Photo Credit: Yonatan Sindel/Flash90
Prime Minister Benjamin Netanyahu and today's Finance Minister Yisrael Katz, May 30, 2019.

The confrontation between Finance Minister Israel Katz and the Finance Ministry’s budget chief Shaul Meridor, which eventually led to his resignation on Sunday, was conducted out in the open in recent months. It reflected a contrast in styles between the two men, and also gave the impression of one of them trying to run a china shop while the other was, well, being bullish.

It certainly did not help the Israeli government project a positive front before the various credit rating agencies, which have been sending nervous signals over the past few months, especially in light of the Israeli government’s failure to produce a budget.

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On Sunday, it was reported that Finance Minister Katz had approached Attorney General Mandelblit to initiate dismissal proceedings against Meridor. A few hours later, Meridor published his unprecedented, scathing letter to and against the minister, marking the peak of the hostilities between the two.

Former budgets director at the Finance Ministry Shaul Meridor, December 11, 2017. / Yonatan Sindel/Flash90

Meridor told Katz in his letter of resignation: “In recent months, and even more so in recent weeks, my ability to perform my duties as head of the budget department has become impossible. Unfortunately, you do not allow me and many other public servants in the various divisions of the Finance Ministry and other government ministries to do what we know – formulate, propose, analyze and criticize policy measures that would enable the Israeli economy to survive the period of severe economic crisis that befalls it, along with support for the national effort to effectively address the corona pandemic.”

Meridor warned that “decision-making processes these days are affected by narrow, irrelevant, short-term interests, along with the silencing of the professional echelon, blatant disregard for professional staff, shooting from the hip, trampling on the budgetary means and rules that have been the guiding light for Israeli economists for decades.”

“The message to the business sector, to the citizens of Israel and to the world is one of tearing down all our principles, frameworks and boundaries – and trampling on the values, rules and norms of a public service that works for the general public,” Meridor wrote.

“Despite our unequivocal recommendations on the need for a substantive discussion within the budget’s framework, as a background for decisions on the use of additional means, and in accordance with the recommendation of all serious economic experts in Israel and around the world,” Meridor wrote, “Every week I’ve been horrified to discover that the budget framework had changed without any discussion, orderly thinking or long-term planning.”

“In recent days, and after more and more red lines had been crossed, and elementary rules of proper budgetary and economic conduct had been shattered, I have decided that I can no longer be part of the system and to be giving a legitimacy to a series of wrong decisions: decisions which do not take into account the long-term consequences and their impact on the country’s economy and the lives of citizens – and the incentives they produce,” Meridor explained.

“I can no longer lend a hand to the aberrant conduct that has taken place over the past few months, for which all Israeli citizens will pay a heavy price in the coming years,” Meridor pitched his final explosive charge at the boss.

Finance Minister Israel Katz responded: “Since taking office, I have given broad support to the professional staff in the Ministry of Finance, including Shaul Meridor, as I have done in all my positions in the past. Unfortunately, recently, out of narrow political considerations, Meridor began to act blatantly and publicly against government policy and against the policy I led in the Finance Ministry, which is why his resignation as head of the budgets department is the right and necessary move. I intend to bring in a suitable and professional replacement for the position as soon as possible, who will assist me and the government in advancing economic policy during this challenging period.”

PM Netanyahu rejected the criticism coming from Meridor and senior finance officials at a press conference shortly after the resignation, and argued that giving away small grants to the citizens of Israel would kickstart the economy, promote consumption, encourage citizens to go out to work and also shorten bureaucratic procedures.”

That’s a lot to expect of NIS 750 ($222.77), which was the amount most individuals received. Thise with children received a few shekels more. Needless to say, this did not usher in an economic miracle.

“This is not the first time I have argued with civil servants,” Netanyahu joked. “They often oppose what I ask for,” he said, “but in the end, the responsibility is mine, ours, the elected officials.”

Yair Netanyahu, the prime minister’s son, posted on Instagram an attack on the finance officials, writing: “The truth is that the finance officials are ‘terrorists’ who do not transfer the money to the self-employed and to the citizens – in order to agitate the people.”

Netanyahu Jr. added: “This is a disagreement of civil servants with Netanyahu’s policy!”

Actually, this is exactly what it is. The fact is that injecting cash into the hands of the people at a time of economic duress can be a very good move – but it takes more than a couple of nickels. Several European countries have tried it recently, as did the US, but over there citizens received a few thousand dollars, not the price of three pizza deliveries.

Earlier this month, at a conference of the School of Economics at the Interdisciplinary Center in Herzliya, Meridor said: “Reliability is something that is forged over time but can be quickly destroyed. If there’s one thing that can damage credibility, it’s that the government passes a law within a certain framework at 12 noon, and announces a different framework at 7 PM.”

Meridor added: “We as a government need to be careful to bring in plans that come at the right times and do not chase one another, unless there’s no choice because we made a mistake. It’s important to convey seriousness.”

OK, that’s really a lot to ask from a coalition government that’s been threatening to collapse because one partner wants a 1-year budget—in the month of August of the same year, while the other partner insists on a two-year budget—of which only a year and three months are left, and all of it is happening with the subtext that the PM is not dreaming of living up to the rotation agreement, and his partner is dreaming up schemes of cuffing him to their signed deal.

Meridor added: “We are strictly forbidden to shoot too many successive bullets at this time. We need to make sure that the bullets are fired accurately and that we are careful not to spend unnecessary money which would hamper us when we’ll need the money later.”

The director general of the Ministry of Finance, Keren Turner, who was appointed by Minister Katz, defended Meridor in a tweet: “It is very difficult for me to remain indifferent to the unprecedented criticism directed at the ministry’s staff and in particular of the budget commissioner in the Treasury, Shaul Meridor, and in general to the really violent discourse that is developing on social networks (e.g. Bibi and Yair Netanyahu – DI). The professionals in the Ministry of Finance, and in particular Shaul Meridor, work around the clock to inject a professional and values-based ​​voice that views the public’s good today and in the future, alongside the strict implementation of all the decisions of the elected echelon. That’s the way it is and we will continue to do so.”

Probably, but with a new captain…

Last week, Globes reported that the conflict between the budget director and the finance minister reached a climax when the minister requested that communication between Meridor and the legal counsel at the finance ministry, attorney Asi Messing, “be conducted in writing only.” According to Globes, the demand was made against the background of Meridor’s rejection of the state budget Katz was endorsing, and after Katz had promised the Knesset Finance Committee that he intended to deal with the elements in his office whom, he said, were trying to “inject a budget within a budget.”

Years ago, the late humorist Ephraim Kishon coined the phrase: “You think there are children sitting in government,” which he followed with a sigh, a shrug of the shoulders, and a sotto voce “Yes.”

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