Netanyahu, Lapid at Odds Over New Bank of Israel Governor

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Prime Minister Benjamin Netanyahu is under pressure to name the new governor of the Bank of Israel this week rather than after the Sukkot holiday.

The frontrunners are Professor Mario Blejer and Professor Zvi Eckstein, with the third candidate, Victor Medina, having a low chance of winning the post.

Because of this pressure, Netanyahu met Thursday with Finance Minister Yair Lapid to discuss the appointment. The meeting revealed that Netanyahu supported Blejer, while Lapid supported Eckstein, who was one of the people who instructed him in economics after he was appointed finance minister.

Recently, Netanyahu met privately with the two leading candidates and received comprehensive opinions on them from officials who know them well. A series of high-ranking academicians from Israel and abroad advocated for Eckstein, though it is not clear whether they did so on their own or because Eckstein asked them to.

In any case, the prime minister continues to prefer Blejer as the next, and ninth, governor of the Bank of Israel, mainly because he is well-known internationally, including in the corridors of the International Monetary Fund and the World Bank, as well as in Europe and in Latin America. Netanyahu believes that like his predecessor Fischer, Blejer can serve as Israel’s financial foreign minister. Blejer’s status in the developing countries, particularly in South America, is particularly important to Netanyahu.

Some Bank of Israel officials say, in Blejer’s favor, that if he wins the position, he will keep Dr. Karnit Flug in her position as deputy governor. If Eckstein is appointed, he is not likely to do so. As Blejer’s deputy, Flug will help him enter his new position smoothly, and have a positive influence on the financial markets and on Bank of Israel employees.

Sources in Jerusalem have said over the past few days that the candidacy of Victor Medina, the third candidate for the position, got an upgrade in the Prime Minister’s Office, though Netanyahu continues to favor Blejer for the post. Two of Medina’s associates, who are connected with the Prime Minister’s Office, are lobbying intensively on his behalf: Uri Yogev, the director of the Government Companies Authority, and Aharon Fogel, a former director-general of the Finance Ministry.

Mario Blejer is Prime Minister Netanyahu's preferred candidate to head up the Bank of Israel.Credit: Bloomberg