Globes: Ram Belinkov, when you left your post as director general of the Ministry of Finance at the beginning of this year, we met to discuss the judicial overhaul, and the damage caused to the economy. Today, we meet at an even more difficult time. How are you feeling?
Belinkov: "I'm hurting. Tense. Sad. The writing was clearly on the wall, and they didn't listen."
What do you mean? Could you have imagined an event like this?
"Of course, I couldn't have imagined such an event, but they were busy with nonsense, and this is the result. Moments after the disaster, the politicians went on with their politics. They were already preparing for the day after. I have no words".
You lost many friends from Kfar Aza in the terrible attack on the Gaza border area on October 7. For nine years, until 2020, you served as chairman of the board of a Kfar Aza-based company, Kafrit Industries. What can you tell us about that morning?
"October 7 was my birthday. In the morning I received a call from my youngest son. I thought he wanted to congratulate me, but instead he said, 'Look what's happening in the south. It's crazy.' Then, a WhatsApp message came in from my best friend of 60 years, Ofer Baram, telling me that his son, Aviv, was wounded. Aviv managed to call his wife - now his widow -- and warn her that terrorists were wearing IDF uniforms. Today. we know that he bled to death"
"After that I started messaging with other people: Shai Hermesh, a director at Kafrit and former head of the Shaar Hanegev regional council, who also lost his son Omer. Nadav Goldstein, VP of Kafrit, was murdered along with his daughter. Yesterday, we learned that his wife and their three children were kidnapped. Director Aviv Kutz was murdered along with his wife and their three children. Dorit Wertheim-Bar Ilan, a wonderful employee, was murdered with her husband. You can't call terrorists 'animals'. That would be a compliment for these loathsome creatures."
When you think about the failure in intelligence, the delayed security forces - what conclusions to you come to?
"This is degradation, both in the army, and at the political level. Shai Hermesh wrote to me at two o'clock in the morning: 'They are rescuing us under fire.' That was 20 hours after the madness began."
Tens of billions is just the start
You served as director general of the Ministry of the Interior during the Second Lebanon War, and as head of the budgets division at the Ministry of Finance during Operation Cast Lead. On the basis of your experience and your understanding of the situation, what should be done on the economic level?
"During the Second Lebanon War, Roni Bar-On, the minister of finance at the time, grabbed me one day and said, 'We're going to the north, and basically we’re not going back to the office; we’ll be in the field.' I expect government ministries to be in the field. I expect this thing to be run in a sane way. Instead, I read that they're squabbling over who has authority over what.
"During the Second Lebanon War, we never had a surprise mass slaughter attack. The economic damage was short-term and our economic recovery was quick. Back then, we weren't under threat on two fronts. In Operation Cast Lead, we paid NIS 3.5 billion in compensation out of the property tax fund. Another NIS 2.5 billion was channeled to the army."
Minister of Finance Bezalel Smotrich intended to appoint Ehud (Udi) Adiri , former director general of the Ministry of Energy and a senior Ministry of Finance official, as a project manager, to coordinate civil ministries activity (government ministries, local authorities and civil society organizations). But the director general of the Prime Minister's Office Yossi Shelley opposed this, because he did not want to grant Adiri the powers he requested. The Prime Minister's Office claimed they had no objection, "so long as the appointment does not conflict with the work of the director general of the Prime Minister's Office and does not create systemic chaos or add an unnecessary bureaucratic burden."
"Yossi Shelley - I don't want to talk about this man after what he said about the Re'im party (referring to an interview with Channel 12 News in which Shelley said of the massacre at the Rei'm music festival, "the party made a not insubstantial contribution to the chaos," and also compared the process of identifying the bodies of the murdered victims to a supermarket queue. - H.W., O.D.). Udi Adiri was in the budget division when I was appointed. He is an exceptional person. More to the point: these people need to be given exceptional powers to act. It is impossible to work in this crisis using the traditional tools, with the methods that existed prior to October 7. We need to change our mindset, both now and after the crisis has passed."
What do you mean?
"There are countless director generals of government ministries. Everyone has a driver. There are innumerable army generals. We are a country that kowtows to the public sector. Priorities need to be changed from end to end. It's untenable for a huge proportion of our population to piggyback on the rest. It's outrageous. It's not just the NIS 14 billion in coalition funds. It's in the budget base."
Let's break down these statements into concrete steps.
"One needs to understand that this crisis is going to cost a great deal of money, that the deficit will not be the same deficit, and stop playing the pathetic games of boxes (referring to spending voted by the Knesset but not included in state budget calculations, making it possible to bypass the spending ceiling established in the State Budget Law. - H.W., O.D.), a tool that has enraged me since it was invented. We need to sit down, and rewrite -- and soon -- the 2024 budget under a completely different paradigm."
It's clear now to people at the Ministry of Finance that the 2024 budget needs to be reconstructed. The question is whether it will be possible to finance the war through coalition funds and changing priorities, or will there be no choice but to increase the fiscal deficit?
"Obviously, the deficit will grow. My fear is that the politicians will fall in love with the deficit, and hang on to it instead of looking in the mirror and saying, 'Wait, we've gone crazy here over the past few years. Let's see how we build a healthier and more normal country.' If we want to survive, increasing the deficit cannot be the sole solution. The whole system has to be shaken up, structurally."
Regarding the costs of the war, Belinkov believes that "Tens of billions is just the start", but given the level of Israel's GDP debt - only 60% - there are reserves enough to draw on. "If we rise to the debt-to-GDP ratio of an average European country, around 70%, this means another NIS 180 billion of debt. I'm not suggesting we rush to pour out the money, but the funding issue isn't something that's stopping us at the moment. By the way, during the Covid pandemic, we spent NIS 150 billion on all kinds of crazy things, like furlough payments, which I hope won't come back."
Suppose you’re called to reserve duty at the Ministry of Finance, to serve as joint director general and assist in these efforts. What are the first three steps?
"First, we need cooperation with the Bank of Israel in order to create solutions regarding the availability of credit for businesses. Second, I would ask the budgets commissioner to formulate a work plan for all sectors. The third step relates to management. I don't want to see Ministry of Finance managers in the office more than three days a week. I want to hear a report from them, every evening, on Zoom, about what they did that day and what their plans are for tomorrow."
Is there anyone to rely on in the government?
"I won't comment on the ministers, but on the public service. Some posts haven't been filled till now, and some positions are filled by people who previously did not meet threshold conditions. Thwarting Udi Adiri's appointment, for example, is shocking."
At a discussion at the Ministry of Finance last week, it was said that planes and ships were having difficulty coming to Israel for insurance reasons. The claim was that government insurance company, Inbal, had not yet entered the picture to help. Smotrich's answer was: 'I'm still quite new here, isn't there a procedure ready for emergencies?'
"Smotrich knows that there's an emergency procedure. The Minister of Finance and the Minister of Transportation have the authority to operate air and sea traffic with the help of a document called the 'Vital State Interests Order' , which is intended for precisely such times. It's something that’s very easy to arrange, a matter of minutes."
A message to end with?
"We must win."
Published by Globes, Israel business news - en.globes.co.il - on November 1, 2023.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2023.