The Men Who Would Be Israel's Finance Minister

Lapid wants his old job back, but Zionist Union has its own candidates; two Likudniks aspire to the job and so does Kahlon. What are their odds and what would they do?

Moti Bassok
Moti Bassok
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An Israeli soldier stands atop a tank in the Golan Heights near the Quneitra border crossing, close to the ceasefire line between Israel and Syria, June 6, 2013.
An Israeli soldier stands atop a tank in the Golan Heights near the Quneitra border crossing, close to the ceasefire line between Israel and Syria, June 6, 2013.Credit: Reuters
Moti Bassok
Moti Bassok

Yair Lapid had a short and stormy career as neophyte finance minister for under two years, but his bitter experience hasn’t made him any less anxious to have the job again. The Yesh Atid chairman is one of five candidates running in next week’s election who have staked a claim to the post. Two are serving cabinet ministers, one is an economics professor and the fifth, of course, is Lapid himself.

Finance is one of the most powerful cabinet positions, equaled only by the defense portfolio. Its appeal has been enhanced by the fact that the cost of living is at the top of voter concerns these day, making the post a potential way station on the path to the prime minister’s office.

Prof. Manuel Trajtenberg. Credit: Emil Salman

But that path will be full of treacherous obstacles, in the form of rising home prices, the banking cartel, government monopolies such as Israel Electric Corporation, an inflated defense budget, income inequality and the need to bring more Arabs and ultra-Orthodox Jews into the labor market.

Kulanu Party Chairman Moshe Kahlon.Credit: Ilan Assayag

The test will only begin once he (all the self-professed candidates so far are men) lands the job, after the election and the coalition negotiations. Whoever is appointed will have to push forward a reform agenda in what will almost certainly be a fractured coalition.

Transportation Minister Yisrael Katz.Credit: Emil Salman

If Prime Minister Benjamin Netanyahu forms the next government, the odds are good that either Gilad Erdan or Yisrael Katz, both of them Likud cabinet members, will get the finance portfolio. If the honor ends up going to Isaac Herzog, then Zionist Union’s designated point man on the economy, Prof. Manuel Trajtenberg, is the most likely candidate.

Public Security Minister Gilad ErdanCredit: Emil Salman

It’s quite possible that the ruling party will end up handing the Finance Ministry to one of its junior coalition partners, as in the outgoing government. That leaves the door open for Kulanu’s Moshe Kahlon, and the revolving door open to Lapid, conceivably.

Yair Lapid during an election event in Tel Aviv University, January 18. 2015.Credit: Tomer Appelbaum

Traditionally, the ruling party prefers to keep the treasury and the power it confers for itself, but given the difficulties that either Likud or Zionist Camp are expected to face in assembling a coalition, there might not be much choice in the matter.

As much as their ideologies differ, the one thing all five candidates agree on is no tax increases, although voters would be nave to assume that this resolve will survive the process of drafting and approving the next annual state budget.

Trajtenberg, 65, certainly has the rest of the field beat when it comes to credentials. One of Israel’s most lauded economists, he chaired the National Economic Council under prime ministers Ehud Olmert and Netanyahu and went on to head the committee that proposed socioeconomic reforms after the 2011 social protests.

Still, the odds are slim that Trajtenberg will get the job. His best chance is if Zionist Union forms the next government and Herzog keeps the finance portfolio for his party. If Zionist Union goes into a national unity government with Likud, Trajtenberg’s chances shrink considerably.

Or not. Netanyahu and Trajtenberg share similar ideologies and have worked together in the past. In the event of a national unity government, Netanyahu might decide to give the finance post to a friendly Zionist Union politician and keep defense or foreign affairs for Likud.

In his years on the National Economic Council, Trajtenberg’s stated views were close to Netanyahu’s and Lapid’s — support for a free-market economy and reservations about raising the minimum wage.

Since joining Zionist Union and being placed 11th on its slate, Trajtenberg has drifted leftward. He issued a platform calling for increasing government spending by 3.4 percentage points, to 40% of gross domestic product, although that is hardly radical. Regarding the housing problem, he says the government should build thousands of apartments for subsidized long-term rental, with tenants reserving the right to buy their homes.

He would likely face opposition from within the party from backbenchers such as Shelly Yacimovich, who support a more activist economic policy.

As in previous elections, Likud has not offered voters a socioeconomic platform, and neither of the party’s two aspirants for the finance portfolio have made any public statements about their views. But it does have five years of Netanyahu governments to show as a track record. And during that time, neither Erdan nor Katz publicly clashed with Netanyahu over economic policy.

That means the two support a free-market economy; a big defense budget, even at the cost of cutting civilian spending; big business over small and economic aid for settlers and ultra-Orthodox Jews. Neither Erdan nor Katz has shown much interest in reducing income inequality and solving the twin housing problems of high prices and low supply.

As transportation minister, Katz, 60, has shown determination to fight the powerful port unions, to push for building private ports to compete with the government-owned monopolies and to reforming automobile imports. Erdan, 45, as communications minister led the shake-up under way at the Israel Broadcast Authority.

Both are professional politicians who see the finance portfolio as a career move. Katz is considered to be the more politically powerful of the two but Erdan is considered brighter. Both are close to Netanyahu and have good standing among the Likud rank and file.

Kahlon’s chances of capturing the finance portfolio are slim, unless his party does unexpectedly well in next week’s election. His odds improve only because he could be an acceptable finance minister both in a Likud- and Zioniust Camp-led government.

His political ascent is due chiefly to his revolutionizing the cellphone sector by opening up to competition three years ago. Competition has been the byword of Kulanu’s campaign, but Kahlon has framed it in a social way: More than any other candidate, he has focused on narrowing income gaps and the high cost of living and sees his voter base as people who earn less than 10,000 shekels ($2,500) a month.

Kulanu’s platform seeks to replicate its leader’s success in cellphones in the banking and real estate sectors. He wants to break up the Israel Lands Authority and remove red tape that slows construction approvals by creating a housing czar. In banking he wants to break the power of the big banks by encouraging smaller lenders and forcing them to divest their credit card businesses.

Kahlon, 55, has also talked about imposing an inheritance tax of 20% to 25%. He wants to lower food prices by introducing more competition to food manufacturing and retail and in energy to break up the natural gas cartel.

Lapid’s chief claim as finance minister, apart from getting more aid to Holocaust survivors, was his blocking money going to settlers and the Haredim. If his term hadn’t been cut short by Netanyahu, more achievements would have come, so he says. As to the 2014 budget, the only one he helped design, Lapid, 52, still insists it was good for the middle class he said he would fight for when he formed Yesh Atid ahead of the 2013 election.

Lapid fought with Netanyahu over appointing Karnit Flug as Bank of Israel governor and later fought with Netanyahu and Flug over increasing the budget deficit in the abortive 2015 budget. He then fought everyone, including his own treasury advisers, over his plan to exempt many new-home buyers from the value-added tax.

Now he wants a second crack at the job. Lapid remains committed to Zero-VAT as well as legislation protecting tenants. Yesh Atid has a lengthy list of reforms in its published platform, most of them relating to welfare, health and education. On the economic front,. It supports limited privatization of government companies and how debt bailouts are structured and putting effective caps on CEO salaries.

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