David Boaz, a former budget director at the treasury, wrote an article two weeks ago called "Guide to opponents of the structural reforms."
Boaz, who himself spearheaded a series of reforms at the Finance Ministry, divided the progenitors of the structural reforms into two types: headline-seeking ministers and bureaucrats who will ultimately fold and compromise, and the "dangerous" sort who genuinely want to institute change.
Boaz suggested a four-stage strategy for dealing with the latter, based on his personal experience and 20 years of watching structural reform attempts.
Let's visit his guide in the context of the battle raging over the banking reform, which would divorce the banks from their holdings in and management of provident funds and mutuals.
Phase I: Use the press and publicists to launch a campaign. All articles in the papers must include the following components:
l Describe the ministers/ clerks behind the reform as slogan-spouting ignoramuses.
l Describe the managers in the target sector as sober people with a history of performance.
l Describe the proposed structural reforms as a mishmash of experiments that will bring disaster upon us all.
It is fair to say that Phase I is upon us. The papers are inundated with reports, anecdotes and "leaks" about developments at the Bachar committee. Here are some of the latest leaks, hot off the presses.
"Even the committee members know they can't send the capital market into shock, so the move has to be done gradually and partially." The subliminal message is that separating the banks and the funds would shock the market. Why? How? Doesn't matter, just sit back and wait for the "shock" headline.
Here's another one: "Throughout this entire process of the Bachar committee, nobody has asked the customers of the banks' funds what they think."
That steaming one implies the reform would hurt the investors in the banks' provident and mutual funds, so they should be consulted first. In reality, that is arrant nonsense. Financial institutions are sold every day without their customers being consulted, and the same when their management changes. Did Galit Maor consult with Migdal Insurance's customers before selling the controlling interest to Generali of Italy? Did Arie Mientkavich meet with Discount Bank's many and myriad customers before selling the bank's mutuals management company?
Phase II: When the artillery fire from Phase I has died down, counsels Boaz, it's time to unleash the lobbyists among the ministers, employing the principle of Divide and Implore, while presenting three rhetorical conundrums:
l Can the state in its current condition afford such a massive shock to such a sensitive system, which has been so stable for so long?
l Will these prophets of structural reform be around when the system collapses? Who will replace the shattered incumbent leaders of the sector? Probably the rankest amateurs to whom the "greater good of the sector" is Greek and who want nothing more than easy money.
l And finally, Boaz suggests, one must speak in a calm tone but adopt a serious mien, shake the head and ask, "Has anybody seriously examined the fundamentals and data that served these harbingers of structural reform?"
Indeed, Phase II has also begun. The lobbyists are out and about. Ram Caspi has submitted a compromise proposal and Boris Krazny, a crony of the Knesset Finance Committee chairman, is getting into gear.
And the inflammatory questions have already been presented. In background discussions with the committee members and journalists, the bankers explain that foreign banks or brokerages cannot possibly be allowed to run these provident and mutual funds.
For instance, they explain, foreigners would export much of the money and invest it abroad. From which we learn that provident and mutual funds aren't instruments for the general public to make a buck, they are instruments of patriotism and nationalism. Or, the customers' money, say the banks, must be restricted to national goals.
We may not expect a "consultancy" commissioned by the banks to submit a serious, sweeping analysis proving that Israel's capital market is the ninth wonder of the world and that if any structural reform at all is necessary, it's of tax, and that's all. Our banks are the best in the world, except maybe for a couple of institutions in Scandinavia.
Phase III: Strike while the iron is hot. If at the end of the first two phases the danger of structural reforms has not passed, get down and dirty. Impose personal responsibility on the progenitors of the reform and throw everything you have into the ring - demonstrations by irate workers, complete with their wives and babes in arms; nasty caricatures in the press; billboards across the nation, Boaz advocates.
Now, we have not yet seen Eyal Ben-Chelouche, Meir Sokoler, Netanyahu and the other proponents of bank reform tarred and feathered in effigy, and accused of destroying the nation. But we're flying in that direction.
We have reached the stage of the Histadrut leading the workers into battle. As last week closed, the bank workers announced firm rejection of the reform. No wonder, really. The bank workers and the management are in the same boat. They have the same interests. And what is the labor federation doing in that boat? As usual, supporting the interests of the richest workers while ignoring the greater national good.
Phase IV Compromise. As crisis looms large, an industry veteran must take the initiative and spend an entire night with the finance minister hashing out a compromise. The sector will accept the changes, but drag them out over years.
We haven't reached that stage yet. But trust that Shlomo Nehama and Galia Maor are preparing for that moment.
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