Netanyahu, Appoint Karnit Flug and End the Uncertainty at the Bank of Israel

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The time has come for Prime Minister Benjamin Netanyahu to appoint Dr. Karnit Flug, acting governor of the Bank of Israel, as permanent governor of the central bank.

Israel has been functioning with an acting governor for the past month, due to Netanyahu’s failure to use the five months’ notice given him by outgoing Governor Stanley Fischer to find a replacement in time. Netanyahu brought in Jacob Frenkel, a former central bank governor, at the last moment, only to have Frenkel withdraw his candidacy after Haaretz revealed that he had been accused of shoplifting at the Hong Kong airport in the past. (Frenkel has called that incident a misunderstanding.)

Israel has returned to a state of uncertainty concerning the most senior financial position in the country.

The prime minister clearly does not want Dr. Flug in this senior position. If he did, he would have offered it to her six months ago.

Clearly, the prime minister believes that Flug, who made her first independent decision regarding the interest rate as acting governor, is not the ultimate candidate for the job — and he has his reasons. But the country cannot continue waiting for the prime minister to formulate an opinion on the most suitable candidate for the job.

It’s time to acknowledge that we’re out of time. It’s time to compromise and choose Flug.

It’s not such a bad compromise, either. As is well known, Flug has served as deputy governor of the bank for two-and-a-half years. Before that, she was head of the bank’s research department. Flug is intimately familiar with the Bank of Israel and knows its monetary policies very well. She has the appropriate knowledge and experience. She also has excellent references — Stanley Fischer felt she was the most suitable candidate for the position. Flug may not be the ultimate candidate, but the time for ultimate candidates has passed, in any case. It’s time to bring the matter to a close and appoint her once and for all.

Karnit Flug, Bank of Israel governor.Credit: Tomer Appelbaum

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