Who's the Boss? Power Play Threatens to Defang Israeli Treasury

Lapid's tactics threaten to turn the Finance Ministry from a lion into a lamb.

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Reuven Kogan wasn’t the only deputy director at the Finance Ministry to hand in his resignation this week. However, his departure from the treasury’s state budget department was seen as premature in the only government ministry whose top officials apparently come to serve for fixed periods of time before leaving to fill other roles in the private or public sector.

Many observers at the treasury knew that Kogan's notice that he was leaving was just a matter of time. He was known to have lost favor with Finance Minister Yair Lapid and was therefore forced to leave.

The resignation of a deputy director of the state budget department following a dispute with the finance minister is like the first in at least a decade if not more. It follows another unprecedented event: the resignation of former state budget department chief Gal Hershkowitz after a rift developed under him in the department.

There are various accounts of the dispute between Kogan and the minister in charge, but the details probably don't matter. What's known is that the minister was fed up with his subordinate, who crossed swords with him over Lapid's attempts to establish a new government corporation for promoting rental housing construction – so he was shown the door. What is also known is that Kogan's direct superiors, budget director Amir Levy and the ministry's director general Yael Andorn, kept their silence; a resounding silence, some said.

On the face of it there's nothing wrong with a minister tossing out an underling who doesn't toe the line. After all, the minister is the boss. This is apparently also the world view of Lapid, who lacked any managerial experience before taking on the Finance Ministry portfolio. Moreover, he never held a managerial role in the public sector where it is much more complex due to the built-in lack of managerial flexibility and the particular sensitivity over the status of a public sector boss.

In effect there is no one boss in the public sector, but two. One is the direct boss – in this case the minister in charge. The second is the indirect boss for whom the public sector exists to serve – and that's the general public. Public sector employees owe their allegiance more to the public than to their minister, which is why they are called "civil servants."

Government officials are therefore supposed to serve two masters, and as long as both are in agreement there is no problem. The problem arises when a dispute emerges between the two bosses, as happens when the will of the direct boss – the minister in charge – doesn't necessarily coincide with the interests of the more important indirect boss – the general public. In this case the civil servant has an unavoidable conflict: Who should he serve first? The one he has to face or the one who isn't present in the room but who pays his salary?

This conflict is complicated, problematic, and occurs daily. Wise ministers and experienced civil servants know how to manage the conflict within the bounds of good taste. This means the minister knows how to pursue matters important to him without placing his officials in too much conflict of interest. The official knows enough to keep his head down and shut up about all kinds of minor political nonsense the minister wants to promote while at the same time making sure not to cross any red lines. The discretion exhibited by both sides, the mutual respect between them, and most of all a strict adherence to a professional decision making process – the officials present the minister with reasonable alternatives and the minister makes his choice among them – are the decisive factors in managing this built-in conflict.

The treasury ironically displays the most entrenched civil service culture of any ministry, save perhaps for the Justice Ministry. It is an elitist ministry where officials exhibit professional pride and are obstinate about principles they believe in. Finance Ministry officials are accustomed to standing up for their principles against other government ministries, the Knesset, the prime minister, and even the public. They are accustomed to being in the minority but persisting because professional justice is on their side – and often they're even right, but not always. But they are less accustomed in contending with internal opposition from the direction of the minister's bureau.

This is the line that was breached in the Reuven Kogan affair. For the first time it turned out that an official could find himself out the door due to a professional split – and likely a personal one, too – with the finance minister. The minister, the boss, decided this wasn't acceptable and that the official therefore needed to go. The minister, the boss, transgressed against the delicate balance of power in the public sector where officials aren't forced to choose between their two masters but find to compromise. The minister forgot that even in the private sector an overbearing boss isn't necessarily successful, and that there is certainly no room for such a boss in the public sector. The minister forgot that the treasury isn't his own private business and that he can't hire and fire officials just because he likes or dislikes them.

But in the meantime there's nobody to lay down the limits of his power. Andorn and Levy, as mentioned, kept silent over Kogan's dismissal. This silence raises concern whether even the likes of experienced and opinionated officials are forced to bow before the boss – the finance minister. The culture of silence, as reported to us, is gaining hold in the Finance Ministry and treasury officials now prefer also keeping quiet in internal meetings.

It isn't certain that Lapid has an angle on all this. It's likely that his lack of managerial experience is a handicap, although there's also the possibility that this is precisely how he wants his treasury – obedient and docile.

In any case it's clear that these personnel managing precedents reinforce the finance minister's sense of power but seriously weaken the ministry over which he's in charge. This is the way to go down in history as a strong and successful finance minister.

Yair LapidCredit: Emil Salman

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