Netanyahu: Economic Reforms Are Vital

WASHINGTON - As developed economies experience changes that make them more open and more competitive, so Israel is meeting the challenge of change too.

WASHINGTON - As developed economies experience changes that make them more open and more competitive, so Israel is meeting the challenge of change too. This is the message Finance Minister Benjamin Netanyahu wants to project at the IMF (International Monetary Fund) annual meeting which opens here on Sunday.

"My goal on my trip to Washington is to tell the world's finance ministers that Israel has a rising economy and it's worthwhile for them to do business with us," Netanyahu told Haaretz in an interview in advance of the IMF conference.

The minister clearly spelled out the end of an economy based on excessive welfare handouts that relied on the idea that `someone else will pay'. "There isn't someone else," he said, adding that the reforms were vital.

"Everything we are doing now has already been done over the past 20 years in other countries that have surged forward, from New Zealand to Chile," he said. "In the past, Israel was a `bad' country for business - with its Histadrut, taxes, welfare - and things could not go on this way. On the other hand, we have the advantage of being a technological country, and if we combine this with a pro-business climate, our economy will also surge forward. That is the message I want to send in Washington - look at us, see the changes."

"I speak with businessmen who tell me the only reason they come to Israel to invest and do business is because they understand the economy is changing," he added.

"In the global context, we are considered one of the most reformist countries today. It interests all the international business community. The economy is growing, we are creating 80,000 places of work a year - the world is talking about it. Everywhere I go I hear people saying about Israel, `finally they're changing the face of the economy.'"

But there is at least one body that doesn't seem to relish this change - Netanyahu clearly has no love for the Histadrut labor federation.

"If there is someone trying to delay changing the economy today, that's the Histadrut. It doesn't hesitate to dismiss its own staff, but it's quick to fire off a television campaign to raise the minimum wage. We are talking about a kiss of death for the economy. You cannot compete when the minimum wage is rising.

"It also introduces an insupportable temptation to employ cheaper foreign workers. Raising the minimum wage will increase production costs for Israeli industry, and it will jeopardize our global competitiveness. The result will be job losses and unemployment."

Netanyahu, who once compared the economy with an oversized public sector to a thin man carrying a fat man on his back, now chose a sporting analogy.

"Imagine [Israeli pole vaulter] Averbukh starts running with the pole, just about to make his leap, and someone comes and shoves the pole - Averbukh fails, doesn't make the height. That's what the Histadrut is doing now, they are trying to move the pole just when we are about to take off."

The last strike proved that the Histadrut has great power to shut the economy down whenever it pleases.

"This has to be changed by law. Otherwise, this isn't a state. It's madness. A group of gangsters and hypocrites is oppressing workers everywhere, preventing a recovery program that would save the workers, shutting down the economy and sending factories fleeing, causing the most strikes in the world, while the entire rest of the world is streamlining and competing, and there's a free flow of products and goods. We can't continue this way.

"The industrialists agree with me, but aren't standing with me. Essentially, I'm fighting a one-man battle for the country's future. That's how I feel."

He returns to the Histadrut as Nemesis. "What does the Histadrut want exactly to happen here, do they think someone will let us live like this? We'll just get trampled over by billions of Chinese and billions of Indians...

"Who could come to a country of high taxes, insane bureaucracy and swollen unions? Who would come to such a country? What are they thinking in the Histadrut, that they'll send us back to Clerksville? Histadrutstan? Welfare-handout-land? We simply don't have an existence if we do not make these necessary changes."

How do you relate to the hunger that we see all around us?

"It's 20-30 percent true, but 70-80 percent a lie by people who don't want to go to work. Under the Wisconsin plan, we will bring in a private company that will be paid for every person who goes to work. We will thereby reduce the number of unemployed and poor people."

We have growth of 4 percent a year, but it's not stable, and doesn't penetrate all sectors. If we don't reach growth of 6 percent, then unemployment cannot fall. Shouldn't that be your main objective?

"To start getting unemployment down I don't need growth of 6 percent. I can lower unemployment with 4 percent growth. At 5 percent, the drop will be sharp, and 5 percent growth is attainable if I bring in banking refroms and port reforms - so long as oil does not reach $50-60 a barrel."

If the reforms are so vital, why have they stopped? The ports have not yet been broken into three; in the electricity sector, there's no movement; the banks aren't sold; no-one's dealing with the Airports Authority, and nothing's happening with Oil Refineries or the Israel Lands Administration.

"Oil Refineries we will split up, and there is already much interest in the Ashdod refinery. Regarding the Israel Electric Corporation, we will soon appoint a chairman who will help us complete the sector reforms, the splitting up..."

Such as Uzi Cohen [as IEC chair]?

"It will not be a member of any political central committee, not even in that direction. It will be an excellent individual. First let's finish dealing with the ports, and then we'll tackle the Airports Authority. The Israel Lands Administration is in the hands of [Industry Minister] Ehud Olmert."

And what about the ports? In practice, nothing has actually been implemented.

"There could be another strike there, and then we will have to call all our shots. The media glorified the man that broke the law, that defied the Labor Court's ruling [Histadrut chair Amir Peretz], who prevented for weeks signing recovery programs that would have hurried wages to the workers.

"The media praised him, this man with no reservations or limits. He is simply tearing the economy into pieces, forever creating new layers of poor with their welfare demands, creating unemployment".

And on a personal note, is the minister in favor of disengagement from Gaza?

"I will support the disengagement, according to the stages agreed in government. After the first stage, if there is a catastrophe, Sharon will stop it, not me. If there's no catastrophe, we'll advance to stage two, and then three, and four.

"The public wants to leave Gaza. Gaza is gone. The question is whether we go with it - in other words, will the county be set ablaze with internal strife. Therefore, we need a referendum in order to reach a wide consensus."