With Kahlon at Treasury's Helm, Israel's Business Sector Is Orphaned

As Kahlon’s coalition prisoner, Netanyahu gives the self-described 'social-advocacy finance minister' free rein; meanwhile, a tiff over yeshiva funding paralyzes the Knesset Finance Committee.

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Illustration.Credit: Amos Biderman
Yossi Verter
Yossi Verter

Sounds of weeping and gnashing of teeth emanated from the stock exchange building in Tel Aviv on Tuesday. The outcry of the so-called “heads of the Israeli business sector” rose to the heavens as they met with Finance Minister Moshe Kahlon. Their utterances were a mishmash of complaint and sycophancy, lobbying and anger, importuning and a desire to seize the opportunity. Passive-aggressive, some might say. Crocodile tears, others might say.

This column is not about the economy but about the political arena. However, the meeting between bigwigs in high-tech, industry and banking and Kahlon – for the first time since he took office 13 months ago – reflects the big change that has occurred in national politics under the present government.

All Israeli finance ministers have been representatives in the Knesset and the government of the industrialists, the bankers, the people with big capital, and people from the realms of insurance and high finance. Since May 14, 2015, that whole group has been orphaned. No political structure exists in Benjamin Netanyahu’s fourth government that protects and promotes the business sector. Of all people, it’s Netanyahu, who always sanctified the private sector and disdained the public sector, who abandoned the fray and left it in the hands of a person whose views are the polar opposite to his. As Kahlon’s coalition prisoner, the premier lets him do what he wants, however much he may disagree.

Here and there, Netanyahu chooses his battles, such as that over the natural-gas deal, or when he tried to torpedo Kahlon’s dramatic slashing of salaries in the banking industry. In the latter case, he backed off when his minister threatened a coalition crisis.

In the 2006 election, when Amir Peretz was leader of the Labor Party, his campaign slogans claimed that “everyone wants to be socially conscious.” These days, that slogan has become reality. Likud, once the ideological sister of the Conservatives in Britain, the Republicans in the United States and the Christian Democrats in Germany, now terms itself a “social advocacy party.” The tone is being set more by Miri Regev than by Yuval Steinitz. By Shas, of course, and Kahlon’s Kulanu party as well. Habayit Hayehudi might be on the other side, especially given the background of its leader, Naftali Bennett, but in practice it plays no role in economic discourse. Certainly it will not lie on the fence for the business sector.

On Wednesday, I asked Kahlon whether what he heard in the meeting had changed anything for him. “There was a productive discussion, but I won’t convert to a different religion,” he replied.

When Israel Chemicals CEO Stefan Borgas complained that for over a year, he had been unable to meet with the Israeli finance minister, in contrast to the open door he has in other countries, Kahlon beamed with delight. For moments like that, everything is worth it. When others present asked why he was turning his back on the business sector, he didn’t apologize. “I am the first social-advocacy finance minister in Israel,” he asserted.

When some of the participants bemoaned the waste and inefficiency of the cumbersome public sector, Kahlon cut them off sharply. “I am not willing to hear attacks on the public sector here,” he snapped. “I have a completely different worldview. It doesn’t bother me if there are many more doctors, or more teachers and nurses here. It does bother me that people have to wait half a year to see a medical specialist. People pay steep taxes and they deserve proper service. The civil services in Israel are at a relatively low level compared to many other countries.”

I asked Kahlon whether such meetings would now become standard practice, so that the “productive” process can continue. He wouldn’t commit. Maybe he’s heard all he wants to hear.

The unkindest cut

Few noticed, but for many weeks, the government ministries have been effectively paralyzed. The chairman of the Knesset’s powerful Finance Committee, MK Moshe Gafni (United Torah Judaism), suspended most of the budget transfers that the committee was asked to approve. A brief explanation: Every ministry that wants to shift an allocation from one budget clause to another, within the framework of the approved state budget, needs the committee’s authorization. If the chairman doesn’t put the ministries’ requests to the vote, the ministries become his prisoners and their ongoing activity is derailed.

Of late, Gafni was in the throes of a dispute with Kahlon, concerning 80 million shekels (about $20 million) that had been promised to the yeshivas in the May 2015 coalition agreement. The treasury held up the payment, whereupon Gafni cut off funding to the ministries, so that the ministers would pressure Kahlon to transfer the money. It’s like when the Israeli army bombs infrastructure targets in Lebanon to induce citizens to pressure the government to restrain Hezbollah.

In the weekly meeting of leaders of the coalition parties, Kahlon blasted Gafni, who happened not to be present. “I can’t work with him, he’s intolerable,” Kahlon told the prime minister; other ministers backed him up. Kahlon related that, knowing Gafni’s methods, he had opposed making him chair of the Finance Committee. “I went to him and said, ‘Gafni, I know you’ll be crap,’” Kahlon said. “He promised to behave fairly, so I was convinced and I agreed.” Kahlon surely regrets that decision today, but it’s no longer up to him.

Netanyahu, upon hearing the lamentations of Kahlon and the others, asked: “Is it really that bad?”

“Yes!” they replied in a chorus. “It’s really that bad.”

“Maybe he wants to be a minister?” Shas leader Arye Dery wondered aloud.

“He wants to be Litzman,” Netanyahu averred (referring to UTJ’s Yaakov Litzman, the minister of health).

Read part 2 of Yossi Verter's weekend column.

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