Tycoons' letter helps PM deflect fire
Netanyahu appoints commission to examine middle class jam, seizes opportunity afforded by letter sent to him from forum of economy leaders
Understanding that the protest's Achilles heel is the high tax burden shouldered by the middle class, Netanyahu will have the commission examine the following steps: Cutting indirect taxes (such as gasoline excise taxes), reducing electricity tariffs and benefits for working women.
Netanyahu's close associate and Likud Knesset Member Ofir Akunis announced Saturday, "The government is tuned in to the public's sentiments. The prime minister is formulating a series of steps to ease the indirect tax burden most of which is shouldered by the middle class. There's a good chance that a considerable tax cut will be considered as well".
Akunis added, "We hear the public's justified outcry. Working women, young couples and reserve soldiers have to bear most of the brunt – we intend to offer them a range of benefits".
The move reflects Netanyahu's mistrust of the Ministry of Finance and its director general, as the issues assigned to the commission are in the Ministry of Finance's domain.
The opposition hastened to respond to the initiative – Knesset Finance Committee member, MK Zahava Gal-On (Meretz), said: "We are fed up with empty promises and false initiatives. This struggle is not over sectoral benefits – this is about a root canal for a system that is rotten to the core".
Boomerang back at heads of economy
Netanyahu and associates' political activism did not miss the opportunity that came their way in the form of a letter to Netanyahu from forum of the heads of the economy – an organization which few are aware of its existence – sent by forum founder and chair Noga Keinan, in which she called upon the PM to proclaim 2012 as "the year of the middle class".
The letter, which according to Keinan represents the tycoons (although some claim that they were not aware of such a letter), states that "there is a need for a 'root canal' to deal with the cost of living for the average family in Israel", expresses solidarity with protestors and recommends a row of government reforms.
Netanyahu could not have wished for a better break – after the slew of mistakes made by his team over past weeks in an attempt to assuage public fury, it was the initiative on part of Keinan of all people, which reminded him against whom he could deflect the fire.
Jerusalem was quick to realize the unexpected stroke of luck; the PM immediately figured out that deflecting the fire to the tycoons would afford the cornered government a desperately needed breather. Although taking on the tycoons would not be an easy task but it would not call for cuts across the board and would not entail disputes that might rip apart the already narrow coalition.
Just before the Friday newspapers went to press, in an uncharacteristically nimble move, Netanyahu hastened to use the letter to his advantage and within three hours of its release, announced the first meeting, with his attendance, of the commission on the concentration of capital in the economy, held Sunday morning in a move aimed at fueling the public rage that the letter sparked.
Even the social organizations forgot about Netanyahu for a moment and over the weekend some released announcements such as "rather than giving back the money they robbed from the middle class, the tycoons are rolling their eyes and calling upon Bibi to open his wallet."
MK Nachman Shai (Kadima) criticized the move and said it was a "cynical and shabby move aimed at diverting the public's attention from the social-economic downfall and directing it at the tycoons".
On Sunday morning, a meeting of the committee for the promotion of competition in Israel was held in the presence of Minister of Finance Yuval Steinitz, the committee heads, Prime Minister's Office Director-General Eyal Gabai and Ministry of Finance Director General Chaim Shani.
The committee is slated to present its interim recommendations on September 1, but on the basis of the meeting, Netanyahu will decide whether to prod the committee to submit its recommendations sooner.
In recent weeks, the committee has been working to form an empirical basis for the recommendations soon to be presented. Netanyahu will request the committee to present its work so far, review the research and probably lend his support to recommendations that are as far reaching as possible. It should be reminded that further recommendations are unfavorable to the tycoons, are already sitting on Netanyahu's desk, such as a bill memorandum aiming to prevent holders of control from shelling out exorbitant wages to the economy's senior directors.
The prime minister, who is likely to meet with heads of municipalities today as well in a bid to prevent them from jumping on the protest bandwagon, will probably use the crises to implement the committee's recommendations. If protests run into October (when the Knesset reconvenes after its summer break) only few MKs will attempt to mitigate them.
Already during the weekend, MK Carmel Shama-Hacohen (Likud), chairman of the Knesset's Economic Affairs Committee, announced that "the tycoons are trying to deflect the fire rapidly gaining on them as the committee's recommendations are drawing nearer. There is no main reason for the high cost of living in Israel other than the ailment of centralization which infects most of the economy's sectors".
'Centralization a confusing term'
It would appear than that Keinan did a great disservice to the tycoons who are members of her forum. What was she thinking?
Keinan, aware of the indignation on part of some of the tycoons for being associated with the letter, commented Saturday that "the forum operates in by accepted procedure and has many members. As part of the activity, we send members the position papers for their response. In the event that there are responses, we make the necessary changes.
"I cannot know whether Idan Ofer read the letter or not, but it was sent out to everyone and revised according to remarks.
Do you think that following the letter Netanyahu will deflect the fire to the members of the forum?
"That seems improbable and unlikely. The Prime Minister is one of the most accomplished individuals on economic issues. I don’t believe that he would go for a plan that is not serious or successful just as retribution against the forum's support of the middle class.
"By the way, centralization is a confusing term. If you are talking about centralization and lowering prices – this is an important issue which is under the jurisdiction of the antitrust commissioner who is doing his job faithfully; however, centralization under its other title, as part of the centralization committee, will offer no value and will not lead to price cuts".
Why send the letter only now?
"I conceived the idea over a week ago but it took time to collect the members' responses."
Are you going to recommend the signatories to take further steps to support the middle class?
"Some of the signatories suggested we form a work group to come up with a solution. It's not a clear cut case – the middle class predicament was not born yesterday; now it has come to a head.
"There is no doubt that something has to be done and that a third of the nation should be acknowledged for shouldering the burden. We'll be there to deal with the issue."
There are more than a few steps that the forum members can take in the matter such as cutting prices and reigning in executive wages.
"As I said, the forum will appoint a committee and publicize its official standing."
When asked when she thinks this will happen, Keinan replied," The committee will convene in the near future, but it's hard to tell when."
Click here to read this report in Hebrew
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