Lieberman's 'Good' Economics Is Bad for Israel

Nehemia Shtrasler
Nehemia Shtrasler
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Finance Minister Avigdor Lieberman in the Knesset.
Finance Minister Avigdor Lieberman in the Knesset.Credit: Ohad Zwigenberg
Nehemia Shtrasler
Nehemia Shtrasler

The biggest blow from the omicron variant to the global economy comes in reminding us how much we need a “bad” finance minister who guards the coffers. Finance Minister Avigdor Lieberman assumed the role of the “bad guy” during the first months of his term. He rarely surrendered to pressure, refrained from distributing gifts and didn’t increase deficits. In that way he maintained the stability of the economy and the transition to high growth and a decline in unemployment.

However, Lieberman’s most recent decisions raise the question of whether he wants to continue to be “bad,” or has decided to be “good,” to gain the affection of the public for the short term, at the expense of the economy and of budgetary responsibility.

'Biggest change since COVID started': What's Omicron and how to beat it. LISTEN

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The outbreak of omicron has sent the global economy backwards, into the bad days of 2020, when airports were closed, lockdowns were imposed and economic activity was suffocated. The first to react were the global stock markets, which fell on Friday, and then recovered. The price of oil also plummeted by 12 percent and commodity prices dropped. That, incidentally, is good news. It pours cold water on the media hysteria which erroneously claims that we are facing a new wave of inflation.

And in fact, inflation is not the problem. The fear is of a global recession. After all, the global economy is emerging only now, with great difficulty, from two bad years of low growth and high unemployment. Just now Christmas celebrations have begun all over the Christian world, which are mainly one big shopping spree, and now boom! The Christmas markets are closing for fear of omicron, tourists are staying home, hotels are empty and people are afraid to go shopping.

Here, too, the tourism industry has been hit the hardest. The airport has been closed to the entry of tourists, and December, which was supposed to be the month of recovery for the industry, is turning into the month of a major crisis for hotels, airlines, tourist restaurants and tour guides.

The policy of Prime Minister Naftali Bennett is to avoid harming local activity, but the damage exists. The 350,000 people who are employed in the tourism industry directly and indirectly are suffering. They can’t work remotely. They are once again becoming unemployed. Bennett says that closing the airport and the new restrictions “will have a certain economic price” and that “We are prepared to help anyone who is harmed.”

But Ram Belinkov, director-general of the Finance Ministry, says there are no reserves in the budget for an additional compensation allowance. It is also clear that fear of becoming infected by omicron is already now causing the general public to go out less, to buy less, all of which will lead to a decrease in tax revenues and an increase in unemployment and the deficit.

And here we should discuss Lieberman’s latest decisions. He gave a very large increase to the Defense Ministry budget, and agreed to launder the “chief of staff additions” for members of the regular army, without making an exception of those serving in the Defense Ministry headquarters in Tel Aviv and on the home front.

Only a month ago, after being asked when soldiers doing mandatory service would receive a raise in pay, he replied angrily, “Don’t stand there with a stopwatch.” At the time he also said the soldiers’ salaries would be updated only toward 2023, because 2022 is a “very pressured budgetary year.” But recently he gave in to the pressure and raised the soldiers’ salaries beginning in January, contrary to the opinion of senior treasury officials.

Lieberman even announced that there are other groups of workers who deserve a pay hike, such as management and maintenance employees in the hospitals and young teachers. He has to understand that it’s not his job to point out those who are being shortchanged; it’s the job of the appointed minister. His job is to confront that minister and say “no,” and in the end to reach a fair compromise.

The outbreak of omicron teaches us we have to keep large reserves in the budget for such cases, rather than eliminating them even before the start of the year. Lieberman has to understand that a “bad” finance minister is really a good finance minister.

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