The publication of the December Consumer Price Index this week provides a good opportunity for summing up 2002, one of the worst years since the establishment of the state from an economic and social standpoint. Our standard of living retreated to what it was seven years ago, in 1995. Furthermore, the gaps between the richest and the poorest widened significantly, and this constitutes a time bomb.
Mistake of the year: After two years of maintaining a cautious monetary policy, Bank of Israel Governor David Klein caved in to political and public pressure and did the exact opposite of what he had always advocated in the past: He entered into an unnecessary package deal with the government under which he lowered the interest rate by 2 percent at one go in December 2001. The result was a run on the dollar and an outbreak of inflation in the first half of 2002.
Novice of the year: Finance Minister Silvan Shalom came to the famous press conference that followed the package deal "to ensure that Klein indeed lowered the interest rate by 2 percent." Immediately afterward, he declared that now, new investments would flow into the economy and we could look forward to a year of growth. Shalom thus failed to repeal private legislation, and he presided instead over a fiscal policy of "we have money for everything." Only when the financial crisis erupted in June did Shalom understand that it was impossible to continue to be a "good" finance minister, and that he instead had to institute cruel budget cuts. That was the end of Shalom's expensive apprenticeship.
Trick of the year: Prime Minister Ariel Sharon formed the largest cabinet in Israel's history, 28 ministers and 12 deputy ministers (one-third of the Knesset), on the cynical theory that anyone who was in the government would not want to give up his position (and was he ever right when it came to Ephraim Sneh, Dalia Itzik and Matan Vilnai!). Now he suddenly tells us that he plans to abolish five ministries and reduce the size of the cabinet to 18 ministers and four deputy ministers. He also seems to expect us to believe this transparent campaign gimmick.
Populist of the year: Municipal taxes (arnona) should have gone up 6.5 percent this year, in line with the rise in inflation in 2002. The Finance Ministry said this was too much, and the local authorities should streamline instead, so it proposed an increase of only 3 percent. But Interior Minister Eli Yishai decided on a 0-percent increase. But don't think for a second that arnona really will not rise this year. The discussions on the increase will begin the day after election day, January 28. Until then, Yishai will be playing to the public.
Chutzpah of the year: Even in the darkest days of the old Mapai regime, there has never before been a situation in which the entire Histadrut - all its workers, all its institutions and all its resources - was mobilized for a Knesset election campaign. But Histadrut Chairman Amir Peretz continues to finance giant newspaper advertisements and billboards lambasting Sherry Arison and Eli Yones, the owner and CEO of Bank Hapoalim, at a time when the Histadrut does not even have enough money to pay its own employees on time. Peretz, who fired workers on terrible severance terms, is playing the role of the valiant fighter against the rich. Perhaps he thinks Yones should run Bank Hapoalim the way he runs the Histadrut, with a current deficit of NIS 200 million and a cumulative deficit of NIS 1.4 billion, so that Bank Hapoalim will also be in danger of collapsing? Why should the Histadrut be the only one?
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