Minister of Finance Abraham Hirchson is a master of facial expressions and tones of voice. These change according to the demands of the moment, the question, and the will. He is alert, attentive to nuances and slip-ups by the person sitting opposite him, and uses these too to his benefit. Hirchson can sometimes be soft, pleasant, considerate, patient and complimentary, and sometimes acerbic, short tempered, critical, and impatient. When it comes to an issue he’d prefer not to talk about, his eyes harden, his voice becomes loud and harsh,, and his hands saw the air. He uses his voice and tone of speech in the same way as former Prime Minister Ariel Sharon used to use attentiveness one minute, and table thumping the next.
Hirchson and Prime Minister Ehud Olmert have been friends for more than 40 years, and they are the perfect couple in the current government. They are alike, and different to each other. Both are sophisticated, hedonistic, manipulative, tough, and very very self-confident. Both men started off small and pushed their way to the top. But in contrast to the detached attitude, hubris, and truculence that has never left Olmert, Hirchson has become noticeable for his fatherly image and easygoing, friendly behavior to anyone who isn’t antagonistic towards him. “I am not the kind of person who goes against people,” he says. “I work in cooperation with people. They say that a finance minister should be a baddy. I don’t think this is true.”
Globes: War, commissions of inquiry, threats against you, is this what you expected in your first few months in office?
Hirchson: “I didn’t imagine that things would be like this but I am not new to public life and I know that things can change from one day to the next. War broke out and it had immediate economic consequences. The State of Israel has never been through a war during which people were given responses while the fighting was ongoing. This was the first time.”
It didn’t happen this time either.
(Hardened tone) “Excuse me, that’s not true.”
A bank manager said that a minister phoned him during the war and said, ‘Do a good turn. The people in the shelters in x and y neighborhoods have no food. Could you see they get a hot meal.’ Is this not disgraceful?
(Fuming but restrained). “Excuse me, excuse me. With all due respect, I am talking about specific responses. I didn’t say that our conduct was one hundred percent perfect. But people did get their salaries, and manufacturers did receive compensation. Perhaps some of them said that what they got was insufficient, but they got something. Farmers, who have never ever received any compensation before, got it this time.”
A state of emergency was not declared for economic and financial reasons. Was this justified?
“People eventually received responses to problems even without the country being in a state of emergency.”
Do you think a state of emergency should have been declared?
“I am not sure… and I’m still not sure today.”
What advice did you give Olmert about a commission of inquiry?
“I think that a government-appointed inquiry chaired by a reputable judge will be able to examine the issues in depth and will not be subject to same the legal constraints as those of a state commission. There are things that would take a state public inquiry a lot longer to investigate, and as a result we would see a lot of people coming into the sessions with lawyers in tow, and they would have no time for anything else. The state cannot function this way. A government-appointed inquiry chaired by a judge, with powers of investigation and immunity, will be able to investigate more broadly and also draw conclusions.”
“Abram, I would like to have your blessing”
Olmert recently appointed, under your nose, Professor Manuel Trajtenberg as National Economics Council Director. His role is to create a policy for economic growth while reducing gaps, and to provide professional opinions and budgetary alternatives. This sounds like a vote of no confidence in you and the people you work with at the Ministry of Finance.
(Kind and pedagogical) “Certainly not. I will tell you how I work. I don’t think that wisdom is hidden in one place. I do think that debates are very important and that they ultimately produce more accurate results.”
Did the prime minister consult you before he made this appointment?
(Soft and giving) “Yes, of course. Not only did the prime minister consult me, but Professor Trajtenberg himself also said, ‘Abram, the prime minister has offered me the post and I would like your blessing.’ I told him, ‘You have it.’ I consult the governor of the Bank of Israel as well. I am a strong believer in team work and brainstorming. It sharpens you.”
Structural change at Israel Electric Corporation (IEC).
Chief of Staff in the Prime Minister’s Office Yoram Turbowicz recently said, during a lecture, that ‘Privatizing IEC was a deadly risk. Woe betide us if it ever happens.’ Is this Turbowicz, or is it the prime minister and Kadima party leader delivering a message to IEC employees through his chief of staff?”
(Liberal, open) “Turbowicz has the right to speak his mind. I submit proposals to the government, and these are introduced as part of the government’s economic agenda. One of the proposals I submitted concerned IEC. There was a vote and it was passed, so it is now on the government’s agenda. Period. I will be very glad to hear Turbowicz’s views, whether I agree with them or not, but the government of Israel has made a decision.”
He is chief of staff to the prime minister, the supreme authority.
“The prime minister, madam, is the supreme authority in government, and he voted in favor of my proposal. I have never heard him say anything remotely different at any meeting.”
Have you asked the prime minister about this?
(Assertive and tough) “No. Whatever for? Why should I have to ask anything? I sat in cabinet meetings and I presented my ideas. We had a lot of preliminary meetings, at which the prime minister took an interest in the minute details. He was minister of finance himself and he is well acquainted with all the details. I did not hear any comments whatsoever about the structural changes in IEC. The proposal was passed and it’s working.”
An antisocial government.
This government has a few tough challenges on its plate, especially where the budget, Kadima party and coalition are concerned. There’s Minister of Defense Amir Peretz, and Minister of Industry, Trade and Labor Eli Yishai, who always has to be more social than Peretz.
“Two weeks ago people said to me, ‘You won’t get this budget past the government,’ and ultimately, it was passed with a resounding majority of 19:4. Then they told me, ‘We cannot remember a year when the budget went through in a such a calm and business-like manner.’ I held long talks with ministers and listened to their views. I think that a finance minister has to be consistent and take decisions when these are required, even if they are tough. I work with people and reach understandings with them. The results are proof that it works.”
Getting the budget past the government was just the first hurdle. The real battle will take place in the Knesset.
(Quite unconcerned) “I know that there are people in Knesset who hold different views and they have both a right and a duty to express them. I believe in engaging in dialogue with MKs and I recognize that at the end of the day, national responsibility will prevail. I know that the MKs will play their part.”
Have you begun to talk to them?
(Ready and willing) “Not yet, but I will most certainly talk to both coalition and opposition members. I used to engage both sides when I was chairman of the Knesset Finance Committee. We had some very long arguments and eventually, proposals were frequently passed with the support of the opposition.”
How long will the government last?
“I’m not a prophet, but I believe than it can complete its full four-year term.”
How long do you give Kadima?
(Resolutely hopeful) “Kadima is a party which fought an election for the first time its history, following which we found ourselves at war. I believe that a center party is a very, very important part of the State of Israel’s political landscape, so I believe that Kadima will establish itself as a center party and will grow in strength with the passage of time.”
What about the Convergence Plan?
“The Convergence Plan is not on the agenda. A new situation has evolved in the Middle East. Nobody is indifferent to all this. New situations have developed that require a new line of thought. We are adopting the Road Map in accordance with a government decision on this, and the convergence proposal is off the agenda at this stage.”
VAT will not be raised
You are likely to find yourself in a bind over spending and deficit targets, since the Knesset could impose a budget breach. You also want to keep the government intact.
(Emotionally and resolutely) “I will not breach the budget framework. Period. End of story. I am not merely restating our policy when I say this. Breaching the budget framework means that we will enter a tailspin that will bring unemployment and recession. I would remind you of the first years of this decade, when we had the high-tech and real estate bubble and revenues that were larger than what we have today. We spent vast amounts of money and found ourselves in a recession, which harmed, above all, the weak and the middle classes. The tough economic program that followed got Israel out of this and I will not let the country slide into economic crisis. No way!
“We made a commitment to the Americans. Shortly after the war, we received an extension of the loan guarantees from the US. Let me tell you that these were not given because of Abraham Hirchson’s pretty eyes. No chance. They were given because the US believes that we are continuing with the right economic policies.
"We were given a signal by the credit rating agencies. They said, we are not lowering our rating but we will be watching closely to see whether or not you are maintaining a responsible policy. So people tell me why should Hanna from Hadera be interested in credit ratings? My answer is that Hanna from Hadera will be the first to suffer from the lowering of our credit rating, because this is what causes a collapse. The big money will flow out of Israel and find its way to other places, but Hanna from Hadera will stay here.”
What about raising VAT?
“Next year we will be selling Oil Refineries Haifa and our remaining 10% stake in Bank Leumi (TASE: LUMI). These two sales are expected to generate NIS 7 billion, which will slightly reduce the deficit target. I said this to the governor of the Bank of Israel and I say it again now. If there was ever a way of helping the weaker sections of the population, it is through indirect taxation. They don’t pay any direct tax but they do pay VAT on everything. True, they don’t pay much but it all adds up and it is a burden. Raising VAT would harm the weaker sections of the population. I won’t do it.”
I’m nobody’s shadow
People continually refer to you as ‘Olmert’s friend.’ Don’t you find this difficult to cope with?
“First of all, I have been a friend of Olmert for more than 40 years. I didn’t elect him or endorse his candidacy for the premiership because he’s my friend. I supported him because I believe he has the skills needed to lead the State of Israel. Likewise, Ehud Olmert did not appoint me Minister of Finance because I’m his friend. I would still be his friend even if I hadn’t been given the job. He chose me because he believes that I can lead Israel’s economy and that I have the requisite responsibility and sensitivity for the task.”
Don’t you find it irritating to be constantly Olmert’s “friend,” in his shadow?
“Tell me, do I look irritated to you? Do you feel I am someone’s shadow? Look me in the eyes and say so. I am in nobody’s shadow, and nobody is in my shadow. The prime minister is a personality in his own right and so am I. Everyone has their merits and shortcomings. We have been friends for many years and we remained friends despite the differences of opinion that we had on many occasions. We always knew how to deal with these.”
Published by Globes [online], Israel business news - www.globes.co.il - on September 25, 2006
© Copyright of Globes Publisher Itonut (1983) Ltd. 2006