Shifting Ground Beneath Israel's Feet

Seemingly unrelated upheavals at the banks, in the big unions, at the undersea gas fields and in politics are actually part of a sweeping process - of democratization.

Could there be a connection between the leave of absence taken by Alon Hassan, the chairman of the Ashdod Port workers’ committee chairman - and  Bank Leumi’s decision not to write off NIS 150 million in debt for the IDB conglomerate?

And could those possibly have anything to do with Israelis protesting intentions to export some of the natural gas found deep under the Mediterranean, in Israeli territorial waters? What about the extraordinary feat by Yair Lapid and his brand-new party Yesh Atid, which won19 Knesset seats in the last election -out of nowhere - and nabbing over the Finance, Education, Health and Social Affairs Ministries?

Yes, there is a connection between these seemingly unrelated events.

Each occurred in a different world and stands on its own. But together they can be seen as an effort by Israel's society and economy to rebalance. To find a new equilibrium.

Relationships are being renegotiated between big lenders and big borrowers, between businesses and consumers, between aggressive labor unions and the public - and between and the majority that works, pays taxes and does military service and the minority that does none of these things.

The outbreak of public protest in the summer of 2011 marked the beginning of a process, to change the social and economic order. It still has a long way to go.

Many are struggling to characterize the emerging reality and so tend to explain it naked terms: capitalism versus socialism, rich versus poor, good versus bad. Some even label those they disagree with hateful bigots, as in the tropes about “hating the rich,” “hating the Haredim,” and “hating organized labor.”

I hate that rhetoric. It turns anyone who wants a civilized society and economy based more on justice and equality and less on corruption and rifts, into a hater/fanatic/limited thinker.

The picture that speaks 1,000 words

Take a look at the picture here for a moment. We see Prime Minister Benjamin Netanyahu, Finance Minister Lapid, Energy Minister Shalom and the outgoing governor of the Bank of Israel, Stanley Fischer.

This quartet got together last week to announce that "just 40%" of Israel's presently known natural gas reserves would be exported, as opposed to the at-least 53% recommended by a government committee.

Not only are the four men responsible for handling the gas, they also appear to constitute a support group. Nobody wants to be a lone voice confronting public rage over "selling out our gas to tycoons." Nobody wants to be the address for angry protesters.

This perhaps explains the harmony they displayed on the reduced gas quota. The question of export quotas has stirred up a lively public debate in recent months, featuring the usual slogans about rich and poor, kowtowing to the tycoons and so forth.

In the end, a compromise was reached that seems reasonable and balanced and leaves us with more gas.

The real outcome of the decision, though, won’t be known for a decade or more. None of the quartet’s members have any idea how much gas the country needs to keep in reserve, simply because there's no way to foresee developments in the field in coming years.

What is clear is that unless Israel exports gas, and a lot of it, the Leviathan field – the largest reserve discovered off our shores to date – won't be developed.

If that's so, any arrangement that leaves us with between 50% and 65% of the discovered gas is reasonable. In any case, more exports mean more revenues for the state, not just for the gas tycoons.

But the government would probably not have changed the reserve amount if not for the public outcry.

These voices, on the gas and other issues, aren't necessarily based on factual analysis. Too often they express nothing but rage against a system that repeatedly leaves the public out in the cold.

Perhaps the main message for Israel's decision makers is that the old discourse, which involved politicians, regulators, businessmen, lobbyists and journalists, has changed and now includes a new player: the public.

Leumi hears the word

This is also the message for Bank Leumi. The bank has forgiven IDB chairman Nochi Dankner's debt on numerous occasions. It has rescheduled, written off and postponed loans for hundreds and thousands of favored customers in the past and will probably do so again in the future.

The public outburst against the bank’s most recent attempt to let Danker off the hook is the result of pent-up rage against a system that encompasses all the evils that can be imagined: shady interested-party deals, bad gambles with the public's money, sky-high executive pay that delivers no value, and unfettered borrowing.

The public passively let this continue until it became clear that Dankner can't pay his debt and his shenanigans will mean ordinary folk have less to retire on.

Is the outcome good for Bank Leumi? Probably not. The bank might have done better if it had gone ahead with its planned write-off, under which it would have gotten back at least part of the money Dankner owed.

But there's a difference between the narrow view of an individual firm and the broader public interest.

The bank had focused on cutting its losses. The public's interest is to strike at the disorders that allowed the problem to arise in the first place – particularly the bankers’ practice of treating their tycoon friends completely differently than small borrowers without connections.

The public outrage against Bank Leumi is an attempt to create a new equilibrium in the way bankers treat small borrowers and big ones.

The story of the Ashdod Port and its controversial union boss is part of the same effort, though the process has been glacial.

Two and a half years after Hassan's private businesses were uncovered by Haaretz, the affair got television coverage. Politicians woke up. 

The seaports are a symbol of public service being held captive by workers, resulting in poor service, nepotism and a higher cost of living for all.

But Hassan's (temporary?) suspension won't solve a thing. The public and business sectors have many others like him and changing the situation requires government grit like we’ve never seen. We need only quote United States President Barack Obama who, on his visit here, called on Israeli youth to pressure their government to follow a path toward change. The politicians won't do it if the public doesn’t demand it.

Olivier Fitoussi
Albatross