Bank, Budget and Blackboard

There are some who want to give the choice of Stanley Fischer as governor of the Bank of Israel a halo of brilliant planning and misleading the media;

1. Stanley Fischer. There are some who want to give the choice of Stanley Fischer as governor of the Bank of Israel a halo of brilliant planning and misleading the media; as though the appointment had been agreed upon ahead of time, and the search committee (Yossi Bachar and Ilan Cohen) served only as camouflage.

But the story is simpler. A month and a half ago, the Israeli ambassador to the UN, Danny Gillerman, mentioned the idea to Fischer - who didn't say no. Finance Minister Benjamin Netanyahu took over from there in a series of conversations - but everyone assumed that there had been no change, because who would leave such a senior position with Citigroup and give up such a high income? That was why the Bachar-Cohen committee continued to search, and Prime Minister Ariel Sharon offered the job to Yitzhak Swary. Had Swary agreed, he would be the governor today. But Swary said no. This week, in a surprising move, Fischer said yes.

Now, the Prime Minister's Office is somewhat fearful about this outcome. They want Fischer to "understand the economy" and "take into account the employment and growth situation," and to put it more bluntly: to lower the interest rate at a fast pace and not to apply pressure on the subject of the state budget. But there is a surprise in store for them: Fischer is not far from his predecessor, David Klein, and from former governor Jacob Frenkel. In his opinion, low inflation is a central goal, and a cutback in government expenditure is an important target because it is a basic condition for tax reduction and growth. In the 1990s, Fischer conducted quite a harsh debate with then-finance minister Avraham Shohat. Fischer proposed broad cuts in the budget and a fast reduction in the inflation objective. Since that time, Shohat doesn't like him too much.

The PMO is engaged in consultations. They want to establish a monetary council, to include senior economists such as Aharon Fogel, Victor Medina, Avi Ben Bassat, Amir Barnea and Swary, to "balance" Fischer somewhat. But anyone who thinks that Fischer will allow anyone else to manage him, or will give up any of the independence of the Bank of Israel - is quite mistaken.

2. The rebels. Two days ago, the state budget passed its first reading in the Knesset. The rebels (Likud MKs who oppose the disengagement plan) say that they voted in favor "because the disengagement is not in the budget." That is indeed the case. The disengagement is still not included in the budget, but it is definitely present in the "evacuation and compensation" law, which also passed its first reading. Eventually, the law will become part of the budget. A kind of bluff.

For the time being, it is convenient for the rebels to close their eyes and postpone the decision to the second and third readings. If they then decide to vote against, they will bring down Sharon's government, and elections will be held within three months. The solution that will save Sharon from going to the polls is to bring Shas into the coalition. Or perhaps, in spite of everything, Shinui.

The rebels are playing innocent and saying that their only objective is to force Sharon to hold a national referendum, in order "to prevent division in the nation." But their real objective is to torpedo the disengagement by means of postponement and piling up obstacles until the issue sours and the opportunity is missed.

3. Teachers' salaries. The Dovrat report proposes good salary raises for the teachers. The tables were prepared by the subcommittee headed by Meir Shani. They are based on the assumption that all the proposals in the report will be implemented - as though we were talking about Switzerland rather than Israel. As though it is common in Israel for the conclusions of a committee to be carried out to the letter.

In order to make it possible to raise the teachers' salaries, the authors of the Dovrat report gathered money from several sources. The first source is the Finance Ministry, from which they will receive an additional budget of NIS 1.2 billion annually. A second source is a streamlining process in the Ministry of Education: the closing of colleges and teachers' seminaries, the abolishment of regional offices, the dismissal of supervisors and workers - a process that will net NIS 1.5 billion. In addition, the report assumes the dismissal and retirement of about 14,000 teachers, and for all the others, more hours of frontal teaching. In addition, the local authorities (which are barely surviving) must contribute their share.

First of all, there is no chance that all of this will happen. But if a miracle occurs, and everyone implements the plan to the letter, even then the treasury will not agree to the new salary tables - because, it claims, they are too high. They have dangerous and broad implications, since nobody in the government sector will agree to maintain his present salary at a time when the teachers are bypassing him by such a large differential.

We have already gone down this road, in 1993-94, when the government of prime minister Yitzhak Rabin announced "a change in the order of priorities - less to the territories, more to education and infrastructure." The idea was to have money for teachers and for roads, but the entire government sector rebelled - and also received considerable sums. Thus the budget was breached, and the economy found itself in difficulties. Netanyahu doesn't want to undergo that trauma.

Kobi Haber, the treasury budget director, says that he is willing to raise teachers' salaries, but only in accordance with the implementation of streamlining and dismissals. So the battle over wages is just beginning.