After Frenkel Mishap, Netanyahu Has to Make Quick Decision

There is no lack of candidates who would be happy to fill in for Frenkel; and Israeli markets will not respond well to delay in a choice.

Prime Minister Benjamin Netanyahu understands that after the Jacob Frenkel fiasco, which lasted about a month, he needs to choose a new governor for the Bank of Israel quickly. Otherwise the markets will start getting antsy and foreign investors will start asking questions that are better left unasked.

Netanyahu’s choice of Frenkel was a slap in the face of all Israel’s senior economic leaders. Frenkel, even if we overlook the Hong Kong shoplifting allegations that ultimately led him to withdraw his candidacy yesterday, is an Israeli who lives abroad. Israel is home to a long list of top-notch economists who want to lead our economy. Now, Netanyahu apparently will have no choice but to choose one of them.

The two leading candidates to become Israel’s ninth central bank governor are Karnit Flug, the deputy to outgoing chairman Stanley Fischer (and who is currently filling in for him); and Leo Leiderman, Bank Hapoalim’s senior economic adviser and an economics professor at the Tel Aviv University.

Another potential candidate could be Avi Ben Bassat, a professor at the Hebrew University of Jerusalem. Ben Bassat used to be head of the research department at the Bank of Israel, and later the Finance Ministry’s director general. Recently, he has been serving as one of Finance Minister Yair Lapid’s economic advisers.

Other names being batted about include Prof. Dan Tsiddon, Leiderman’s counterpart at Bank Leumi; outgoing Bank Mizrahi-Tefahot Chairman Eli Younes; Bank Leumi Chairman David Brodet; and outgoing Migdal Insurance Chairman Aharon Fogel. Finance Ministry Accountant General Michal Abadi-Boiangiu has also been mentioned - both Netanyahu and Lapid are fans.

It’s not clear why National Economic Forum chairman Eugene Kandel and Council for Higher Education budget committee head Manuel Trajtenberg revoked their candidacies for the post. It could be because they knew that Netanyahu preferred Frenkel. If that’s the case, maybe they’ll throw their hats back in now.

Jacob Frenkel