The Bottom Line / Standards for Sale

The most efficient barriers to competing imports are the invisible ones. Not tariffs, but licenses, quotas, bureaucracy, and the Standards Institute.

The most efficient barriers to competing imports are the invisible ones. Not tariffs, but licenses, quotas, bureaucracy, and the Standards Institute.

The declared role of the Standards Institute, headed by Ziva Patir, is to ensure quality of products, but its additional surreptitious role is to protect local firms, or in other words, to prevent imports of competing goods that could bring prices down.

The Institute does this by setting standards that are appropriate for the local manufacturer, sending importers on goose chases and collecting high fees for checking standards. This is a bloated (500 workers) state-owned body that amasses losses. It should have been split up ages ago, the standards part staying public, and the laboratory work privatized.

Last week, an investigation by Maariv unearthed corruption at the Institute. Fake certificates were distributed to contractors and freebies were handed out in return. The set-up prompted a friend of mine to tell a story of what happened to him at the Institute. In order to get a sealed room passed, he had to prove that it was fully sealed. He went to a private laboratory, which came and checked it, told him that it was not fully sealed, and that expensive alterations would have to be made. My friend then went to someone who "understands" these things, and he told him of a contractor who works with the Standards Institute. My friend called him and told him the problem. "I'll get you the certificate," was the prompt rely. "Don't worry. You'll pay through me for the Institute inspection and for my services."

And so it was. My friend paid, someone from the Institute came to do a check, the contractor's men and the inspector did something in the sealed room, and the certification arrived just a few days later in the mail. And my friend also knows that his sealed room isn't gas-proof.

l The consumer price index for October points to a situation of price stability. This year will finish with inflation of around 1.5 percent, and that's good news, despite what some say about too low an inflation rate bringing disaster of recession and unemployment.

One must remember that price stability is a prerequisite for stable long-term growth. To achieve this, the right monetary and fiscal policies must be chosen. The most outstanding benefits are for society: preserving the purchasing power of the wage earners and those on fixed incomes - precisely the poorer members of society that do not organize and speak out.

But low inflation is not enough for growth. In its latest issue, the Economist newspaper poured cold water on the rosey growth forecasts of the treasury. The prestigious publication forecast the Israeli economy will grow by just 3.3 percent this year, and 3.6 percent next - less than Benjamin Netanyahu's forecasts. And out of the 25 growing economies on their list, Israel is at number 24! Only South Africa comes under with growth of 2.8 percent.

So what are the chances of Netanyahu proving the Economist wrong? The chance lies with the disengagement that can stabilize the security situation, reduce uncertainty and increase investments and activity. In other words, Ariel Sharon could possibly be the one that saves Netanyahu from himself. The irony of politics.