netanyahu - Tomer Appelbaum - February 1 2011
Netanyahu, right: You have a chance to cure public governance. Photo by Tomer Appelbaum
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Ehud Barak's precisely orchestrated attack on the Labor party last week and the lightning-fast cabinet reshuffle it precipitated underscored the rank ugliness of Israel's power ethics and its system of government. Israel already sorely lacks long-term strategic planning and strong-willed public servants with the backbone to withstand political convulsions and the temptation to remain in office for power's sake. Moves like Barak's hardly help promote the cause of proper governance in Israel.

There is no obvious solution to officials who hang onto their positions at the public's expense in sight. Fortunately some regulatory agencies are impervious to political upheavals. The heads of three of them are about to leave office. Prime Minister Benjamin Netanyahu has three strategic appointments to make, and he must do so in a seemly manner that takes into account their economic and political implications.

Israel Securities Authority chairman: The responsibilities of the ISA head go well beyond protecting the interests of investors in the capital markets. The chairman has the legal authority, enforcement powers and public legitimacy to effectively police most of the country's companies and financial institutions.

The chairman's job is to make sure the players conduct themselves in a just, transparent and professional manner.

Israel's business and capital market sectors have for some years been sliding down a slippery slope. They are riddled with conflict of interest. Directors have little independence. A small elite of power brokers has arisen who allocate billions upon billions of shekels of public money in a non-transparent, non-professional and partisan way. A general director to the Israel's Antitrust Authority: Few are the branches over which the antitrust commissioner has no sway. The Israeli economy is full of monopolies, cartels and oligopolies, some overt and some covert. All too many branches are uncompetitive. Absent a dynamic of competition, the players are fixated on maintaining the status quo, which is bad for consumers, bad for innovation and bad for the economy as a whole.

A commissioner to the Civil Service: This person is the human resources manager for the entire civil service. He is the regulator of most of the most important jobs in the public sphere. The civil service commissioner, together with the wages director at the Finance Ministry, are the key people in setting standards of excellence and professionalism in the biggest company of all, the Israeli government.

The public sector suffers from low quality human capital. Its organizational culture is weak and mediocrity and indifference reign. Together with treasury officials and other bodies in government, the civil service commissioner must revolutionize the civil service, making it better, more professional, and more attractive to a better quality of people.

Needed: A meritocracy

A thread runs through these three strategic appointments and positions: the urgent need to block the erosion in the management of Israel's economy, to create an environment founded on professionalism, and to inculcate values of meritocracy.

The weakness of Israel's corporate culture, the weakening of the public sector, the low level of competition in most branches of the economy and high levels of economic centralization - all these factors pose threats to competitiveness, professionalism and market efficiency in the labor market, the capital market and the services and managerial markets. Israel's economy is plagued by nepotism and cronyism; the inefficient allocation of capital and labor resources plagues all strong branches of the economy, and raises questions about the types of opportunities that will be left in another 20 years for today's children and young people in Israel.

The chairman of the Securities Authority, who is responsible for business regulation, and the civil service commissioner need to be independent, strong-willed and courageous professionals. They should begin their new posts determined to revolutionize the bodies they lead. They need to rethink the nature of their jobs.

They should think outside the box, and outside the histories of the organizations they serve; and they must not wait for politicians or legislators to determine the nature of their assignments and goals.

Israel's business and public sectors should brace for sharp change in the direction of competitiveness and efficiency.

The three new bosses should create market dynamics where special interests and special access have no place, and there are not conflicts of interest. We need more professionals, more professionals and the creation of opportunity for worthy persons. The prime minister and responsible ministers keep the appointments of these three strategic positions shrouded in secrecy. The result is that deserving professionals do not apply, and the list of candidates is reduced to mediocre figures who would make haste to conform to existing norms in the economy and political system.

A new sort of professional is needed for these appointments: people who set ambitious goals, who do not conform, and who have the communicative ability to excite the public about the reforms they want to institute.

The State of Israel has many enemies beyond the sphere of security. We need to declare war against them. We need three courageous, determined regulators in these three key positions should lead us forward in years to come, standing fearless before the powers of corruption that would cow them and the mediocrity that would taint them, the powers that are satisfied with things just the way they are.