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The Knesset Finance Committee yesterday approved the bill to distribute shares in Bank Leumi. It was yet another stage in the finance minister's transformation from an ogre demanding drudgery, sweat and budget cuts from the public to a Santa Claus preparing for elections.

The state now holds 28 percent of the bank, and plans to give away 22 percent to the public - hush money. That 22 percent is worth about NIS 3.7 billion, which this Santa Claus wants to distribute to every Israeli over the age of 18 (who lives in Israel). Each of the 4.4 million eligible citizens is to receive some NIS 840.

The proposed distribution of shares was first brought to the public's attention in Haaretz on December 24, 2003. The treasury came out with an uncategorical denial: "It's a fiction of their imagination." But the truth turned out differently.

Accountant General Yaron Zelekha proposed selling the public the shares at half price. The discount grew to 85 percent, and lately, with elections looming on the horizon, the proposal was sweetened to make the shares free. Santa Claus never asks for money.

Zelekha's idea was to use the distribution to raise the income of the public, who would then buy more, leading to increased economic growth.

But increasing growth via private consumption is unhealthy and unstable. Growth is best when it comes from investment and exports.

Also, a one-time gift would have almost no effect on private consumption. We learned this from Prof. Milton Friedman.

The bill's distribution system in ridiculously complex, involving three rounds, limits on resale and the establishment of a huge organization that will cost a bundle: NIS 250 million.

Who knows how many screwups there will be, how many obsolete addresses and inactive bank accounts, how many frauds will take place and how many cronys and members of the Likud Central Committee will get work in the new organization and its many by-products.

In order to allow the distribution of the shares to proceed in an "elegant manner," it has been decided that they will be put into each citizen's bank account. To this end, the treasury is assembling a monstrous database that brutally invades the privacy of each and every one of us.

But this is nothing compared to the plan's main drawback: Throwing away NIS 3.7 billion.

Israel suffers from an enormous public debt that drags in its wake high annual interest payments, which come at the expense of investment in the roads, education, culture professional training, aid to the poor and the health services basket.

If the treasury sold the controlling interest in Leumi to foreign investors, it would use the NIS 3.7 billion to reduce debt and save NIS 250 million in interest every year, which could be used to address some of Israel's social ills. Reducing foreign debt would also lower long-term interest rates and contribute to growth and employment.

Distributing the shares to the public would perpetuate the rule of the managers at Bank Leumi, and that would be bad. In Israel - in contrast to the United States - it's preferable for a bank to have a clear boss.

Netanyahu is always telling us that investors are begging to invest in Israel. If that's the case, what's the problem? We should issue an international tender, sell the bank at full price and use the money for strategic investments, with no tricks or election economics. Wait a minute, what would Santa Claus do then?