Netanyahu expects Steinitz to fall on his sword

Stella Korin-Lieber

Under pressure, the prime minister needs more than gestures to appease the cost of living protesters.

The truth emerged in announcements from the Prime Minister's Bureau and the Finance Minister's Bureau: there is no conflict between Prime Minister Benjamin Netanyahu and Minister of Finance Yuval Steinitz. That is true. There is no conflict, no disagreement. There is just one thing: Netanyahu is seeking a sacrificial victim to appease the tent protesters. An easy, polite sacrifice who is highly dependent on him, will not besmear him, and will not pull any sudden surprises. Steinitz fits the bill. Minister of Housing and Construction Ariel Atias, from Shas, definitely does not. Atias is a whole other character and has immense political support.

Putting Steinitz's head on a silver platter is an invention of a coalition of whisperers in Netanyahu's ear, who are pulling the hidden strings in his office, and Likud ministers and interested parties. It isn't that Steinitz hasn’t done exactly what he was supposed to do and could do. Steinitz is Netanyahu. They both did nothing because neither saw the depths of the public's frustrations. They didn’t realize that Cairo's Tahrir Square is very close to Rabin Square in Tel Aviv.

The strength of the tent protest over housing costs has panicked Netanyahu. He is sweating. He knows that the issue is not only housing; it is not merely a protest against his government. He knows that the protesters are right, he knows that the interests of the unorganized public have been ignored for years by all governments and special interest politicians. He also knows more than anyone else that there are no magic solutions that will satisfy the voracious masses.

Netanyahu knows that the protest by the young, the students, the people who serve in the IDF and the reserves, who work and pay taxes, is an "authentic protest" that has already changed its face, and that the political hacks, the homeless, and the voluntarily unemployed who have jumped on the bandwagon will topple it. But he also knows that this will not happen quickly. Meanwhile, he is under siege, and he needs to be rescued. Steinitz has been designated for the role. Netanyahu dare not fire him, since that would be an admission of his own failure as prime minister and finance super-minister over Steinitz, so he is pushing Steinitz into a corner where he will resign of his own volition.

Netanyahu also spoke the truth at today's cabinet meeting. He really identified the housing problem years ago, and he put it at the center of his economic plan when he was head of the opposition. For years, he talked about the government's monopoly by that "convoluted agency", the Israel Land Administration, which "releases land in driblets, for too few apartments at astronomical prices."

Netanyahu also saw the failure of the planning and building commissions, which he called the "most convoluted in the Western world", which require at least five years to approve a housing project. He did know.

But what did he do with his knowledge? The land began to burn, but he took two years since the Knesset passed the Israel Land Administration reform bill to settle outstanding issues with its employees. 24 months, which included ten meetings at the Prime Minister's Office, to reach an agreement with 700 employees. How many years will he need to reach a deal with the 15,000 employees at Israel Electric Corporation (IEC) (TASE: ELEC.B22), not to mention the tens of thousands of employees at Israel Aerospace Industries Ltd. (IAI) (TASE: ARSP.B1), Israel Military Industries Ltd. (IMI), Israel Ports Development & Assets Company Ltd., and the airports? After all, they too play their part in the cynical exploitation of the public.

Not to mention the fact that Netanyahu continues to run from any decision on rezoning agricultural land leased to kibbutzim and moshavim. After all, these are the only available land reserves for the construction of residential neighborhoods.

As for Minister of Communications Moshe Kahlon - start measuring him for some suits. He will save us, saying Netanyahu's personal advisors. Kahlon is enthusiastic, beloved, trusted, with a track record, courageous, and a Sephardic Jew from Givat Olga who doesn’t speak flowery language. His mother has become everybody's mother.

If Netanyahu believes that his house is about to collapse around him because of the tents, if he decides that his survival depends on changing his budget priorities and opening the till to give something to all the social demands, then Kahlon is the right man for him.

As for Kahlon, this would be a serious, possibly fatal, mistake as far as his political future is concerned. He is liable to become the Amir Perez of the Likud. Israel's politics are about to enter a long campaign season, and the uncertain global economy will unquestionably affect Israel. Kahlon is untrained and he won't have a grace period to learn. He knows how to provide microeconomic solutions: mobile, telephony, Internet. Can he overnight switch to macroeconomics and find answers to the economy's many failures?

Netanyahu must provide an immediate housing and social response to placate the tent protesters. There is no overnight social justice and no overnight apartments to buy or rent. But there are some immediate options. First is an announcement of the commencement of construction of thousands of affordable apartments. Price reductions will be achieved through delaying payment for the land to the Land Administration for years. It is also possible to set state eligibility criteria so that the well-connected won't win these apartments.

Second, is an announcement to support the bill already in the Knesset Finance Committee to postpone or cancel the cuts in the companies tax from the current 24% to 23%, which is due to come into effect in January 2012.

Third, is an announcement of a gradual rise in income tax on the very wealthy. There is already talk about an inheritance tax.

Fourth is to announce the appointment of committees on housing, food prices, and the indirect tax burden that has been levied on the public in recent years. First and foremost is an announcement of a cut in VAT and the excise on fuel.

Published by Globes [online], Israel business news - www.globes-online.com - on July 24, 2011

© Copyright of Globes Publisher Itonut (1983) Ltd. 2011

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