Business is not as usual
It is possible to seek solace in the fact that the stock exchange is racing ahead, the economy is growing at a nice pace and unemployment is diminishing. However, no one can promise that these positive trends will continue when a shaky, faltering government is leading the economy and there is "no one in charge" at either the Finance Ministry or the Prime Minister's Office.
A few hours before the publication on Monday of the Winograd Committee's partial report, Prime Minister Ehud Olmert, in his capacity as acting finance minister, tried to create the impression of "business as usual." A press release stated that Olmert had met with the director general of the Finance Ministry, Yarom Ariav, and with the treasury's budgets director, Kobi Haber, "who gave him an up-to-date picture of the 2007 budget and growth trends, as well as assessments in anticipation of the discussions on the state budget for 2008."
It is difficult to believe that, a few hours before his political fate was about to be sealed, Olmert devoted most of his energies to the 2008 budget. It appears that someone was keen to show the public that the prime minister is functioning as usual and, even at this difficult time, managing to deal with issues of economics and finance. But several hours after that very meeting, when the Winograd report was published, Olmert turned into a prime minister trying to hold on to the reins of power in order to survive, and his government began its countdown, a mere year after it was established. Even if Olmert does manage to stay afloat in the coming weeks, it is clear that he will have difficulty remaining at his post after the Winograd Committee issues its final report in August 2007.
In a situation of this kind, issues related to the Finance Ministry, the state budget and the economic reforms that the government would like to introduce will go into a deep freeze for an indeterminate amount of time. Olmert, who is fighting for his political life, will not be able to institute far-reaching economic steps and will soon have to appoint a new finance minister.
It is hard to imagine that many people from outside the political system will be interested in the position. Professors of economics and "economic leaders" will surely be extremely hesitant to take on the finance portfolio at a time when the future of the person who is appointing them is shrouded in fog. Nor will a political appointee (Haim Ramon after he completes his sentence of community service? Meir Sheetrit, in order to neutralize his opposition to Olmert? Interior Minister Roni Bar-On, Olmert's crony?), chosen by a ruling party that is liable to collapse and serving in a shaky government, be able to lead the economy in a determined and effective way.
Under these circumstances, economic reforms will either have to wait or be subject to far-reaching changes by members of the Knesset Finance Committee, under the influence of interested parties and lobbyists.
At the beginning of the week, the Finance Committee began to discuss a draft law to institute a negative income tax and mandatory pensions, as well as a proposal to raise the tax that workers pay for using a company car. But for now, those who are likely to be affected by these reforms - in the case of company cars, for example, high-tech workers and leasing companies - can relax. A weak prime minister, the lack of a permanent finance minister, a governing party that is on the verge of crisis and the creation of the first cracks in the coalition will all make it possible for them to put pressure on Knesset members to soften the evil decrees.
In the meantime, it is possible to seek solace in the fact that the stock exchange is racing ahead, the economy is growing at a nice pace and unemployment is diminishing. However, no one can promise that these positive trends will continue when a shaky, faltering government is leading the economy and there is "no one in charge" at either the Finance Ministry or the Prime Minister's Office.