U.S. President George W. Bush should really be crowned the Israeli economy's "Man of the Year." After all, his was the power behind the three developments that most affected the local marketplace in 2003: the $9 billion in loan guarantees, the conquest of Iraq and the rallying of the U.S. economy in general, and of Wall Street in particular.
But the man who changed the mood of the business sector, the man who set a new economic agenda, and the man who won most of the credit and backing is our finance minister, Benjamin Netanyahu. Nor should his achievements be taken lightly. Few finance ministers have won much acclaim for their efforts, in good times and certainly in bad ones. Over the years, these men have generally served as moving targets for mudballs.
Ten months after Netanyahu took the helm at the Finance Ministry, there can be no dispute over the fact that he managed to surprise everybody with bad memories of his stint as prime minister. Few would have believed that the Netanyahu they knew - Bibi, the master of spin, the man who preferred word to deed, the hater of elites - would turn into the first finance minister in years who has impressed the business community, most of whose leading members are left-wing to boot.
Not one of the steps that Netanyahu spearheaded, from steep budget cuts to pension reform, from reforming the labor market to investment in infrastructure, were his idea. All the plans had been formulated previously and left to languish on shelves. Some had been dusted off by his predecessor, Silvan Shalom. Bibi didn't invent the wheel; everybody knew perfectly well what had to be done.
But unlike his predecessor, Netanyahu promoted all these plans, energetically, decisively, resolutely and mainly with a sense of faith that Shalom never had. Netanyahu believes in the free market no less, in fact probably more, than most of treasury officials. For Netanyahu it isn't just an economic program, it's an ideology.
Naturally, he also had a lot of luck. The timing, for example, was marvelous. He arrived at the Finance Ministry just as the economy reached its lowest point ever, before the U.S. guarantees, the invasion of Iraq and the worldwide market rally. Netanyahu had the pleasure of wedging himself into the small shoes of Silvan Shalom, who throughout his miserable career had managed to lose the confidence of the business sector and of investors in Israel and around the world.
The first hint that Netanyahu didn't mean to repeat his predecessor's mistakes, and intended to succeed as finance minister, was evident in his appointments. Rather, the appointments he did not make.
Flouting skeptical expectations that he would replace the entire top echelon at the treasury with his own people, he has confined his appointments to professionals, such as Joseph Bachar as director general and Yaron Zelekha as accountant general.
The second hint was that Netanyahu spent hours upon hours at the Finance Ministry, in meetings and discussions.
Netanyahu's best talent is as rhetorician. He is making moves that needed to be made, but without his remarkable marketing skills, he would not have received such adulation from Israeli and other investors.
If it were up to him, he'd probably love to contend for the prime ministerial seat right now. At the moment, he is considered the man who stopped economic deterioration - but as the devil would have it, elections are not around the corner. Prime Minister Ariel Sharon is sitting firmly on his throne. Netanyahu will apparently have to spend quite a bit more time at the treasury before contending for the premiership. And the wave of adulation might last for two or three quarters, but no more.
Netanyahu will face being measured by real economic parameters, the ones he can afford to ignore for the moment, as the stock market climbs wildly and the mood shifts from crisis anxiety to increasing certainty of stabilization. Netanyahu will face being measured by the gauge of unemployment, which isn't budging and is actually one of Israel's gravest problems. Business leaders may be applauding him, but the hundreds of thousands of jobless and small business owners aren't begging for encores. Nor are they heartened by the mad rise on the stock exchange. They are contending with day-to-day bills while treasury subsidies shrink in their hands.
Netanyahu will face being measured by the real pace of economic growth, which even the most optimistic scenarios see remaining very low in 2004 compared with the economy's potential. In other words, changing the sentiment in the market, which is his main achievement so far, won't propel him into Sharon's seat. In the next two years, he'll have to deliver the real goods: restoration of growth, and reduction of unemployment and poverty. These are missions that are much tougher than merely breathing some life into the moribund Tel Aviv Stock Exchange, or selling blocks of shares in government companies.
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