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Top Treasury Official's Exit Leaves Israel's Economic Policy in the Worst Possible Hands

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Keren Terner-Eyal on a panel of a transportation conference, June 8, 2017.
Keren Terner-Eyal on a panel of a transportation conference, June 8, 2017.Credit: Nir Keidar

Three of the most important people in the Finance Ministry and in Israel’s economic policymaking establishment have resigned from their posts in the space of just 10 weeks.

The first was Rony Hizkiyahu, the accountant general. Next to exit was Shaul Meridor, the head of the budget division. On Sunday, Keren Terner-Eyal announced that she was stepping down as director general, the top appointed position. She is leaving less than six months after taking up the post.

In contrast to Hizkiyahu and Meridor, who were appointed by the previous finance minister, Moshe Kahlon, Terner-Eyal was the personal choice of the current finance minister, Yisrael Katz. She had worked under Katz as director general of the Transportation Ministry. He brought her with him when he moved to the treasury.

Terner-Eyal’s resignation can only be seen as Katz’s personal failure. The two had worked well together advancing mass transportation projects, but the minute she moved over to the Finance Ministry, their relations deteriorated.

However, it would be wrong to blame him for what happened on Sunday and for the previous resignations. Yes, Katz is responsible for the chaos in his ministry, but above him is Prime Minister Benjamin Netanyahu, who is responsible for the chaos that has taken hold of the entire government.

What Hizkiyahu, Meridor and Terner-Eyal have in common is their belief that the current management of Israeli economic policy is disastrous. Indeed, “management” is a misnomer. Katz knows that he stands no chance of succeeding as finance minister without an orderly policy, the center of which is a national budget for the remainder of 2020 and for all of 2021. However, he hasn’t been banging on the table demanding it, making clear to Netanyahu that the economy cannot be subordinated to the prime minister’s political interests.

Netanyahu wants to retain the power of being able to bring down his government at the time he chooses. That has made the budget a hostage of the prime minister and Kahol Lavan Chairman Benny Gantz. It’s also turned the top brass of the Finance Ministry into pawns. None of engaging in professional decision-making, ordering staff work and establishing priorities is happening.

At this time of the year, the treasury is normally working around the clock in preparing the state budget and the accompanying legislation known as the Economic Arrangements Bill.

Hizkiyahu has said he would leave his office in October. It’s not clear whether Yaheli Rotenberg, who Katz announced as his replacement, will actually take the accountant general job. That’s because Kahol Lavan is expected to demand in return that appointments for key jobs in its ministries be approved as well. For Meridor’s job, Yogev Gradus is filling in on an interim basis. Terner-Eyal’s post is vacant.

The problem is not just the loss of top talent, but the fact that no work is being done and there’s no longer any semblance of teamwork in the treasury. There are no gatekeepers. There’s no one who is advising the finance minister or the prime minister what they should be doing, what should move forward and what should not.

This would be bad enough if it were happening in ordinary times, but it is happening in the midst of a deep economic crisis whose impact will be felt in Israel for years to come. Every mistake this government makes will be paid for by ordinary Israelis for a long time. It’s at a time like this that we need officials with a backbone and professional experience, officials with the ability to communicate to the outside world – in particular the international rating agencies – the constraints Israel is working under to prevent our credit rating from being lowered.

The treasury professional staff also plays a critical role in helping the finance minister ward off pressure from special interests – a situation that obtains in normal times and has become even more important at this time of crisis. They are the people who tell him what the cost will be of every concession he is thinking of making. In that respect, letting Meridor leave was easy for Katz, because Meridor got on his nerves; in the case of Terner-Eyal, Katz can’t make that claim.

Versus Netanyahu, Katz is like a featherweight boxer pitched against a heavyweight champion. Without his professional staff, his ability to fight back is even poorer.

Right on the heels of Terner-Eyal’s resignation on Sunday, the treasury announced: “At a meeting today Finance Minister Yisrael Katz held today with the acting budget director, Yogev Gradus, and legal adviser Asi Messing, it was agreed that the 2021 state budget and the arrangements bill would be prepared by the treasury and presented to the cabinet for approval during December this year.”

This is a pathetic announcement. It was an announcement that should have been made when the government was formed last May, not as a panicked reaction to the departure of the director general.

Those of us on the outside have been critical of the Finance Minister over the past several months, but one source on the inside says we don’t know the half of it. “ From inside it looks a lot worse,” he said. Now, the treasury staff is left leaderless.

It would be easy to claim that all those who have left are just civil servants and that the real decisions are taken by the elected officials anyhow. Some people might even believe it. But the truth is it’s akin to the doctors and public health experts quitting the health care system, leaving the decisions on the coronavirus to politicians. And not just politicians, but politicians who put their political agendas before everything else.

We would never dream of putting our health solely in the hands of politicians. But today, we are entrusting, or rather abandoning, our economic and employment health to exactly the same people.

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