state comptroller’s censure and, if reports of double-dipping for the same flight are accurate, a criminal investigation à la Olmert.
Netanyahu, though, is not the only villain in this piece. The Israel Bonds organization, which seems to act as an exclusive travel agent for the prime minister and his family, as well as a series of other high-ranking Israeli politicians, is also in need of some careful scrutiny.
In fact, as Kadima MK and former finance minister Meir Sheetrit has advocated, the organization should simply be disbanded. This is not because it wastes thousands of dollars annually flying our political leaders around the world to address Jewish audiences in attractive locations, providing them with top hotels, limousines and gourmet meals at fancy restaurants, but because today there is simply no need for the Bonds to exist.
Established in 1951 by David Ben-Gurion, the Israel Bonds raised much-needed capital for the young Jewish state at a time when commercial banks were unwilling to provide loans, except at exorbitant rates of interest. But what was true more than half a century ago is no longer the case.
The fact is, we’re no longer short of foreign capital.
Currently the Bank of Israel is holding $70 billion in foreign currency reserves, which makes the $1.2b. a year the Israel Bonds brings in – at a much higher cost than simply raising capital in the international markets – a negligible achievement.
And as Sheetrit points out, the argument that Israel Bonds helps strengthen the relationship between Diaspora Jews and Israel is also spurious. Due to the attractive interest rates offered by the Bonds, the majority of its purchasers are American pension funds and banks, not world Jewry.
It seems the Israel Bonds leadership, headed by former Likud minister Yehoshua Matza (the latest in a long line of political appointments) knows very well why it invests so heavily in making sure prominent Knesset members and ministers have such a good time when traveling on a Bonds mission.
Just as turkeys don’t vote for Christmas, Israeli politicians are in no rush to close down an institution that provides them with luxury travel and the chance of a cushy job once their political career is over, even though the organization can no longer justify its existence on economic grounds.
The writer is a former editor-in-chief of The Jerusalem Post.