Two and a half weeks before the recent election, Prime Minister Benjamin Netanyahu told a political gathering in Or Yehuda, "Nir Barkat will be minister of finance in the next Likud government." In recent days, we have learned that Netanyahu and the Likud will indeed form the next government, but the person replacing Moshe Kahlon as minister of finance will be Yisrael Katz, who was minister of transport for a decade, and in the past few months has been minister of foreign affairs.
Katz's appointment gives Netanyahu a reliable base in the Knesset for passing budgetary measures. As chairman of the Likud Central Committee, Katz is likely to be very helpful to Netanyahu in the political sphere. As has been demonstrated in the past, however, Katz is loyal above all to his own agenda, and pays little attention to the opinions of the professional staff subordinate to him.
During his three terms as minister of transport, until he left the post last year, Katz had difficult relations with the Ministry of Finance.
On the one hand, the Ministry of Transport enjoyed a budget of unprecedented size during Katz's period at the helm. More than NIS 100 billion poured into the ministry over the past decade, and almost NIS 40 billion in approved budget and authorization to make commitments (for privatization of Egged) in 2018-2019.
The Ministry of Finance repeatedly gave in to budgetary demands by the Ministry of Transport, especially when these were accompanied by popular slogans such as "the fight against congestion," "infrastructure development," "bringing outlying areas close to the center," and "the plight of public transport." Even when the State Comptroller more than once expressed doubt about the way in which budgets were allocated in the Ministry of Transport, and even when road congestion neared a state of system failure, the money kept on flowing.
On the other hand, the Ministry of Finance, or at least its professional staff, still barred the way over the years to several of Katz's long-term imperial dreams. The high-speed railway to Eilat project, with a projected cost of tens of billions of dollars, was blocked in the Ministry of Finance budget division's corridors. The same thing happened to the artificial island off the coast of the Gaza Strip, and to several other spectacular projects.
One of Katz's most memorable clashes with the Ministry of Finance involved his determined opposition to a road congestion charge in Israel. Now, however, on the eve of Katz's becoming minister of finance, the congestion charge is one of the most important transport plans being promoted by the Ministry of Finance. This charge will fill the state coffers in the quickest and most effective way. Will the new minister sacrifice state revenue on the altar of his declared ideology? Will he be forced to give into the current constraints and levy taxes on the auto sector and on fuel consumption, at the cost of losing popularity?
On the other hand, it can be assumed that Katz will give a budgetary go-ahead to a large number of development projects for future routes in the Tel Aviv area and connecting the tracks between Haifa Port and Jordan. In addition, given the declared pro-Chinese policy practiced by Katz in his decade as minister of transport, we will not be at all surprised if, as minister of finance, he assigns high priority to a trade agreement between Israel and China that may also include the establishment of free trade areas.
In any case, judging by his conduct at the Ministry of Transport over the past decade, tough times are in store for the Ministry of Finance's officials. Katz has very little patience for subordinates expressing an opinion different from his. It can be assumed that he will concentrate as much authority as possible in his own hands, leaving professional staff very limited possibilities for exerting influence and freely expressing ideas deviating from the line dictated from above. Anyone who thinks that the independence of the professional staff in the Ministry of Finance is essential to getting the economy out of its current crisis should be concerned about Katz's appointment.
Published by Globes, Israel business news - en.globes.co.il - on March 30, 2020
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