A lot of hopes are riding on Moshe Kahlon, the White Knight charging with a whoop into battle to save the little man from the most powerful forces in Israel, albeit sitting at the Finance Ministry rather than on a horse's back.
- Kahlon’s Dilemma: Big Ideas, Little Money
- New Government Economic Policy to Fight Cost of Living, Economic Concentration
- Navigating the Maze of Kahlon’s Housing Reform
- Yes, Mr. Kahlon, Israeli Housing Prices Can Be Lowered
- Israel's New Finance Minister Is Facing a Difficult Challenge
Benjamin Netanyahu had no choice but to name Kahlon finance minister in his new government: It was the will of the people.
The people hope Kahlon will really manage to substantially lower the cost of living in Israel, as he promises, which would be a first. The business scene hopes he will fudge lowering the cost of living in Israel so their profits don’t suffer, and Benjamin Netanyahu presumably hopes that whatever Kahlon does, it won’t be done well enough to make him the stuff of prime ministers.
Certain elements had touted Kahlon, 54, a modest man from a poor background, as a potential prime minister in the last round of elections. Kahlon himself had no such pretensions. He felt he wasn’t ready, and knew what he wanted: the finance portfolio, where he could help the downtrodden masses. And though he presumably hated leapfrogging a potential future rival into the treasury post, Netanyahu had to give him that ministry — not that other would-be ministers from the coalition were fighting tooth and nail for the position.
Truth be told, the finance portfolio is a bit of a suicide mission, according to the conventional wisdom. Nobody loves a finance minister – not the people whose budgets he cuts, not the people on whom he lavishes largesse (it’s never enough), and certainly not the targets of his reforms, or even his own professional staff, who tend to sniff from their lofty positions of knowledge and competence at newbie ministers, like the last luminary, Yair Lapid, who not only didn’t have a degree in economics or finance, but didn’t even matriculate high school. Tut tut.
How Kahlon beat the system
In many ways, Kahlon is more akin to John Boehner, Speaker of the House, than he is like Lapid, though in the Israeli politician’s case, the olive complexion isn’t from alleged application of tan spray, it’s from his Libyan parents.
Boehner is older, at 65, but both come from humble roots. Kahlon’s father was a construction worker; Boehner’s family owned a bar. Boehner was the second of 12 children; Kahlon is fifth child of seven. Both had immigrant parents.
Kahlon’s predecessor at the Finance Ministry, Yair Lapid, was born to an Israeli mother, the author Shulamit Lapid, and immigrant father, the Yugoslavian-born Yosef “Tommy” Lapid. While the elder Lapid, a famous reporter and later politician, was accused of having a yellow-journalism streak, blue-collar he was not.
And unlike Yair Lapid, but very much like John Boehner, Moshe Kahlon has a conservative streak a mile wide – in Israeli military terms, of course. On other fronts, he demonstrates an interesting broadmindedness: In January 2015 he categorically told Army Radio that despite being religiously observant, he supports state recognition of same-sex marriage. He is also arguably in favor of gender equality: the Kulanu party roster was studded with women.
Also unlike the much-maligned Lapid, Kahlon comes to the Finance Ministry with a proven track record of political efficacy (and academic diplomas). His crowning achievement was that as minister of communications, a position he was awarded in 2009, Kahlon brought the “cellular reform” to the Israeli consumer, overcoming overwhelming odds and yowling opposition, and slashing mobile communication costs by as much as 90%.
According to the business press, Kahlon saved Israeli wireless consumers oh about six billion shekels a year. That’s about $1.5 billion. Israel’s budget is about 350 billion shekels a year, to put things into proportion.
It surely doesn’t hurt that Kahlon is young(ish), angularly handsome and well-spoken. Indeed, the humble politician hailing from Hadera had been highly popular in his home party, Likud, even before he attacked the mobile operators. But the cellular revolution is what won him the hearts of Israel’s consumers across the land, who vastly outnumber the powerful people horrified by his moves to introduce competition (shudder) into the mobile market.
To achieve the cellular reform, Kahlon had to combat a lot of powerful opponents – from the Big Three Cellular companies themselves (Pelephone, Cellcom and Partner Communications), the banks to which the Big Three owed billions of shekels, the great business pyramids that owned the Big Three, the investment community (including the powerful insurance companies) which could foresee the companies’ value implode almost overnight, equity analysts who wailed about the damage to long-term portfolios, etc., etc., the lobbyists and contacts of all these people in government, and more.
That’s a lot of very vociferous, well-connected opposition to overcome, but Kahlon did it. He demonstrated that with vision and spine, great and mighty powers can be brought low for the greater good of the people.
Just to clarify – why would Israel adore a man whose main achievement was not, say, bringing the messiah but reducing their mobile phone bills? Because to Israelis, mobile phones are like their right hand. The penetration rate of mobile phones in Israel is famously above 100%, because lots of people have more than one. And the prices charged by the Big Three before competition arrived had been – let’s just say very high. Their profits, on calls and mobile phones, had also been very high. Kahlon ended all that by allowing competition to raise its hairy head.
People tend not to even remember it but after his successful stint as finance minister, Kahlon was appointed minister of welfare and social services at the start of 2011. In the build-up to the March election, Yair Lapid’s minions accused Kahlon of achieving precisely nothing as welfare minister, a charge Kahlon’s people turned back on Lapid as finance minister. Meowwww.
Moshe Kahlon throws a party
While doing all that, Kahlon was a member of Likud, the party Netanyahu heads. But after a short break from politics, ahead of the last election, he split from Likud and formed his own party, Kulanu, whose agenda was rather vaguely devoted to repeating the cellular revolution in other areas – such as the banks — and thus bettering the lot of the little man.
As he enlisted serious people to Kulanu’s ranks and polls began to show the brand-new party doing very well, gaining around 8-12 out of the 120 seats in the Knesset, Kahlon was pushed to be clearer on his political views, which – unsurprisingly, they hadn’t been secret before – were on the right of the political map.
At first he stuttered in television appearances and positioned the party as centrist. But he quickly got back on his feet, gained clarity and became more adept at maneuvering the conversation – Yes, oneJerusalemundividedandsecurity but housing prices have to be lowered! and those bank fees – oy oy oy, those bank fees! (Indeed.)
Bank stocks take a beating after Kahlon targets bank fees as a topic for reform
Kahlon may have dismayed the peace crowd with his right-leaning personal penchant, but at the end of the day Kulanu won a respectable 10 seats. The party manifesto stresses mainly economic issues and does not explicitly mention one or two states, but does clearly say that protecting Israel’s boundaries is a paramount interest.
Kahlon the savior
We now see how Kahlon became the great white hope of the Israeli consumer, who catapulted him into the Finance Ministry with the mandate of lowering the staggeringly high cost of living in Israel, and housing prices while he’s at it.
Can he do it?
Who knows. Time will tell. Kahlon has demonstrated that he has cojones and the backing of the masses. But he also has a prime minister liable to feel threatened by his very success, who in the course of building his coalition government, made promises that will make Kahlon’s life as the Great Reformer very difficult, not least because there’ll be no budget left for his plans.
Meanwhile, Netanyahu has rolled back just about every success Kahlon’s predecessor, Yair Lapid, could claim. Lapid could boast that he cut benefits for the ultra-Orthodox and pushed for equality in the draft. Poof! In one coalition agreement, all that is gone. So even if Kahlon’s critics are wrong, if aspirations for revolution are not just appearance but substance, even if he achieves a fraction of what he aspires to achieve for the poor and the middle class in Israel - that doesn’t mean their gains will last.