Instead of Real Capitalism and Lower Prices, Israelis Get Noodles and Lies

Yair Lapid is the kind of finance minister whom business leaders have for breakfast. Or in a recent case, a pasta lunch that the people pay for.

Daniel Chechik

“We didn’t talk business, we talked about Zionism, values and commitment to the community,” the finance minister waxed lyrical while describing a meeting with Dan Propper, chairman of food conglomerate Osem.

Propper probably had to try hard not to burst out laughing. He’s had finance ministers far more shrewd than Yair Lapid for breakfast. Still, he listened attentively to Lapid’s comments about “Zionism and commitment” as he thought about what to do with the 46 million shekels ($12 million) he had demanded from Lapid as a condition for setting up a new plant in Arad.

Lapid isn’t fazed by 46 million shekels. After all, he blithely wasted 2.5 billion shekels on his proposal for zero value-added tax for certain home buyers, so what’s another 46 million?

The law for encouraging capital investment, under which grants for establishing plants only go to businesses that will export at least 25 percent of production, doesn’t seem to register with him. Everyone knows that no exports will come out of Osem’s new venture, and the economy won’t benefit from the move to Arad. But laws are there to be circumvented, aren’t they?

The media are reporting about the establishment of a new plant, but in reality this is just the shifting and upgrading of an ice cream factory from Be’er Tuvia to Arad. In other words, 200 unemployed people in Be’er Tuvia will replace 200 unemployed people in Arad. For this we’ll pay 46 million shekels.

Olivier Fitoussi

Of course, the Proppers, Dan especially, have been instrumental in Israel’s industrial development. The problem is, they also have helped inflate our cost of living.

Until the 1990s, anyone desiring a helping of pasta needed to fly to Rome. The Proppers got legislation passed prohibiting the import of pasta, claiming they were only protecting their workers in Yokne’am. In reality, they were seeking more profits. As a result, we had to eat low-grade noodles at exorbitant prices, while the rest of the world consumed high-grade durum wheat pasta.

Only in August 1990 did Industry and Trade Minister Moshe Nissim muster up the strength to one-up the Proppers and allow pasta imports. But the Proppers pushed through a high tariff that made pasta very expensive, so Osem continued selling noodles at inflated prices while taking over the import market — a resounding failure by the antitrust commissioner.

A few days ago the current commissioner, David Gilo, said the public should boycott products that are too expensive. He forgot to mention that he was one of the people responsible for the high prices.

In the old days, Osem only produced pasta and salty snacks. Over the years, thanks to profits in the pasta business, it acquired dozens of food companies and brands such as Beit Hashita pickles, Vitaminchick syrups and Tzabar salads. It has also benefited from imported items such as Taster’s Choice coffee and breakfast cereals and ice creams produced by Nestle, which in the meantime took over Osem.

If all past antitrust commissioners had done their job they would have blocked these takeovers and prevented Osem from becoming a giant that food retailers are dependent on. But the commissioners were caught napping, leading to the domination of food retailing by five large players, one of them Osem. The result is limited competition and inflated prices.

So now Gilo is calling on us to boycott expensive items? He’s offering advice after falling asleep on the job?

Propper will apparently soon receive another gift from the state. Lapid will sell us a story of how he saved Arad. Ice cream will become more expensive and the cost of living will rise. We’ll be served another helping of Osem’s noodles and lies.