Israel's New Finance Minister Is Facing a Difficult Challenge

In view of the forces that will act against Moshe Kahlon, he will have to remain loyal to the interests of the broad public that elected him.

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Moshe Kahlon, January 8, 2015.
Moshe Kahlon, January 8, 2015.Credit: Moti Milrod

The first appointment Prime Minister Benjamin Netanyahu announced was that of Moshe Kahlon as finance minister. Kahlon will enter office after a successful term as communications minister, due to the cellular revolution he brought about, and an unremarkable term as social affairs minister.

His term as finance minister is expected to be harder and less glamorous than his tenure as communications minister.

First, Kahlon, leader of Kulanu, is not part of the ruling Likud party. It was because of Netanyahu that Kahlon left Likud, and his relations with the prime minister have known ups and especially downs. Kahlon was one of the first to experience the prime minister’s dubious reliability and the difficulty of developing alongside him. To make really major moves Kahlon will need Netanyahu’s support and it is to be hoped that he will receive it.

An added challenge is the fact that the ultra-Orthodox United Torah Judaism is likely to receive the post of Knesset Finance Committee chairman, as part of the coalition negotiations. This party has promised to work in harmony with Kahlon, but an experienced politician such as himself probably knows that political alliances are a fluid matter, subject to interests.

The new finance minister is inheriting a growing economy whose situation is good compared to that of other developed countries. But it’s an economy whose advantages do not permeate all of society. A cost of living that burdens most people, competition-stifling monopolies and cartels, a polarized labor market, fluctuating from overly protected workers to workers without rights, a bloated, ineffective civil sector, etc. – all these are some of the problems Kahlon will have to deal with. In addition there’s housing, the most urgent problem on the economic agenda, which is split among several ministries. The new finance minister will have to take on a strong organization like the Israel Lands Authority, whose dismantling is crucial to solving the problem. He will also have to continue the work started by his predecessor – dissolving and nationalizing the lands of the Jewish National Fund, which has become an irrelevant, corruption-riddled apparatus.

Kahlon will also need considerable resolve in carrying out the banking reform, which was one of his election promises. Standing up to the banks’ strong lobby, opening the market to competition and releasing it from the ruling duopoly will be tougher challenges than his struggle with the cellular companies back when he was communications minister.

Kahlon has the potential to be an excellent finance minister. He supports reforms, which are always preferable to randomly increasing the deficit, and has social sensitivity and concern for the needy. In view of the forces that will act against him, he will have to remain loyal to the interests of the broad public that elected him. It’s important that Netanyahu back him up.

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