Upcoming Elections Expected to Put the Brakes on Immediate Prospect of Economic Reforms

MKs' attention is now focused on upcoming party primaries rather than legislative work.

With yesterday's decision to hold general elections on September 4, the Knesset is expected to disband next week, dashing prospects for legislative action on at least some proposals for major economic reform.

Among the items of unfinished business that were slated for decision are recommendations from the committee that examined economic concentration; a bill addressing losses that bondholders suffer when bond issuers seek to renegotiate their obligations; limits on senior executive pay; and legislation to streamline approval for minor construction projects.

MKs' attention is now focused on upcoming party primaries rather than legislative work. There is also the prospect that, in advance of the elections, Knesset members and their parties will attempt to pass populist bills that could break the treasury.

Knesset Speaker Reuven Rivlin (Likud ) cautioned his fellow MKs against a populist election mode. He said legislation would now only be considered if he receives a government request or if he feels certain it is an issue that would garner majority support. He said Knesset elections were moved up to this fall because of difficulties in passing a state budget. By law, elections could have waited until fall next year.

"The public purse is in deficit because of a decline in state revenues and demands for changes in priorities that were put on the agenda following the recommendations of the Trajtenberg committee," Rivlin said, referring to the panel chaired by Manuel Trajtenberg to address the high cost of living in Israel and related social-welfare issues.

The chairman of the Knesset Finance Committee, Moshe Gafni (United Torah Judaism ), said there is no logic in holding early elections because there is no prospect that voters will cast their ballots for a real change in the government. He said the elections will increase the influence of government bureaucrats and do damage to the economy.

"I'm not afraid of elections," he said, but added: "There is no justification for stopping the upcoming reforms on the way just so one party or another can pick up one or two more Knesset seats." Gafni also said the government can ask Rivlin to reconvene the Knesset during the election recess to pass government bills, but in an election atmosphere it is doubtful the government would deal with them.

Political sources also said it is unlikely that MKs would pass reform legislation during an election campaign that would affect the power and the wallets of the country's business tycoons.

Last week the cabinet did in fact approve the recommendations of the economic concentration committee, which are aimed in part at curbing the power of pyramid-shaped corporate holdings in which controlling shareholders are able to dominate vast corporate empires with a relatively small investment. The committee also recommended limits on cross-ownership of major financial and non-financial companies, and measures to increase competition between them.

Prime Minister Benjamin Netanyahu entrusted a team of cabinet ministers to draft a government bill on the recommendations, but the work is not now expected to be wrapped up before the Knesset disbands. Government sources acknowledge that Netanyahu could ask that the Knesset reconvene during election season to pass such a bill, at least giving initial approval on first reading. If passed on first reading, procedure allows the bill to be taken up again by the newly elected parliament. Final passage requires votes on three readings.

Knesset sources expressed concern that if such legislation did not pass on first reading before the elections it could die in the next Knesset or be watered down in a way that would serve the interests of corporate tycoons.

The Prime Minister's Office said in response that Netanyahu was currently in the middle of the seven-day mourning period following the death of his father and was not currently dealing with the matter.

Labor Party chairwoman Shelly Yacimovich said she would press for tougher legislation based on the economic concentration committee's recommendations after the elections. "The committee recommendations not being passed during this Knesset are one thing there's no reason to cry over," she said. "It was clear from the beginning that Netanyahu had no intention of dealing with the issue. Netanyahu knew very well when the recommendations were approved [by the cabinet] that elections were coming up and that the recommendations were not worth the paper they were written on."

Yacimovich also said the committee recommendations were too weak in dealing with the issue of preventing transactions where those involved have a separate, personal financial interest. She said this issue is the most problematic aspect of economic concentration, enabling holders of capital to "exploit the public in favor of their personal enrichment," as she put it.

Meretz chairwoman Zahava Gal-On called for the Knesset to vote on the legislation on first reading before the Knesset disbands.

Kadima leader Shaul Mofaz's office did not comment, but the new Yesh Atid party headed by former journalist Yair Lapid, who is running for the Knesset for the first time, went on record supporting the concentration committee's recommendations.