As Israel burns, Bibi is putting politics before the economy

The truth is Nero didn’t fiddle while Rome burned, if for no other reason than the violin wouldn’t be invented for several hundred years. But the expression is certainly apt to describe Netanyahu while Israel contends with a resurgent coronavirus. He’s even done Nero one better by presiding over a string quartet.

The economic toll of the first coronavirus wave was bad enough, but the cost of the second wave is expected to be greater and has considerable downside risk. Many businesses have been ordered to shut again and increasingly severe restrictions are being imposed at a time when the economy is still recovering from the shock of the first lockdown.

The public needs not only financial assistance but a sense that the country’s leaders are doing their best in the face of a difficult and unprecedented crisis. It’s getting neither, and Netanyahu is to blame for most of that.

Nearly 100 billion shekels ($29 billion) of loans, grants and other coronavirus-related spending have already been budgeted, but by the end of June – nearly four months into the crisis – less than half had actually been spent.

It wouldn’t be fair to blame Netanyahu entirely for this. The fault lies with an Israeli bureaucracy that is immovable even in a crisis, and with treasury officials who hoped fondly but falsely that the pandemic would end quickly, the economy would return to normal and the money would never have to be spent.

But it is safe to say that Netanyahu, a true believer in small government, wasn’t thrilled at the thought of a huge budget deficit being run up by billions of coronavirus spending, and shared those hopes. Even though economic wisdom holds that it is critical to get government money into the hands of households and businesses quickly, there’s no sign Bibi was burning up the phone lines urging the bureaucrats on.

So the coronavirus is resurgent but the prime minister’s sense of urgency doesn’t seem to have grown in response. Rather than rushing to get a second economic program into place to cope with the new reality and approve a budget (which Israel still doesn’t have for the year 2020), he has encouraged a lot of fiddling.

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The second violins

Nir Barkat (the man who Netanyahu had promised the Finance Ministry job during the elections) and Yisrael Katz (the man who got it.) are the violinists. At Bibi’s behest, both have been working on separate economic plans in a competition orchestrated by the prime minister.

Barkat is just an ordinary Knesset member, but he and Netanyahu got together quietly last Friday, and the prime minister either agreed or instructed Barkat to formulate a plan. But, on Monday, while Barkat was already at work on his proposal, Netanyahu instructed Katz to get his plan ready within 48 hours.

A day later, Bibi held a high-profile consultation with Bank of Israel Governor Amir Yaron, former governor Stanley Fisher and other leading economic lights, but without Katz. Later in the day, Barket held a press conference unveiling his proposals while taking a swipe at Katz for creating economic uncertainty. We’re now waiting for Katz’s program, which seems to have the support of the prime minister, too.

The other two members of the Bibi quartet are a viola being played to the tune of a one-year budget and a cellist performing a two-year budget melody.

As you may recall from four paragraphs earlier, that there is in fact no budget at all for this year. The delay is because Netanyahu and Benny Gantz, the alternate prime minister, are at odds over whether the treasury should be preparing a one-year package for the waning days of 2020 or a two-year package that extends through 2021. In the meantime, Likud-controlled ministries are readying a one-year budget and the Kahlon Lavan-led ministries are preparing two-year ones.

This is unforgivable and it’s Netanyahu who’s to blame. Israel wasn’t alone about miscalling the pandemic’s trajectory and bureaucracy is bureaucracy. But the drama of the competing economic plans and the battle over the budget is nothing but low politics being played in the midst of a dire emergency.

Netanyahu seems to be set on undermining his finance minister, lest Katz get too much credit and headlines and entertain premature thoughts about being prime minister. The Katz plan will likely be the final one, but only after Katz himself has been humiliated and Netanyahu can put his own stamp on it.

The one-year/two-year budget is no less about politics. Netanyahu has traditionally preferred two-year budgets to avoid political crises and the coalition agreement commits him to one. Given that a 2020 budget won’t win Knesset approval for several weeks, a one-year budget that is really a two- or three-month budget is a senseless waste of time. But, it appears Bibi wants a one-year budget to serve as fuel for a political crisis in case he needs one as an excuse to call elections.

Netanyahu took Gantz and much of the Israeli electorate for fools when the unity government was being negotiated last spring. We were told that this wasn’t the time for another election and that the coalition would work together to tackle the coronavirus crisis. But it has become pretty apparent that Bibi is less concerned with a second wave than with a fourth election.