Taking Stock /Zelekha's Train of Thought

Everybody hears it - the Likud machers, the other parties, the developers; it's the sound of NIS 24 billion chugging down the track.

The managers of Israel Railways are disgruntled. The accountant-general at the treasury, Yaron Zelekha, has decided to appoint a foreign company to oversee the train's budget. "Zelekha has decided to manage the train from the treasury," they snarl.

Goodness. How terrible.

We are long used to saluting the slogan, "infrastructure," let alone the ultra-slogan "railways." Everything in Israel is up for debate, except the train system. Say growth and you're saying train; say train and you're saying progress; you're saying an end to traffic jams. Say train and be crowned the real thing - a genuine, real McYossi economist.

Zelekha's enemies, and they've been multiplying at astonishing speed of late, say he's a childish, condescending megalomaniac. If you meet him, you're also likely to think he's overly blessed with self-confidence, especially as every few minutes he angrily declaims, "They have nothing to teach me; I came from the business sector."

Zelekha, all of 33, may have to grow up a little and learn to walk the corridors of real power more adroitly; but one thing is clear: This is one government official who doesn't go rampaging with the gang. He has principles.

How things are done

Treasury officials have always enjoyed the image of consummate professionalism, honesty and a deep understanding of economics. But anybody not blinded by naivete also knows that wheeling and dealing and under-the-table accords are the way the consummate pros of the treasury deal with the business sector, and with the rest of the government feeding directly and indirectly off the taxpayer's table.

A few weeks after Zelekha abandoned business for his powerful position, it transpired that he did not shy from confronting the powers that be in big business and government to protect his principles. His unconventional behavior seriously annoys most of his treasury colleagues, leading businessmen with contacts in Jerusalem, and also the former treasury officials scattered throughout the business sector.

When he took the reins, Zelekha instituted a few reforms in the way the state deals with business. Namely, he insisted that a contract is a contract and should be honored. He went to war with the common practice of signing a contract with confidence that it would be breached and amended. Nor did he accept the system of paying a little more here and there.

Lovely principles; now all that remains is to see whether they are practical.

With his latest assault, on the trains budget, Zelekha seems to have hit the bulls-eye. The government has approved an astronomical budget of NIS 24 billion, which is controlled by Israel Railways chairman Moshe Leon. Most amusingly, Leon, like Zelekha, is very close to Finance Minister Benjamin Netanyahu. The budget is also controlled by the railway's general manager, Yossi Mor.

That NIS 24 billion looks like excellent ground for one of the state comptroller's juicier reports on public sector malfeasance - not the coming report, of course; the state comptroller's province is archaeology. It will take years before the comptroller notices that countless billions have been squandered, years after the contractors and developers have retired to beachfront homes in the Caribbean.

The best investment in town

With the help of hordes of naive economists and even some from the Bank of Israel itself, Israel Railways drummed up fantastic PR for itself as the best investment in town for government money. But that axiom bears reexamination, if only because everybody automatically accepts it.

A handful of less conventional economists claim it's 19th-century technology. Nor is it sure that drivers will abandon their cars for its joys; passengers will come from the buses instead. Nor is the connection between the train system and economic growth that obvious, they claim, and it isn't as environmentally friendly as one might think.

Zelekha protests that he has nothing against the plan to develop the rail system, but he is aware of the claims by detractors at Israel Railways itself, and at the Transport Ministry. He is also aware that the investment estimates are skewed upward, that some of the future train lines are economically unfeasible, and that some aren't necessary at all.

The only thing that's 100 percent certain is that the trains receive kid-glove treatment from the people controlling the public's money. Note the treasury decision not to book the train's costs as government expenditure, but as investment instead - meaning the billions to be spent in the years to come won't get into the budget book or appear in the deficit figures. They'll just pop up one day in the form of taxes, or in a higher government debt.

Zelekha is doing the right thing in aiming a giant spotlight at the train's NIS 24 billion budget before the thing leaves the station, and before hundreds of contractors and developers start building their island retirement mansions. Because despite all the superlatives heaped on the train, remember that at the end of the day, a shekel spent by government is a shekel taken from taxpayers, or another shekel added to the government's debt.