Negotiations between the Bank of Israel and the Ministry of Finance over the new Bank of Israel law have broken down. Prime Minister's Office director-general Eyal Gabai met Bank of Israel director-general Hezi Kalo and Ministry of Finance Director of Wages Ilan Levin, in an attempt to find a compromise on the fate of supervision of Bank of Israel salaries by the Ministry of Finance, "Globes" has learned.
The Ministry of Finance was astounded by the new draft of the Bank of Israel law sent by Governor of the Bank of Israel Stanley Fischer yesterday. Sources said that in the new draft "the Bank of Israel has in effect reneged on all the agreements and understandings achieved between the ministry and the bank in continual negotiations over the past two years."
Minister of Finance Yuval Steinitz, who had so far shown restraint, this time joined in the angry response. Sources inform "Globes" that in internal discussions on the new draft at the Ministry of Finance today, Steinitz said, "The Bank of Israel has spat in our faces. The paper submitted by the Bank of Israel cannot represent a basis for dialogue or negotiation, and since the Bank of Israel has retracted all the understandings, we also have new comments to make on a variety of matters."
Steinitz also said that, in any event, the principle of wage supervision was a basic condition for transparency, and that proper administration was a sacrosanct principle from which there could be no deviation. He said that wage control did not impair the independence of the Bank of Israel or of any other body.
"Globes" has also learned that the differences of opinion over the new Bank of Israel law, which up to now have centered on wage control at the bank, have broadened to other matters of substance that up to now were agreed on by the two sides: the make up of the monetary committee that will decide on interest rates, and the demarcation of areas of responsibility between the Bank of Israel and the Ministry of Finance.
As revealed by "Globes" last week, Prime Minister Benjamin Netanyahu, who will decide on the matter, instructed the director general of the Prime Minister's Office to submit to him a final draft of the Bank of Israel law containing a solution to the wage control issue.
Published by Globes [online], Israel business news - www.globes.co.il - on June 9, 2009
© Copyright of Globes Publisher Itonut (1983) Ltd. 2009