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Finance Minister Roni Bar-On must feel pretty bad today. While he told the press that the agreement ending the senior faculty strike "is an important and responsible agreement," these words are only for PR purposes. At the Treasury they tell the truth: "The lecturers made fools out of us, and received a lot more than they should have."

Histadrut labor federation chairman Ofer Eini managed to get only a 5 percent raise for the civil servants; Ran "the Terrible" Erez, the union leader of the secondary school teachers, got them an extra 9 percent following a long and arduous strike. But the senior university faculty managed to gain a huge, disproportionate 24.2 percent - a lot more than the erosion of their salary warrants.

It could be argued that Yossi Wasserman, the leader of the primary school teachers union, got more: 30 percent. But it is not comparable. Wasserman agreed to reforms that include increasing teaching hours and bolstering the role of school principals. For their part, the lecturers did not agree to any change, or to the Shochat Committee's proposed reforms for higher education. They agreed only to the net salary increase.

This is a particularly bad agreement because it did not resolve the fundamental problem of Israeli academia, the "brain drain," and it may actually have made it worse.

The lecturers' representatives conducted themselves cynically, and as a result the senior faculty will receive a much larger raise than the younger staff, as the payoff for seniority has been significantly increased. Those facing wage discrimination are the young lecturers, and they are the ones being courted by foreign universities.

The agreement also does not distinguish between brilliant lecturers, whose work has received prizes and is being quoted abroad, and those who for years have published nothing worth a mention, if they published at all. All will receive the same raises. There is no push for excellence.

Foreign universities, including public ones, have long understood that in order to raise the standard of research and teaching, they must pay leading lecturers much more. Only Israel is trying to ignore market forces. The result will be an accelerated brain drain and a continued decline in academic standards.

The agreement is bad from another perspective: It proves how weak the government is. The prime minister wanted to end the strike at any price. His nightmare was student and faculty demonstrations two weeks prior to the release of the final Winograd Committee report. But the finance minister should have stood up and explained that concessions of this kind would bring anything but calm.

Even at this stage, the university presidents are threatening not to open the next academic year unless they receive the billions promised in the Shochat report. Education Minister Yuli Tamir changed her stance and agreed to increase tuition. The junior lecturers are asking for a raise similar to the one senior lecturers received, and are threatening a strike. The part-time lecturers are asking for extraordinary improvements in their employment terms.

The doctors, who recognize that this is a government of "handouts," are now asking for a raise even larger than what the university faculty received. Then will come the nursing staff, the administrators and hospital support staff, who probably will go on strike on Passover eve. And then the fight for the 2009 budget will begin, and everyone will demand an increase in order to cover the expenses.

This is a destructive process, and in the end we will all pay dearly for it. Growth will be blocked, the drop in unemployment will be reversed, tax revenues will drop, the budget deficit will grow, inflationary pressures will become stronger, and the central bank governor will raise interest rates.

As new elections will draw nearer amid slowing economic growth, Benjamin Netanyahu will come in and say: I gave you a growing economy, with enormous reserves, and you gave me back an economy in crisis with huge deficits. Maybe this political argument will lead Olmert and Bar-On to regain their composure and change tracks.