Naftali Bennett: No Need to Give Peace a Chance

In an interview with TheMarker, the Economy Minister and Habayit Hayehudi Party chairman says Israel’s economy will be better off with political status quo - and some help from a plan to ease regulations for newly formed businesses.

Eyal Toueg

Economy Minister Naftali Bennett arrived at the meeting a little late. Breathing a bit hard, sweating a little. “I was in Gush Etzion all morning,” he apologizes. How characteristic, we answer, the chairman of Habayit Hayehudi party visiting settlements.

“I’ll surprise you – this was the first time I’ve been to Gush Etzion since the elections,” says Bennett. “True, in the media it looks the opposite, but I spend 60% of my time on the economy and only 40% on politics.”

If so, we ask, does that make Netanyahu or him the leader of the right? Bennett answers diplomatically, “You tell me.” But his face broadcasts a completely different answer, which can be understood as “I am, of course.”

Would you like to replace Netanyahu? Do you have a chance?

“Next question.”

What did you do in Gush Etzion?

“I met with amazing young entrepreneurs, among other things to call their attention to our plan for new businesses.”

What do you mean?

“My goal is for a lot more people to choose entrepreneurship and starting up businesses. It will help them and help our economy. And I’m talking about everything, not just high-tech. We conducted research: Around the world it has been proven that businesses five years old and younger create twice as many new jobs as older, larger businesses – and the jobs are high quality. My intuition told me that a large company like Intel brings more jobs, but it’s simply not true.”

So what is the plan?

“Our plan is to create a ‘lite’ regulatory environment for the first five years after business is formed – to ease labor laws, environment, safety laws.” He said the idea is not to remove all regulation, but provide protection for “infant” businesses. “I know about the problems [of entrepreneurs] from the experience of my wife, who started an ice cream business and sold it two years ago. We have to change the environment to make the entrepreneur a cultural hero.

“We’re in the process of harnessing other ministries. We started with the local authorities six months ago, we’re conducting a survey that examines how they relate to businesses. This is a long-term plan that will succeed if we succeed in causing every minister to play his part. It won’t be easy.”

Did you take this from somewhere else in the world?

“As far as I know, there are no such programs anywhere in the world.”

But your visit to Gush Etzion immediately after the collapse of the peace process was not meant just to find a few young entrepreneurs. Is Israel being harmed economically because it is not engaged in a peace process to end the conflict?

“As opposed to the conventional thinking here, our conflict doesn’t really interest anyone. There are 40 conflicts like it around the world. Look at the numbers. Investment in Israeli high-tech grew 50% in a quarter. It’s crazy. They’re making pilgrimages here from China and India every day, prime ministers and foreign ministers. The conflict doesn’t interest them.”

Peace process was suicide

And it shouldn’t interest us? And if the freeze leads to deterioration? Time is working against us.

“The peace process was suicide. We saved the country. I’m the only one who’s presenting a realistic plan.”

Explain.

“I call it ‘imperfect peace.’ We’ll give them more autonomy, on steroids. It includes a solution to the problem of freedom of movement and massive investment in joint infrastructure. My assumption is that the conflict cannot be solved, but we can live with it. True, there might be a worsening of the security situation, but will there be another Intifada? No, since the security umbrella belongs to us. Time is not working against us. It’s stable.”

What’s your opinion of the warning from U.S. Secretary of State John Kerry that Israel could turn into apartheid South Africa?

“It won’t happen. I don’t want to rule over the Palestinians. We are in a very problematic area of an Islamic storm that could continue for another 50 years. We have no control over it – only over how we deal with it. Three years ago, Ehud Barak said that within two months Assad would fall. Nu, in the meantime he has massacred tens of thousands more. Our intelligence also didn’t forecast the developments, since it is impossible to forecast almost anything.”

In interviews Bennett gave before the last Knesset elections, he signaled that competition, bringing down the high cost of living and reducing economic inequality were all issues dear to him. The monopolies must be dismantled, the unions fought and defense spending cut. It all had to be done in the first year, because after that the government would lose its reformer’s drive.

So what happened in the first year of the Netanyahu government?

“We’re not treading water. We’re doing quite a lot, although true, not in every area. It was a great year for severing the connections between the government and the well-connected, despite the pressure. For example, opening aviation to competition. There was enormous pressure on us from the Histadrut [labor federation].”

Does your strong nationalistic outlook, which is connected to investment in the territories, contradict the goal of social justice or your civil responsibilities as a minister?

“Absolutely not. Whoever connects the two makes life easy for themselves. The problems of [business] concentration and a lack of competition and employment problems – all these need treatment. To dump all these on other issues such as Israel’s policy in Judea and Samaria is to make life easy. The politicians who carry this banner have not really succeeded in convincing the public that there is a connection between the territories and the cost of living. This approach has been proved to be baseless. Israel’s economy is growing and growing stronger. There are problems and we need to solve them and not avoid them by making excuses, that if we only leave the territories everything will be just fine.”

Settlements versus the periphery

And what about the investment in settlements instead of the periphery?

“The opposite. If we leave the territories we will need to increase the defense budget unimaginably, like when we left Gaza. A Palestinian state would bring down the Israeli economy. The economy needs quiet. [But] we don’t need peace for the economy to take off. It knows how to prosper even without a peace treaty. But a difficult security situation, when rockets are falling on the Dan region or a large number of terror attacks are happening – as there were after the failed Camp David summit – that’s what will stop the economy. If we allow the Palestinians to control Ben-Gurion Airport and the Dan region, and a missile hits a single plane, no businessman and no tourist will come here.”

You told us before that small businesses are more important than huge investments in Intel, but recently you reached an agreement with the company to build another plant in Israel, an agreement for a billion-shekel grant and leaving the corporate tax rate at 5%. When it was announced, you said you could not have expected a better gift for Independence Day.

“A year ago, the atmosphere on the issue of grants and tax breaks for huge companies was hostile. I received a phone call from someone I didn’t know before – Maxine Fassberg [the CEO of Intel Israel]. She said, ‘You should know we are on the way out, since no one is taking care of us.’ Then the penny dropped for me. I took all the top officials of the ministry and told them we can’t lose this. If Intel chooses Ireland it will be a disaster, since the technology used in the plant in Kiryat Gat [22-nanometer chips] is aging. The next plant in Israel will be, to my understanding, 10 nanometers. After that we met the senior Intel executives and I asked, ‘What do you need?’ I didn’t want it to trip over the bureaucracy. I instructed the top officials of my ministry to jump at their offer.”

With this money you could have accelerated the development and growth of hundreds and thousands of small- and medium-sized factories.

“Here I’m ready to be very unpopular. The public immediately says, ‘You could have given the aid instead to thousands of other businesses.’ But despite what I said before about new companies, this is wrong. If Intel had chosen another country, it would also have meant closing its plant here. There’s no contradiction here with the plan for new businesses. Life is a spectrum. We’re for both.”

In 1999, when he was in his twenties, Bennett and a few friends founded an information security startup called Cyota, raising $27 million and employing, at its peak, 140 people. In 2005 they sold up to the U.S. company RSA for $145 million. Bennett has since remained involved in the high-tech world with a few investments in various startups.

17 steaks

What do you do with the money you earned?

“I don’t eat 17 steaks and I don’t have a private plane or yacht. It simply bought me freedom to do what I want.”

What do you do with your money?

“As the law requires, the money is in a blind trust managed by an investment house. Historically I have a few investments in startups left.”

Netanyahu had a bank account in Jersey. Do you have a bank account overseas?

“When I was in the United States I had an account there, and it remained open with a few thousand shekels. I’ve since brought all my money to Israel. I didn’t look for detours, and I paid taxes.”

What has surprised you most in politics?

“The need for political struggles to advance things. It surprised me. It’s very hard, and it is what we are trying to fix. Everything is a fight and everyone stabs each other in the back.”

Have you seen the U.S. television series “House of Cards?”

“Yes, but it’s not similar. Here it's ‘House of Cards’ for the poor.”