Analysis |

Netanyahu and His Finance Minister Are Bringing Israel Down in a Race to the Bottom

Fiscal policy is out of control as the two men compete for who can spend more irresponsibly, and it's citizens who will pay the price

Meirav Arlosoroff
Meirav Arlosoroff
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Benjamin Netanyahu and Yisrael Katz visit a food factory in Beit Shemesh, August 12, 2020.
Benjamin Netanyahu and Yisrael Katz visit a food factory in Beit Shemesh, August 12, 2020.Credit: Amit Shabi
Meirav Arlosoroff
Meirav Arlosoroff

It wasn’t enough for Finance Minister Yisrael Katz to attack his departing budget chief over their professional differences over fiscal policy. In a radio interview a day after Shaul Meridor announced his resignation, Katz launched into a personal attack not only on Meridor himself but his family, in particular his father, Dan Meridor.

“[Shaul] has returned to his family roots of hate and hostility toward Netanyahu and toward Likud,” Katz declared.

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Dan Meridor was once one of the so-called Likud princes, and he served as minister of justice and of finance, in the latter as a member of Benjamin Netanyahu’s first government in the 1990s. Since then, he has become one of the prime minister’s sharpest critics.

It’s pathetic that Katz chose to attack the son through his father, but that is the kind of politician Katz has become since he was named finance minister – one who wants to show that he can be even more extreme than the prime minister himself.

Katz is worried. He has Nir Barkat – to whom Netanyahu had publicly promised the finance portfolio during the last election campaign – breathing down his neck. The same day that Katz attacked the Meridors, Barkat again called Katz a failed finance minister. By losing his temper, he is proving how right Barkat is.

Benjamin Netanyahu, right, listens to then-Transportation Minister Yisrael Katz, during a weekly cabinet meeting at his Jerusalem office, May 12, 2019.
Benjamin Netanyahu, right, listens to then-Transportation Minister Yisrael Katz, during a weekly cabinet meeting at his Jerusalem office, May 12, 2019.Credit: Gali Tibbon/Pool Photo via AP

Shaul Meridor isn’t a lone voice calling out Katz. A month ago, the treasury accountant general, Rony Hizkiyahu, announced he would be stepping down. The ministry’s top legal adviser, Avi Messing, was declared persona non grata by Katz and barred from attending meetings with him.

If that isn’t enough, Keren Terner-Eyal, the treasury director-general who was appointed by Katz himself after she served under him at the Transportation Ministry, was threatened with dismissal if she dared to consult with Messing.

It seems that the entire upper echelon of the treasury is either leaving or in danger of being fired just three months after Katz took over the portfolio.

Katz, who in a recent newspaper interview compared himself favorably with King Herod, accuses his top officials of betraying his trust. But it’s Katz himself that has betrayed the public’s trust. In Meridor’s letter of resignation, that betrayal is spelled out pretty clearly.

Narrow policy making

“Policy is characterized by narrow, irrelevant and short-term decision-making while professional staff are silenced, blatant disregard is shown toward staff work, policies are rash and normal budgetary tools and norms are ignored,” the letter said. Meridor said he was appalled to find that week after week “the budget framework changes without any discussion, orderly thinking or long-term planning.” He warned that the “citizens of Israel will pay a heavy price in the coming years” for Katz’s policies.

These are all serious charges, and Meridor made even more. But let’s leave aside the issue of the mutual recriminations between the minister and his officials. The most damning accusation that appeared in the Meridor letter is this: “It’s not enough that there’s been no budget since 2018, unfortunately to date no decisions have been made on the formulation of a proposed budget for 2020-2021 that would make it possible to meet the provisions of the recently amended law.”

As of August 30, the date of the letter, no work has been done by the treasury to prepare either the 2020 or the 2021 state budgets. In normal years, next year’s budget is presented to the cabinet at around this time. It’s apparent that there is someone who doesn’t want a budget for either year. The time table leaves no choice.

Finance Ministry budget department director Shaul Meridor, December 31, 2019
Finance Ministry budget department director Shaul Meridor, December 31, 2019Credit: Tomer Appelbaum

There’s no need to guess who that someone is: The finance minister is the faithful servant of Netanyahu.

The fact that there’s no budget in the works means Netanyahu plans to bring down the government that he heads. By law, if the state budget isn’t approved by either the end of December (in the case of the 2020 package) or the end of next March (for the 2021 budget), the government automatically falls.

Remember now, the budget Israel is now operating under was approved by the Knesset in 2017 for 2018 and 2019. Since then, nothing has been adjusted to reflect changing circumstances, apart from the extra coronavirus spending. If the Knesset doesn’t vote on a 2021 budget, it will mean Israel will operate next year along the spending lines that were approved three years earlier – saddled with an out-of-date tool as it contends with the most serious economic and health crisis in its history.

This is deliberate sabotage. Instead of enabling Israel to cope to the best of its ability with the crisis, Netanyahu and Katz are determined to hamstring it with a fiscal policy designed for another era.

How can you possibly explain political behavior like this? You can’t. You also can’t explain how the same finance minister suddenly reversed a decades-old policy of reducing the number of foreign construction workers in Israel by suddenly doubling their quota. It’s similar impossible to explain why a finance minister would lend his hand in support of a Knesset member proposing to break the budgetary framework. Katz used the Knesset to circumvent his own rules.

Not since Aridor

Since the days of Yoram Aridor in the government of Menachem Begin, we haven’t seen a finance minister who is so happy to shower money all around without any discretion or serious justification. It seems that his angling to wrest the Likud leadership from Netanyahu has caused Katz to spend even more recklessly than his boss. It is Israel that will pay the price.

This duo – Benjamin “Churchill” Netanyahu and Yisrael “Herod” Katz – seem destined to go down in history as the politicians who did the most to destroy the Israeli economy and are doing it in a transparently stupid and sloppy way. It’s an absurd competition that would be comic if its results weren’t going to be so tragic.

Tragic it will be because it is happening in the midst of a major crisis. Many people will literally pay with their lives and others with a lower standard of living and income.

Our Churchill and Herod may have convinced themselves that they alone can manage the crisis, that they know better than anyone else what needs to be done. But the bitter truth is that no country stands a chance of coping with the complicated challenges of the coronavirus pandemic without an efficient and effective government that draws on the experience and expertise of its officials.

If the pair of them were really as capable as they imagine themselves to be, they would recognize this truth. But because they are full of hot air – and there is a negative correlation between the quantity of hot air and managerial capabilities – they prefer not to make use of the professional talent at their disposal, but to crush it.

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