If I were to specify Israel’s biggest economic failure, it’s the failure to build the Tel-Aviv-area subway.
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Not having the system harms our quality of life and costs us billions. It forces us to own cars to get to work, leaves us stranded in endless traffic jams, makes parking a problem, wastes costly gasoline, causes accidents and fouls the air and the environment as a whole.
And it’s all because our leaders have no regard for us, even just before an election.
The failure began during Prime Minister Golda Meir’s time. In April 1973, her cabinet celebrated its decision to build a subway in Tel Aviv - but since then, little has been done.
After 30 years of empty promises, the government concluded that it was incapable of mounting such a large and complicated project. So it transferred responsibility to a private developer, as is accepted practice elsewhere in the West.
In 2006, MTS, the most experienced of the bidders, a consortium comprised of four international firms and two Israeli ones, was awarded the job.
But in 2008, the global economic crisis hit and the group’s financing costs rose sharply. It asked the Finance Ministry for an additional 400 million shekels ($103 million at current exchange rates), although it was ready to compromise at 300 million shekels and committed to complete the project in 2016.
At the time, the project cost was estimated at 10.7 billion shekels, so the additional 300 million would have brought it to 11 billion shekels. But the people at the Finance Ministry (particularly Deputy Accountant General Gil Shabtai) refused the demand and the project stalled.
The ministry’s economists made a bad mistake.
Transportation Minister Yisrael Katz then saw a political opportunity (involving appointments and power), and he persuaded the cabinet to transfer the project to NTA, a government corporation.
At the time, in October 2010, I wrote in Haaretz that the decision spelled “a delay of several years in the best case, and the reasonable prospect of the project not being carried out at all.” I added that “there will be political appointments and huge waste and budget problems.”
That didn’t ruffle Katz: He said NTA was an excellent company. But the project has gone from bad to worse. Most of the appointments have been political, the waste has been endless and the business decisions emit a foul sense of corruption.
NTA’s chairman, Alex Wiznitzer, was recently arrested in connection with the corruption case implicating figures in the Yisrael Beiteinu Party, and he resigned. The budget for the project has jumped to 16.1 billion shekels and the forecast now is that the trains will not be up and running until 2020.
So instead of paying 300 million shekels more to the prior project developer and having a subway system operational next year, we will pay another 5 billion and wait years.
The disgraceful situation brought Amir Levy, the Finance Ministry’s budget director, to the conclusion that with NTA in charge, the project would never be completed. He therefore recently intervened and demanded a change.
Levy wants NTA to deal only with excavating the tunnels for the lines and building the stations, while the subway cars, the technical systems, the maintenance and the operations would be carried out by a single private company to be chosen by public bid.
But Katz is balking. He doesn’t want to give up the huge power base he has created.
In fact a much more radical solution is needed. We need to immediately rescind the contract with NTA and return to the model making a private developer responsible for everything: excavations, stations, train cars and operation of the system.
At the same time, we need to change the entire approach to the project. It shouldn’t be another ridiculous light-rail system, with a portion above ground, another part in underground tunnels and a third part open to the air but submerged.
Such a system isn’t economical and doesn’t exist in any similar metropolitan area.
Greater Tel Aviv needs a full subway. It’s a shame that Katz refuses to understand this.