Finance Minister's Growth Recipe: Local Police to Boost Business

Steinitz proposes adopting Giuliani's model, says eradication of thugerry stimulates economy.

Finance Minister Yuval Steinitz is faced with the problem of how to stimulate the economy without spending huge sums and running up the deficit. He has said in internal ministry discussions that the solution lies in investing in infrastructure projects that bear fruit immediately, such as in roads and not in trains. But his novel idea is in investing in infrastructure to make citizens safer.

Steinitz has told his aides and confidantes that the best shot in the arm for the economy is eradicating violence and thuggery from Israeli streets.

The newly-minted finance minister claims this is how Rudolph Giuliani saved New York city when he was mayor from 1994 to 2002. Steinitz says the minute Giuliani stopped tolerating petty crimes such as purse snatching, breaking windows, extorting protection money, harassing subway passengers or illegal sidewalk stands - it not only improved the quality of life for New Yorkers but also helped create a period of prosperity in the Big Apple.

So Steinitz is preparing a plan to establish local, municipal police to take charge of law and order in the cities, provide security for residents, and will be under the authority of mayors. This is also infrastructure, and just as important as roads, says Steinitz.

Improved security and safety brings tourism, shopping and allows people to get out of the house more. A strong feeling of personal safety encourages citizens to open new businesses, since once they no longer have to pay protection their costs drop.

If people no longer have to worry about being run over while at the beach, more people will go to the beach and spend more. If you no longer are worried about being threatened at knife-point in the entertainment districts, you will go out more and business will grow.

In addition to infrastructure, Steinitz believes the most important reform must come in the Israel Lands Administration. In internal treasury meetings, he has proposed fully privatizing urban lands. This means all city-dwellers would pay a fee to the ILA and receive the complete and final rights to their property, instead of the present leases. City residents would no longer have to have any business with the ILA, and would find it easier to buy and sell, improve their properties or add on.

In addition, the ILA would be forced to put all its urban lands for sale via tenders to the public. The task of planning would be handed over to the buyers, and not the state. The idea is to increase the supply of land and lower its price.

Steinitz has also raised the problem of bureaucracy in the internal discussions, and his solution is to establish a committee to cut through the red tape. The committee will aid developers through the bureaucracy to allow quick investments during the present recession.

Other recommendations include fighting the use of foreign workers by focusing on the employers and not the workers themselves.

He also wants to take steps to relieve the credit shortage, though carefully. Steinitz has yet to decide how to encourage more credit, by directly providing state guarantees to the banks or guarantees for the credit the banks provide; but he has said he is worried that if we wait another six months without acting, good businesses will go under and the treasury will have to rescue them with state funds - so it is better to act now.