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Why Does Netanyahu Envy His Former Protégé Lieberman?

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Benjamin Netanyahu and Avigdor Lieberman at a press conference in 2004.
Benjamin Netanyahu and Avigdor Lieberman at a press conference in 2004.Credit: Government Press Office

Benjamin Netanyahu can’t believe what’s happening to him: He sees his former aide shepherding through the cabinet a state budget filled with reforms, and his heart sinks. He sees the man he hired as director general of the Prime Minister’s Office in 1996 trying to steal his “Mr. Economy” title from him, and it drives him crazy. He watches one of the architects of the “regicide” who drove him from power emerge as a central figure in the government, and it’s killing him. Netanyahu looks at Avigdor Lieberman with bewilderment and sees the Netanyahu of 2003, the Netanyahu who passed a revolutionary budget heavy with reforms.

Netanyahu knows that 2003 was the last time he did anything important for the economy. He is aware that over the past 12 years he became a timid politician who fled before every opportunity for change or reform, to avoid upsetting anyone.

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All he can do now is to try to undermine Lieberman. He has proposed awarding the finance minister a “gold medal for global failure in economics,” but, in fact, the failure is Netanyahu’s. For two years, he failed to submit a state budget and bequeathed to us a giant deficit.

Now Lieberman comes along and presents a responsible (though imperfect) budget, which includes a narrowing deficit. The deficit is too big, but at least there’s a plan to reduce it.

Netanyahu is lying when he tells the new government “it’s hurting agriculture,” when in truth the plan to lower import tariffs on eggs and fresh produce while compensating farmers not only does no harm to the agricultural sector but will enable it to advance. Just as in the 1990s, when Israeli manufacturing was forced to modernize after being exposed to competition from imports.

Netanyahu knows the agricultural reforms are both good and necessary, and that he simply didn’t have the courage to introduce them. He also knows the farmers are misleading the public when they blame high food prices on middlemen. The Israel Competition Authority examined the issue of profit margins and found they were comparable to those in the United States and Europe. The problem is that local farm goods are protected by high tariff barriers, which discourage innovation and development and enable growers to demand sky-high prices. In the Netherlands, they grow eight times as many tomatoes per acre as in Israel.

Netanyahu claims that the government is “hurting the poor,” but that's fake news. Lower prices for eggs and for fruits and vegetables will mainly help lower-income people, most of whose income goes to buying food. Even the planned reforms to imports of cosmetics, electrical goods, soap and bicycles (which will no longer need approval from the Israel Standards Institute so long as the product meets Western standards) will benefit the poorest Israelis.

In 2003, Netanyahu raised the retirement age for men to 67, but he didn’t finish the job by doing the same for women. Fear of the women’s lobby prevented him. Now, Lieberman is doing what Netanyahu was too scared to try.

There are many other reforms contained in the state budget, such as the privatization of kashrut certification; increased spending on public transportation; a traffic tax in Tel Aviv; construction of the Gush Dan Metro; giving greater autonomy to school principals; the war on red tape; taxes on soft drinks and disposable tableware and an overhaul of vocational training.

There is more to do, including cutting wages and making it easier to fire workers in the public sector. And there is one scandal: the large increase in military pensions that Lieberman accepted. But the good greatly outweighs the bad.

Reforms aren’t laws of nature. If Benny Gantz, Merav Michaeli or Nitzan Horowitz were finance minister, reforms like Lieberman’s would never have gotten onto the agenda. The budget would have been one big spending party of grants, subsidies and massive deficits.

In other words, everything is personal. Only because Lieberman believes in free markets and competition are we are getting reforms. Only because he wants to be a success do we have a reasonable budget, while Netanyahu looks on with envy.

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