Analysis |

Ex-Jerusalem Mayor Almost Became Finance Minister. But Then Netanyahu Got Cold Feet

Barkat was so close, but then the PM settled on nominating him in the future, maybe

Sami Peretz
Sami Peretz
Nir Barkat.
Nir Barkat.Credit: Ofer Vaknin
Sami Peretz
Sami Peretz

Prime Minister Benjamin Netanyahu isn’t known for his generosity in awarding cabinet portfolios. That is especially so with people who show too much ambition. His attitude toward appointments is entirely instrumental: He’ll only name someone to a post if it’s in his current interests. If not, then there’s no appointment at all.

Netanyahu’s announcement on Thursday that he would name Nir Barkat finance minister if he forms the next government should be understood in this context. Why does Netanyahu need to name his finance minister now?

The last time he made such a commitment to name a finance minister was ahead of the 2015 elections when Moshe Kahlon was Israel’s most popular politician, the man who had slashed cellphone rates and whose party was poised to win a lot of Knesset seats at the Likud’s expense.

Kahlon got the job, but his popularity has since plummeted. In last April’s elections his Kulanu Party went from 10 Knesset seats to four. Ahead of the September election he merged Kulanu into the Likud, and ahead of the March election announced he was retiring from politics.

Revelations last month about his ties with Eti Craif, a judge suspected of granting sexual favors to secure her appointment to the court, was the final nail in Kahlon’s political coffin. But the fact is that for last year he’s lost interest in the treasury job entirely.

Under the circumstances, it would have been an excellent opportunity for Netanyahu to give someone else the job. He’s named new ministers for all the key portfolios – Yisrael Katz at the Foreign Ministry, Naftali Bennett at Defense, Amir Ohana at Justice and Rafi Peretz at Education.

He could have easily named Barkat or someone else for the treasury, except that Kahlon turned out not to be too anxious to give up the job – certainly not to Nir Barkat, with whom he battled when the latter was mayor of Jerusalem.

Kahlon wants to stage manage his exit such that he will be remembered as a successful, socially oriented finance minister. He doesn’t want Barkat occupying his old office and blackening his name.

The treasury could use new blood at the top to push forward reforms. But Netanyahu has stalled, as is his wont. He doesn’t want to upset other Likud leaders resentful at Barkat’s rise. There has to be some benefit for Netanyahu to justify the anger it will elicit.

Two things brought Netanyahu to his decision – one is that Kahlon is no longer serving Netanyahu’s purposes as a vote getter, and the other is Kahlon Lavan’s decision last week to campaign on other issues beside “just not Bibi,” and throw a spotlight on the failings of the country’s healthcare system.

Netanyahu responded by pulling the Barkat card and broadcasting a message that he plans an economic program that not only addresses healthcare issues but “dramatically” reduces housing prices and the cost of living, “giant investment” in the Galilee, Negev and West Bank, and investment in small business and high-tech.

On Sunday, Barkat provided some more details. A Likud government will lower food prices by lowering duties on imports, reducing regulations and more subsidies for farmers. He will break up monopolies. In housing, Barkat promised a “wholesale release” of state-owned land and to devolve more power to local authorities.

“We’re here to take the Israeli economy another step forward,” he declared. Over the past year, Barkat has worked with the Harvard University economist Michael Porter on a plan to leverage Israel’s competitive edge in the world economy. He thinks he can succeed in housing and food where Kahlon failed.

It’s hard to take these promises very seriously. Kahlon raised the number of housing starts, but failed to bring down prices by much. It makes a good campaign slogan, but Netanyahu has never been interested in actually bringing down home prices. He knows existing homeowners like seeing their equity rise in value.

Three questions

Barkat’s prospective appointment raises three questions: Why him? Why now? And, is it for real?

Anything Netanyahu says before an election has only a single purpose – to increase his prospects on Election Day. He did it in 2013 when he said he would name Kahlon chairman of the Israel Lands Authority so he could reduce housing prices like he did cellphone rates. He did it again last September when he announced that Moshe Feiglin would be named a minister if he dropped his Knesset campaign. Neither promise was kept.

Barkat’s future appointment is aimed at voters of the center or soft right, He’s a successful businessman from the high-tech sector, not a settler or divisive figure.

It’s the lot of every finance minister to have his successor blame him for all the troubles the successor is grappling with. Kahlon’s successor will have a lot of problems to blame him for – the need to cut spending, raise taxes, contend with the defense establishment over its money demands and battle with the labor unions.

Kahlon accepts that this is the way of finance ministers, but he fears that Barkat will lay it on extra thick. As it is, Kahlon has been disparaged over the last year for everything from the deficit to the housing market. But he doesn’t want Barkat to use the pulpit of the treasury to brand him a bad finance minister.

Hanging on as long as possible

But more than that, Kahlon has a perfectly good fiscal reason to hang on for as long as possible. Because there is no 2020 budget, the government is operating according to the 2019 budget, month by month. The result is that since January 1, there have been no spending increases and appropriations are being tightly controlled. The budget deficit will be coming down and may even come in close to target for a change in 2020.

Kahlon doesn’t have to lift a finger to do this – the law gives the treasury no choice. But no matter, it will enable him to leave office with the government’s finances looking better.

And for Likud, keeping Barkat out of the treasury avoids embarrassing the party with attacks on Kahlon’s record before the election. Instead, Barkat is happily promising economic miracle cures to the voters,

What remains to be seen is whether Kahol Lavan can exploit the situation to present an even more attractive socioeconomic program. To date it has focused on national security (due to its preponderance of generals at the top) and crime (due to Netanyahu’s indictment).

On economic and social issues, the party has little to say. In the two weeks left till the polls open, they should start talking.

Avi Waksman contributed to this report.

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