Analysis

Gantz and Ashkenazi: Failed Businessmen?

Both chaired firms that collapsed, but that has no bearing on their ability to lead Israel

Benny Gantz and Gabi Ashkenazi during a Kahol Lavan event, March 9, 2019.
Rami Chelouche

Likud’s negative campaigning against Kahol Lavan is based on the theory that the more mud you sling, the greater the chance that some of it will stick. The mud is gathered from decades past, like Benny Gantz’s alleged role in the death of the Druze soldier Madhat Yousef and the Harpaz affair, his attendance at a memorial for victims from both sides of the conflict — and the one that beats them all, claims that he sexually harassed a girl over 40 years ago.

Another claim is that Gantz and Gabi Ashkenazi are failed businessmen. Prime Minister Benjamin Netanyahu had made the claim. Justice Minister Ayelet Shaked of Hayamin Hehadash compared the two to the success of her colleague Naftali Bennett, who led his startup Cyota to a $145 million exit in 2005.

Gantz was chairman of the homeland security tech company Fifth Dimension, which recently closed after losing tens of millions of dollars. Ashkenazi was chairman of gas exploration company Shemen, whose offshore drilling ended in a dry well and 175 million shekels ($48 million) in losses for its backers.

There were many entrepreneurs and executives involved in these companies who share blame for what happened, but to Netanyahu and Shaked the face of failure belongs to Gantz and Ashkenazi, the two men who threaten to topple them from power. No one has seriously investigated the claims, perhaps because there is so much mud flying no one has had the time to examine each volley. Nevertheless, it’s an interesting claim.

First, because Netanyahu and Shaked, who consider themselves neoliberals, are attacking someone for failing in business. The reality is that failure is part of capitalism. There’s no success, and certainly no enterprise, without it.

Are Netanyahu and Shaked coming down on entrepreneurship? Are they saying businesspeople shouldn’t take risks?

Second, it’s being generous to call Gantz and Ashkenazi businessmen. They are former army chiefs of staff who dabbled in business because it was the path open to them: In 2007, Likud passed a law barring senior officers from going into politics until at least three years after returning to civilian life.

Third, and most important, is the kind of businesses Gantz and Ashkenazi chose: high-tech and natural gas. They’re the industries Netanyahu usually refers to when he lauds the Israeli economy, which might give the impression that the money is easy.

The truth is that while both are “sexy” and have seen big growth in the past decade, they are also high-risk.

Some 560 onshore and offshore exploration drillings have been conducted since 1948, but only 15 have yielded commercial quantities of natural gas. The failure rate is 97.3%. In high-tech, the failure rate for startups is 90% or more.

Fifth Dimension (whose other top executives included Ram Ben-Barak, a former Mossad deputy head who is also a Kahol Lavan candidate) was formed in 2014 and closed at the end of last year. Between 2012 and 2017, a total of 3,307 Israeli startups burned through $3.8 billion and closed, according to IVC Research.

Was it a coincidence that Gantz and Ashkenazi chose high-risk businesses? Almost certainly not. They both left the army with generous pensions, but they both wanted to make a bundle, and that requires taking risks. If Fifth Dimension had ended in a giant exit and Shemen with commercial amounts of gas, they would have made millions and been free to enter politics with a clear mind.

They were chosen as chairman of their respective companies for their military backgrounds, their image and their connections in Israel and abroad. They brought charisma that could open doors. Many entrepreneurs looks at appointments like these as practical business, not as needless window-dressing.

But their army careers didn’t set them up to be businessmen. As chiefs of staff they knew how to spend money, not how to earn it. Neither had a head for finance, marketing or technology. Gantz knew nothing about Fifth Dimension’s artificial intelligence technology and Ashkenazi knew nothing about the geology behind petroleum exploration.

The failure of Shemen and Fifth Dimension are now inescapable items on the two men’s CVs, but it tells us nothing about their political capabilities. What can be said is that it’s impossible to become chief of staff without good political horse sense.

They may never have held elected office, but they aren’t newbies. They’ve waged political battles over the defense budget and know how to deal with the media. The jury is still out over whether they will indeed be successful political leaders, but there’s nothing in their career path, including each one’s brief foray into business, that says they can’t be.