Barnea Takes Lead in Central Bank Race

Candidate for governor knows both the business world and academia

The drama in the race for Bank of Israel governor increased over the weekend as the short list of candidates gained one more name: Professor Amir Barnea.

The respective directors-general of the Finance Ministry and Prime Minister's Office, Yossi Bachar and Ilan Cohen, met with Barnea over the weekend at a Tel Aviv cafe to discuss his candidacy. It is possible that they discussed actually appointing him.

Barnea has emerged as a suitable candidate for the post, based on discussions between the two and others in the loop, because he is well-acquainted with both the academic and business sides of the banking world, and he understands the banking system thoroughly. However, the two directors-general fear that Barnea's network of connections with various businessmen is liable to present a conflict of interest and ultimately inhibit his functioning on the job.

The two checked out how much this issue could interfere with Barnea's performance. If they are convinced that the conflict-of-interest obstacle can be overcome, Barnea will likely emerge as the leading candidate.

At this stage two other candidates stand out: David Klein, the current governor, and Dr. Avi Ben-Bassat, formerly a senior board member of the Bank of Israel and formerly the central bank's senior director of its research department and foreign currency department.

Klein and Ben-Bassat have an advantage as pure economists, untainted by conflict of interest issues, as figures who never had connections with the business community. Barnea, in contrast, has been involved in many business initiatives, including the founding the Singer-Barnea investment house in the mid-'90s in conjunction with Shalom Singer, who has served as the Finance Ministry's director-general and as CEO of the First International Bank of Israel. Barnea served as external assessor in 2002 to the Dankner family, evaluating Bank Hapoalim, and as consultant to Shlomo Eliahu regarding the state of insurance corporation Avner-Motor Vehicle Accident Victims Insurance.

Barnea has ties in the banking sector and is well-acquainted with banking executives, as well.

The governor is to be selected no later than January 12, and so before that date, Cohen and Bachar will name their choice and bring the matter to the government for approval.