Fischer's Victory, Our Triumph

It is hard to overstate the importance of the victory that Stanley Fischer won this week. The Bank of Israel governor managed to depose Bank Hapoalim's chairman of the board on the exact terms he wanted: The chairman is leaving the bank without vindication, and will be succeeded by a person the central bank deems worthy and suitable.

Every business leader in the land, every politician and every other major player in Israel's political and economic landscape was mesmerized by the battle of the titans, as public interest pitted itself against private interest.

All awaited the outcome with bated breath. Would the most powerful regulator in Israel, a man with the greatest constitutional independence and supreme professional prestige, have both the courage and the ability to protect the public interest in Israel of 2009 - to impose his will on the strongest forces in the Israeli economy?

Throughout these two months, many were certain that the governor would fold under the belligerent attack. People followed the battle closely, fearing for the nature of the state.

The battle was imperative and historic not because the ousted bank chairman was such an important figure in business or banking circles; far from it. Nor was it because of Shari Arison's involvement in the affair. People familiar with the issue know that Arison's intentions are good; the problem is the people around her, and the people who influence the people around her.

Rather, this battle was of utmost significance because of the mounting fear that economic policy in Israel - even the most crucial decisions, those that substantially affect the public's well-being - is not being shaped by the people who ought to be doing so: the prime minister, finance minister, Knesset members, voters, regulators and other officials. Instead, decisions are being made by a small group, a club of businessmen and bankers, a tight social network of people who are running the country in line with their own narrow interests. They are the ones who control the government, the ministers, the legislators, regulation itself and, often, the press.

Stanley Fischer, as former vice chairman of the International Monetary Fund, has vast experience with countries where the economy is controlled by business interests. He personally took these interests on in Russia, Thailand and other countries. When he accepted the job as head of the Bank of Israel, he knew he would often find himself pitted against powerful families, businessmen and bankers.

But he never imagined how powerful they were. It never occurred to him that if he decided the chairman of a bank had to go, not only would the big businessmen rise up, but most of the business press as well. He never thought he would stand almost alone in the fight.

Nevertheless, Fischer won. And every person supposed to protect the public interest, every person supposed to be loyal to it, takes great heart from the outcome.

Yet they know this was just the first round of a never-ending struggle. The strongest economic forces in the land will always try to weaken and delegitimize regulation in order to make more money, accrue more power, wield more influence.

Fischer now knows that his mission as governor of the Bank of Israel is not limited to protecting the stability of the banks and shaping monetary policy. It is also to prove to the people that in Israel's economy, the public interest, and the people in charge of it, still carry weight.

Fischer should be feeling great satisfaction. If we had not had a central bank governor with international standing, independence and self-reliance, it is doubtful that we would have had a leader who could go into a battle like that, and win.