The Dictatorship Cometh

MKs and activists are warning that if no solution is found for economic concentration, Israel could wind up a tyranny of business interests.

In January, as the Sheshinski Committee wrapped up its discussions on the royalties the state should collect for the commercial exploitation of natural resources, Finance Minister Yuval Steinitz delivered an address. "We live in a democratic country. It's legitimate for businessmen to look out for their companies' interest," Steinitz said.

But, he added, in the companies' campaign against higher royalties and the committee headed by economist Eytan Sheshinski, they crossed the line.

concentration committee Fischer, Netanyahu
Government Press Office

"Instead of freedom of expression before the Knesset and before the committee, what we received looks like an attempt to hamper the ability to make objective decisions in the State of Israel," Steinitz said. Moreover, he was concerned that such interests would get in the way of policy decisions.

Almost a year after the government approved the Sheshinski recommendations, another set of recommendations drawn up by a public committee - the economic concentration committee - has reached the approval stage. A number of the people testifying before the committee emulated Steinitz in voicing concerns that economic concentration and the growing power of big business pose a clear and present danger to democracy and the public discourse.

Like Steinitz, they warned of the danger to good governance posed by corporations whose economic might has grown too powerful.

Among the people addressing the committee last week was Didi Lachman-Messer, Israel's deputy attorney general from 1997 to 2005. Lachman-Messer warned that economic concentration endangers democratic rule in Israel specifically because of conglomerates' control over the media and their donations to politicians.

The fact that several large groups own media outlets such as newspapers, television networks and radio stations magnifies the power of their controlling shareholders, Lachman-Messer said. Ownership of a media outlet strengthens the group and its ability to influence the competition, society and governance in Israel, she said. Their clout lets them shape the public and political discourse.

How does big business influence the democratic process? Through donations to political candidates, Lachman-Messer said.

Aside from influencing politics through donations and media ownership, the large companies also influence civil society organizations such as the Movement for Quality Government in Israel and the Israel Democracy Institute, which are supposed to be guided solely by the public interest, Lachman-Messer said. They too depend on donations, which are usually associated with the head of a corporation.

In fact, the Movement for Quality Government also sent a representative to warn the economic concentration committee about the danger of letting big business own media outlets. The movement presented a map of media holdings by the big conglomerates.

Mozi Wertheim, for instance, owns the Central Bottling Company (better known as Coca-Cola Israel ), a controlling stake in Bank Mizrahi-Tefahot, a chunk of Channel 2 broadcasting company Keshet, and the Channel 2 news corporation. The Ofer family owns The Israel Corporation - which controls Oil Refineries, Israel Chemicals and Zim Integrated Shipping Services - and a piece of the other Channel 2 broadcast company, Reshet. The IDB group, owned by Nochi Dankner, bought the controlling interest in publishing company Maariv earlier this year.

No, the prime minister shouldn't ask Nochi

Owning a media outlet enables big business to manipulate public opinion for or against certain politicians, argued the Movement for Quality Government.

The movement also criticized the relationships between big business and politicians, and dismissed the suggestion by Dr. Yakov Sheinin in his opinion paper the IDB group presented to the committee: "The prime minister should summon Dankner at least three times a year."

MK Anat Wilf (Atzmaut ) spoke to the committee about how the intensely concentrated Israeli economy affects politics and the public debate; she said the tycoons who own media outlets don't hesitate to use that power as they see fit.

Wilf recently commissioned a research paper from the Knesset's research center analyzing the ramifications of economic concentration and big business' ownership of media outlets in Israel.

The study was conducted by the economist Tamir Agmon and the head of the budget development department, Ami Zadik. They found that economic concentration can shackle freedom of expression, manipulate news coverage in favor of economic interests, divert advertising money and gag politicians.

The puppeteers

In fact, a number of Knesset members have been issuing similar warnings as Lachman-Messer, Wilf and the Movement for Quality Government. During a Knesset Finance Committee debate on economic concentration two months ago, chairman Moshe Gafni (United Torah Judaism ) warned that big groups that own financial interests, nonfinancial interests and media outlets could gain control of the economy.

If no solution is found for economic concentration, Gafni warned, Israel could wind up a dictatorship - of business interests. The government could find itself unable to control the economy; it would become the puppet of a few families. There is also a danger that the families controlling the conglomerates would shield themselves from critique through their ownership of the media, Gafni added.

MK Zahava Gal-On (Meretz ), also a member of the Finance Committee, boiled the issue down: "The real problem with economic concentration is the ties between big money and government." It is up to the political system to sever those ties once and for all: no more donation events. Politicians have to stop rubbing shoulders with the rich and powerful. "No more politicians looking out for themselves, making millions after having made billions for the tycoons," she said. "If government cannot wean itself from the affluent, the public will send it home and lose confidence in the democratic system."

Last month MK Carmel Shama-Hacohen (Likud ) also expressed fears about undue influence by business interests over news coverage. "If the owner of a newspaper also owns an insurance company," he said, "how can the newspaper he owns cover other insurance companies properly? If he owes money to the banks, how can his newspaper cover the banks?"

Why buy a corpse?

The worst is when a tycoon buys a media outlet that's been bleeding money for years.

One has to ask why he would do a thing like that: What interest does he have getting involved in a hemorrhaging company? What interest would a savvy businessman with a knack for making money have with a company losing hundreds of millions of shekels? "The question must be asked if the tycoon is buying the company to gain influence over the political system, the business system and regulation," Shama-Hacohen said.

He said the Knesset should clap constraints on cross-holdings by business barons and vowed that the Knesset Economics Committee, which he chairs, will be discussing the issue.