A Martian – or for that matter a foreign correspondent or even an Israeli pundit – observing the Israeli public scene would never guess that the debate now raging in the Finance Committee of the Knesset over a financial market reform plan may have momentous consequences for the country.
A reformed vigorous economy is not merely a matter of a better standard of living for Israelis (a worthy goal by itself) but a matter of survival. The paucity of attention paid by the media and most of the public to the fierce debate in the legislature over the Bachar Commission banking reform proposals is therefore mind boggling.
The debate over the breakup of the banks’ duopoly stranglehold over the economy (far worse than the one banks had on the Japanese economy) and the extraordinary pressure the banks exert on the committee members by questionable means should have been at the top of the national agenda. That the banks can get away with their questionable pressure tactics, and that a government-owned bank, Le’umi, is using public funds to undo a decision of a legitimate government is not really reported or debated, are evidence of the inordinate influence of the banks over public discourse. It bears witness to the fact that the high concentration of political and economic power in the hands of the bank duopoly has not only corrupted the economic system but is also threatening our democracy. The banks are trying to bully and bamboozle Knesset members to vitiate the reform from its real contents and leave it an empty, meaningless shell.
As dedicated and intelligent as the eighteen members of the Knesset Finance Committee may be, how can they cope with a banking lobby that daily swamps the committee room with at least forty banks representatives, with their attorneys, accountants, lobbyists, publicists, PR persons and their aggressive union reps (wages cost the banks 11.5 billion shekels, about 24,000 shekels per person per month, 2.5 times the average Israeli salary).
The banks have hired the country’s top attorneys to give testimonies that confuse the Knesset members and distract them by misrepresenting and inflating trivial issues and by spinning foreboding legal sophistries. The banks’ agents take copious notes of everything said in Committee and then they flood the members with hundreds of pages of “commentaries”, objections, corrections and whatnot.
“While the bankers appears every morning in the committee,” writes the courageous Guy Rolnik, Ha’aretz economic editor (one of the few who takes on the banks, despite the fact that they provide the media with most of its advertising revenue), “and keep threatening and bullying the Knesset members – to this day there is not one single public body that represents the banks’ clients’ interests in the Finance Committee. The Manufacturers Association lost its tongue, the Chambers of Commerce fell silent, the Small Businesses Authority is hiding under the carpet, the Association of Independent Wage Earners is otherwise occupied – all must have good reasons to prefer not to oppose the banks.”
But not only most civic organizations, including the universities, the Histadrut Federation of Labor (who all owe the banks large sums) and the welfare lobby refuse to take on the banks. “Except for a few academicians and private brokers… no senior businessmen has agreed to date to be interviewed and state his position about the reform,” Guy Rolnik notes in an introduction to the exceptional interview he made with Yossie Hollander, one of Israel’s top high-tech pioneer entrepreneurs.
In response to Rolnik’s questions as to why he finally agreed to be interviewed – Hollander, who sold his firm “The New Dimension” for $650 million and is now also a major philanthropist involved in public issues, said: “We are now in the midst of a most important financial reform and I see that no businessmen talks. I fear this is not an accident, that they are held back by the banks. Israel has very vocal social organizations… why are they keeping quiet?… is it because they all receive support from the banks, and therefore fear them?”
“Explain to me why our TV ignores the subject? The bankers have hired most of Israel’s PR firms and lobbyists, and they brainwash the public – yet the media keeps quiet.”
“The fact that I am the first businessman who agreed to be interviewed on the reform is the best proof that the banking industry needs a radical reform,” Hollander continued. “People and businesses need the banks – and they are apparently afraid that if they speak up they will be harmed.”
“The immense power of the banks has become a totalitarian threat, people are afraid to speak up when so much power is concentrated in the hands of two banks. In a democracy I would expect people to express themselves and not keep their mouths shut,” he concluded.
So yes, the reform now being debated in the Knesset is not only about the future of Israel’s economy, but about the future of its democracy too. Clearly, Israel will not be able to keep many of its young at home on the low salaries ($1,200 a month) and limited career opportunities. Israel’s democracy will become dysfunctional should the strong link between politicians and money not be severed.
We can only hope that the MK’s, who are there to represent the public, will rise to the occasion and support a reform that has such immense repercussions on Israel’s future.
