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About two months ago, a businessman bid for a public tender to collect garbage in a city in the central region. After winning the tender, two municipal officials contacted him and demanded he pay them a large sum of money. The man begged for mercy. He explained he could not pay because he had offered an especially low price for the project, in view of the tough competition. The two insisted, and the man was finally forced to pay.

But why did he pay after having won the tender already?

Because the two officials were in charge of issuing the authorization that he had collected the garbage to the residents' satisfaction. In other words, he would always be at their mercy.

Another veteran businessman explained this week how public-sector workers had been affected by the recession. "You mean their wages were cut?" he was asked. "No," he repled, "I'm talking of a worse blow - the bribery. Those on the take in the public sector - in municipalities, the Israel Lands Administration and cabinet ministries - who used to get generous handouts in the era of affluence are now forced to make do with a lot less because of the difficult economic situation in the business sector."

Clearly, those on the take are a minority among the public sector workers, a minority that spoils things for the majority of honest, dedicated workers.

To evade the harsh word "bribery," Israelis have adopted the term macher (wheeler-dealer). But how does the macher persuade the clerk to speed up the process of getting the permit, or reducing the debt, or to ignore the fact that the plant in question is working without a smoke detector? Will nice words and smiles do the trick?

The subject has appeared on the public agenda because of the Bank Hapoalim affair. The bank hired machers to reduce its debt to the National Insurance Institute (NII). The police are now investigating suspicions that the machers bribed senior NII officials, getting the bank a NIS 66 million debt reduction. Thus, it transpired that even the big, strong banks use machers, who are suspected of bribery. Didn't the bank know that that is how they operate?

The excessive bureaucracy, which grinds citizens to a pulp, is one reason for the thriving macher system, which has penetrated every walk of life - municipalities, the Land Registration Office, the ILA, the Interior and Industry ministries, income tax, customs and the NII.

Another, more problematic reason is the change in the norms of conduct. Anyone who conducts his affairs honestly is considered a fool. This is a dangerous plunge toward a corrupt economy, which has already wreaked havoc in South Asia, Russia and Argentina.

When people see how the prime minister and his sons are acting, and what they are being investigated for, they have a kind of justification. If it's permitted up there, why is it forbidden down here? One businessman told a colleague how he managed to get a permit for his business despite having failed to install a sprinkler system in his premises. "I paid the macher," he said, "and he bribed someone in city hall. Now he [the bribed clerk] is even canceling my parking tickets."

The trend is growing now following the extended sanctions in the government ministries. The moment the workers unions agreed to have an "exceptions committees," the machers had a wide opening to wield their trade. They go to the committee and "persuade" the appropriate clerk that this is an "exception," thereby managing to get, for example, a land registration certificate for NIS 500.

The corruption in the corridors of power that has expanded in Israel in recent years (by international standards as well) causes grave damage to the economy and its growth. The one who wins the tenders, the one who get the benefits and licenses is not the best man for the job, but the one with the best connections, or the one who hires the right macher. In other words, the person who gets ahead and expands his activity is not the most effective operator or the one who can implement the project at the lowest price.

A culture of bribery leads to an increase in the uncertainty in the market, and therefore causes damage to investments and growth. The best and honest people are incapable of competing when these are the rules of the game - and they bail out.