In the clamorous chorus reverberating around us, rising to ever more piercing tones as the date of parliamentary election [slated for Jan. 22] is drawing near, another voice – more judicious, more courteous and more concerned — may be heard above the clamor. It is the voice of Stanley Fischer, the governor of the Bank of Israel.
As known, Fischer is not running for a seat in the Knesset [the Israeli parliament] nor has he any intention of vying for the much coveted post of the finance minister. As a matter of fact, it isn’t at all sure whether he will stay in office the full term of his second tenure as Bank of Israel governor, which is to end sometime in 2015. What, then, induced Fischer to voice his opinion, clearly and sharply, on the issues on top of the agenda [of Israeli society] as he has recently done, on three different occasions?
It seems that Fischer, a veteran of many battles who has already seen a government or two established or toppled and replaced by another, just does not believe that the next Israeli government will be capable of taking the necessary economic steps — those that he deems indispensable. And it is any government that he is talking about – whichever it may be, regardless of its political makeup. Just like any one of us observing the local political arena, Fischer reads the polls and realizes that the next Israeli prime minister will most probably find himself in a weak position and will thus have to sign a series of coalition agreements that are liable to cost billions of shekels, which are nowhere to be found.
The fiscal cliff faced by Israel is discussed in another, previously posted article. Naturally, it is not nearly as steep as the fiscal cliff the United States has to negotiate; however, it is potentially no less explosive. And like its American counterpart, the Israeli fiscal cliff has two facets – that of government expenditure and that of state revenues from taxation. Bank of Israel Governor Stanley Fischer is well-acquainted with the data and, as said, he is also closely familiar with the players in the arena. He therefore knows that the government cannot deliver the goods on both ends. That is, no government would be able to raise taxes and, at one and the same time, cut billions off its budget, thus inevitably slashing the essential services funded by the state budget.
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