Economic commentators trying to analyze Ariel Sharon’s economic Weltanschauung face a problem. The Likud candidate for prime minister speaks in two voices. The authentic voice has the style of an old-time Laborite: Massive government intervention in the economy; massive subsidies of various sectors (agriculture, industrialists and contractors); and massive investment in physical infrastructures. In short a bulldozer approach, narrow horizons and tunnel vision, with no understanding or interest in complex economic linkages.
The other voice is that of Maastricht-based economists who call for tax cuts, balanced budgets, privatization, cutting public expenditures, privatizing some social services and increasing competition.
During the election campaign, Sharon has been adjusting his economic vision to the audience of the moment: He promises interest rate cuts and a national economic cabinet to Federation of Israeli Chambers of Commerce chairman Dan Gillerman; cheap water and foreign workers to farmers; Romanian workers and government budgets for infrastructure and construction projects to contractors; and a “Buy Blue and White” (Israeli-made products) law to manufacturers.
At other forums, Sharon lays out an economic program prepared by aides Moshe Leon and Shmuel Slavin, which does not express his vision, but marvelously expresses the philosophy of Slavin and former Minister of Finance Meir Sheetrit – which are not too far from the perspective of Prime Minister Ehud Barak.
It is hard to assess which polarized economic perspective Sharon will adopt if he is the man building the next coalition, or if Barak joins him in a national unity government. The political puzzle is too opaque. Sharon will be a player in any of the three probable political formulations: A national unity government headed by either Sharon or Barak, or a right wing-fundamentalist government headed by Sharon.
The questions are interesting, but irrelevant. Sharon will not be able to allocate more funds to the settlements and haredim (ultra-orthodox) than Barak has done. Barak and Minister of Finance Avraham Shochat have been unable to express the changes in social priorities because they found themselves trapped between the anvil of the 2000 State budget prepared by the previous Netanyahu government and the hammer of the 2001 State budget which has not been passed by the Knesset. It is hard to imagine Sharon will be more successful in changing priorities in any direction.
Published by Israel's Business Arena on 30 January 2001