Minister of Finance Avigdor Liberman told "Globes" editor-in-chief Naama Sikuler today at the Israel Business Conference that towards the end of 2022 housing prices would moderate significantly, described cryptocurrencies as a Golem that had turned on its creator and expressed opposition to government assistance received by yeshiva students.
Let's begin with the most topical matter. How concerned are you about Covid?
"A minister of finance cannot feel stressed, that's the worst. I look at the data and remember that we coped with the Delta variant, we have heard apocalyptic scenarios and we have successfully kept life normal. The seriously ill, the ventilated and the fatalities from Omicron are the important yardsticks and we also see worldwide that mortality is low, the seriously ill are still less than 100 and there are less than 50 on ventilators. That definitely indicates at the moment there is no need to start panicking or tighten the restrictions. We must learn to live with Covid. The G7 health ministers and US president have also said that Covid will be with us in 2022 and 2023. So there is no need to impose restrictions.
But the prime minister is pushing more for restrictions?
"I'm saying my opinion and I don't see data that requires increasing the restrictions. We must not harm the economy because that's what leads the country. We have recorded many achievements since the government was formed and we have made unpopular decisions."
You are talking about the budget?
"Both the budget and the cancellation of furlough payments. We took difficult decisions and we see in all the figures that we are in a much better place than the most optimistic people dreamed. We have returned in terms of employment to the pre-Covid situation."
But we see an 11% jump in housing prices. Tel Aviv is the most expensive city in the world.
"Housing is not something that can be solved in two months, it's a long process. There have been several years of neglect. The figures this year on real estate are breaking records, with 100,000 homes marketed and over 60,000 building starts. I believe that towards the end of 2022, we will see a significant moderation in housing prices. Within two years we can even lower prices. Purchase tax has come to cool off demand and I am optimistic.
"There will be a battle that won't be easy on the issue of the cost of living. With dairy products we have reached an absurd situation that here in Israel they are 79% more expensive than in Europe. A kilogram of yoghourt costs NIS 17 in Israel and NIS 8.50 in Europe."
Many employers would tell you that salaries are more expensive in Israel, there is more regulation and it is no wonder that it is more expensive here. Are you dealing with this?
"Everybody is right and all these elements must be dealt with as well as the supply chain. We are the only country where the wholesalers are also the importers and the marketing companies. There is no lack of challenges but we cannot continue as if nothing has happened and not come to terms with the situation. Every Thursday, I check with a good friend of mine who lives near a supermarket in Helsinki and I compare it with the prices in Modi'in, where my advisor lives. In Helsinki they don't grow grapes but they are still cheaper there than in Israel. Cutting the cost of living is one of our biggest challenges."
Two economies are emerging in Israel. The economy and the high-tech economy. High-tech is pushing salaries higher and creating gaps.
"High-tech is undoubtedly the engine of the economy. Israel is third on Nasdaq in terms of the number of companies traded. Only China and Canada are above us. That's a source of pride. We have to set up development laboratories in Israel. I studied economics a long time ago and they taught us about relative advantage. Our relative advantage is the Jewish mind."
In high-tech there are financing rounds at crazy valuations, is this not a bubble?
"Some of it is a bubble but whoever has genuine activity and not just fantasies will get through the crisis."
Every employer will tell you that they have a shortage of employees.
"This is the number one problem in the economy at the moment - a shortage of working hands. We have decided to import foreign workers for the first time in high-tech but other industries also lack workers. We have given record options for also bringing Palestinian workers for construction, industry and restaurants but we are subject to checks by the General Security Services. As a settler, I say that the stability of the Palestinians is in the interest of all of us. They have not succeeded in managing their economy because of failed management. Unfortunately there are not many Palestinians that I can employ in high-tech."
What else can you do other than import workers?
"We have to spur people into working. There was no small criticism that we cancelled furlough payments but it has proven itself. It is not a solution to let people get used to not working. The most important index is the UN's quality of life index and we are in 17th place. There is no reason why we shouldn't be in the top ten. We can even overtake Switzerland. But there are two population segments that are not part of the job market. Haredi men and Arab women. If they would enter the job market, we would enter the top ten."
How can this be done? You don't have good relations with the Haredi leadership. Is that the way forward?
"You don't have to invent the wheel. Netanyahu as finance minister once did this.
Do you plan cancelling the subsidies for Yeshiva students?
"If there is somebody being trained in the Torah, so let him learn until he is 28. But he can't sit there until 67. If by 28 you have not become an esteemed Torah scholar and you want to continue learning, do it at your own expense, and not the expense of the public. Tens of thousands spend time in the advanced study Kollel institutes and receive support and charity. There is no such assistance as this anywhere in the world.
What other steps do you plan on the issue of employment?
"Last night I sat with Minister of Economy Orna Barbivai about training for the Arab sector. We will do it together with Mansour Abbas. We have to enter the Arab sector and deal with young people who find themselves without a dignified income and that is the main factor in the spread of crime there.
"Today the most in demand profession in industry is a welder and metalworker. You earn NIS 18,000 in the job and they receive training while being paid on the job. But employers still can't find workers. They bring in welders from Romania and Ukraine. You have to give the people the option to earn a livelihood."
Do you support the introduction of cryptocurrencies?
"Cryptocurrency is the biggest danger to the monetary system. In China they made it illegal. In El Salvador they introduced it into the monetary system and it was not successful. There are many cryptocurrencies that we don't even know who's behind them. I'm trying to catch out money laundering for terror and drugs. There are 14,000 cryptocurrencies worldwide and no global regulation. We've reached a point where we must decide what to do.
"This is technology not gold and there is no economics behind it. Most countries cannot cope with this because to monitor this you have to have serious government capabilities. Let's assume that within a year giants like Apple, Google, and Facebook will create their own currencies. This is a golem that has risen against its creator and can wipe out its creator. I don't yet know how it will influence the system but it's no longer possible not to decide. It's a very complicated matter. It's impossible to ignore and we have conducted a series of discussions. There are areas where cryptocurrency has taken control like gambling and gaming and the state sees no income tax from this or anything set aside for the benefit of the public. We are forming policies and recommendations but I see more dangers than opportunities in this."
Will there be Israeli regulation in this field?
"First you have to understand who the regulator is. The Capital Market Authority? The Israel Securities Authority? The Bank of Israel? Is cryptocurrency a financial asset or security? There is no legal definition, so it's very complicated. I believe that by the end of 2022 we will enshrine in it law."
You seem to enjoy being minister of finance
"What's for certain is that it is never boring."
Will the government survive for 4 years? Will Lapid become prime minister?
"Yes. I see no reason why not. This is the first time that we have had a coalition that understands that its chance to survive is by focusing on domestic problems and investing money there."
I don't know many finance ministers that say 'we have money come and take it.'
"First of all I can say up front that nobody will get a cent. It has to go on the right expenditure, for growth and jobs. All the rest is burning money."
Should we be concerned about the situation on the Iranian front?
"This is really about our immediate existence and we have to cope with this. In my opinion, we will cope best with less declarations and more deeds. If you want to shoot, shoot don't talk."
The Israel Business Conference is in cooperation with Bank Hapoalim, and is sponsored by the OR Movement, The Phoenix Holdings, Profimex, Amdocs, Strauss, Azorim, Hot, and Super-Pharm, with participation from Mekorot, Israel Electric Corporation, the Port of Ashdod, the Tel Aviv Municipality, and the Israel Innovation Authority.
Published by Globes, Israel business news - en.globes.co.il - on December 21, 2021.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2021.