Israeli government trips over top economic appointment

JERUSALEM -- When Stanley Fischer announced in January that he planned to step down from his post as governor of the Bank of Israel, commentators suggested that replacing the iconic economist credited with the country’s economic performance could be a challenge -- but no one thought it would be so difficult, or dramatic.

After two candidates graciously accepted the prestigious nomination only to back out under graceless circumstances, the issue is fast becoming a public and political fiasco, raising questions about government judgment and chronic procedural problems in top public appointments.

The first, Yakov Frenkel, who already filled the post in the 1990s, withdrew his candidacy after allegations arose of a shoplifting incident seven years earlier at the Hong-Kong airport’s duty-free shop.

The second veteran economist, Leonardo Leiderman, cited “personal reasons” for his withdrawal amid local press murmurs of a past sexual harassment claim.

The appointments, made by Prime Minister Benjamin Netanyahu and Finance Minister Yair Lapid, were subject to the approval of an advisory committee on senior positions headed by a retired Supreme Court justice. In both cases, the press seemed better informed than the committee.

The debacle is drawing fierce criticism from politicians. Opposition lawmaker Avishai Braverman, himself a prominent economics professor, suggested Lapid spend “less time on Facebook” and more on his ministry’s work.

Attacks are coming from within Netanyahu’s cabinet too, as Minister Yuval Steinitz, a former finance minister, lashed out over the weekend at the duo’s recent conduct.

Attacks have put Lapid on the defense. “We don’t have a private investigation office,” he said Sunday, adding that Leiderman’s weekend move came as a surprise but the problem would soon be resolved.

Some reports suggest Netanyahu and Lapid are running out of candidates, and that prospective nominees are spooked by a public atmosphere that increasingly demands uncompromising transparency on key economic issues.

Other critics argue the blunder is of their own sexist making, for going to lengths to avoid replacing Fischer with a woman.

Fischer left the post he held since 2005 in June, leaving Karnit Flug, his deputy and long-serving bank official, as acting governor until an appointment was named. To many, she was the heir apparent.

Columnist Merav Betito accused decisionmakers of keeping women from their “popular boys’ club.” Opposition leader Shelly Yachimovich suggested Netanyahu and Lapid beg Flug’s forgiveness, do the right thing and “implore her” to take the post.

Twice snubbed and passed over, Flug announced she would resign from the Bank of Israel after 25 years of service once she eased the new governor into the system.

While the international financial press has begun poking fun at the saga, calling it a “soap opera” and advising “how not to hire a governor,” a post on Facebook joked that Netanyahu offered visiting Barcelona soccer superstar Lionel Messi the position immediately upon landing in Israel.

But the joke could be at the expense of Israel’s economy and monetary situation, experts warn, if speculators take advantage of the opportunity to drive up local currency unchecked.

Whether an embarrassing coincidence, political blunder or male chauvinism, the affair suggested to some a need to reform the mechanism for senior appointments. Braverman called for establishing a system to locate and vet candidates before, not after, government appointments are announced.

The attorney general is still cleaning up a previous appointment gone bad, as last week he ordered a police inquiry of a forged document designed to intervene in the appointment of the army chief of staff in 2010.

Ultimately, Yoav Galant’s appointment as chief of staff was canceled after press exposed an alleged zoning violation. Here too, the committee entrusted with ensuring candidate’s integrity did not have the information.

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