Note: The translations of articles from the Hebrew press
are prepared by the Government Press Office
as a service to foreign journalists in Israel.
They express the views of the authors.
Economics as War
(Op-ed by Gili Dinstein-Yaspe, "Ma'ariv", July 3, 1999, p.B7)
Frenkel wants to contain inflation, Shohat wants growth, Barak cannot
compromise between them. It will be interesting.
Listen very, very closely to Barak. He does not say much and he keeps his
cards close to his chest, but when he speaks one should listen. At the
conclusion of the cabinet meeting to discuss the economic plan, Barak
said, "Growth is the government's key objective." It may sound economic
and arid, but it is in fact a quite colorful statement. On the other side
of the battlefield stands Bank of Israel Governor Jacob Frenkel, who ought
to start wearing a flack-jacket.
For years, the Governor has spoken on every available stage that he merely
implements government policy. He wants to say: If the government sets an
inflation target, it should not wonder that I do everything in order to
achieve it. With Frenkel, everything is everything. He has no coalition
pressures to consider and no budgetary constraints. He has a clear target
to achieve a European level of inflation of 2% and he has two years
until the end of his second term to achieve it.
Furthermore, Frenkel who has already seen five prime ministers and six
finance ministers in the past eight years is not afraid of anyone. His
flag is to have Israel join the family of European inflation. The fact
that his flag does not fly harmoniously with the flag of Barak and Shohat
does not really interest him. His reputation as the man who contained
Israeli inflation interests him far more.
But there are two sides in war. Against Frenkel is the 1999 model Beiga
Shohat, as determined as ever, and dying to be the Finance Minister who
returns us to the days of growth and prosperity. Behind him stands a
strong prime minister who promised 300,000 jobs and intends to keep it.
Shohat and Barak know that high inflation and a deep recession are a sure
recipe for losing power and they will do everything to tighten the ring
around Frenkel.
"It is inconceivable that Frenkel should act in opposition to government
policy and do what he wants with the economy," says Shohat. Barak also
thinks so, even if he does not say so explicitly. Do you think that it
just so happened that recent newspaper headlines began to talk about the
Governor being fired?
Barak does not intend to fire Frenkel, but he certainly intends to make
his life difficult and make him toe the new government's political line,
which has replaced the goal of containing inflation with that of growth.
But Frenkel does not intend to kowtow. He simply does not know how. And
Shohat does not intend to give up. He simply cannot. And this time Barak
cannot split the difference.
So, what will happen? It will be interesting.