Erel Margalit, unless we're mistaken, was supposed to have been the Labor Party's leading light on the economy, after the departure of Prof. Avishay Braverman. He has demonstrated the capacity to think, plan and execute. He has also demonstrated parliamentary ability, social sensitivity and a caring approach, and the courage to stand up to large and strong interest groups.
Moreover, he has a good rapport with party leader Isaac Herzog. After just two years in politics, he reached a respectable seventh place in the party primaries, but then it turned out that Herzog was looking for imported talent. First he brought in Tzipi Livni to share the party leadership and the premiership; then together they imported their own defense expert, Amos Yadlin, and economic expert, Prof. Manuel Trajtenberg, who was treated to catcalls by the party membership when he was presented to them.
Margalit, who had prepared a wide-ranging plan, both socially aware and responsible, was left behind, pushed down to twelfth place on the party list, immediately after Trajtenberg. "Certainly someone worthy", Margalit says of him with gallant restraint, like the rest of the senior figures in the Labor Party who have had a bellyful but are keeping silent. For now. Until the long knives are drawn.
What does the fact that you have imported people from outside for the most senior positions in the party say about you? Don't you rely on yourselves?
"It has to be admitted that we, our own people, have for a long time presented positions, fought, and done everything. All the same, the substantial move that Herzog made has turned the Labor Party into a strong alternative. Teaming up…"
If teaming up with Livni had been brought before the party for a decision, how would you have voted?
"A year or so ago, Eitan Cabel and I helped Herzog reach the leadership. The idea was to bring the party to a position in which it would be an alternative government, and it was clear that we would have to make alliances and join up with other people. We are familiar with such needs from the business world."
Still, without making a noise about it, in order not to give ammunition to the enemy, there is resentment about this business synergy.
"I don't think there is, nor should there be. Apart from that, we didn't get synergy, we got alchemy. A real alternative government. The link has does us good. The spotlight landed on us as an alternative government, and that's something dramatic. People feel that it's possible to bring about the change, something they haven't felt for years. This is the drama, this is the main thing."
And you paid a personal price.
"In any significant move you have to pay prices, nothing just happens by itself."
Did you plan, did you dream of becoming minister of finance?
"I have been in politics for two years, and I'm a serious candidate for one of the economic posts. True, I wanted a higher position, but I don't bewail the bitterness of my fate."
There were catcalls when Trajtenberg went up on stage.
"The Labor Party has to present a broad economic and social alternative to Netanyahu's way. That's the most important thing for the State of Israel. Netanyahu brought us to the top of the poverty table. We have a prime minister here who boasts of economic achievements but who led us into a deep economic hole. He had Yuval Steinitz as minister of finance who put us into a deficit and Yair Lapid as minister of finance who led the economy into depression. Lapid and Netanyahu are tempting salesmen who tell stories. The facts are that 60,000 small and mid-size factories and businesses collapsed, 50% more than the average for previous years. People talk about the south and the collapse of businesses in the south, but the whole country has become the south. And it happened before Operation Protective Edge. The level of private investment in the economy fell by 4.5%. Let them not talk about the growth in the economy. Most of this growth is in the public sector. The self-employed can't make a living, and wage earners may have work but they can't make ends meet. People are working and poor."
It's all very well to attack Netanyahu and Lapid, but the question is what do you bring instead?
"What Netanyahu and Lapid have done to housing in the past few years is the most un-Zionist thing there is. We will introduce an affordable housing program such as there is in any properly-run country, that will apply to four groups: the third age, young couples, the homeless, and students. Instead of pension funds and insurance companies investing in real estate in Romania and the US, we will offer an affordable housing program that will lead international funds to invest in Israel, just as we brought these funds to invest in Israeli high tech."
How do you finance this and make a return?
"First of all, you give land free for fifty years for each category (third age, young couples, etc.). Secondly, you award a tax exemption for developers who construct for affordable housing. There are American Jewish developers whom I brought to Israel and who are prepared to do this. They are ready to invest on those terms. The return is 10-15%."
But then you lose several billions in real estate taxation. How will you cover this?
"We'll forego the revenue in certain clear categories. I'm talking about 100-200 thousand housing units in eight years. I take the air out of the bubble, release the pressure, and then if I want to keep young people in Karmiel, I have the means of doing so. If I want to bring a company to Beersheva, so that it will become a cyber city, I have the means of doing so. I do it in small doses, according to categories, according to sections of the population that I want to advance."
What will the criteria be?
"We want to keep young people in the north, and for them to buy homes. We only need the tools to keep them there. In Israel, people think in terms of extreme communism or extreme capitalism, but there is such a thing as public-private partnership. You have to provide an incentive to the private sector to take part in growth where we need it, because there's a limit to the state budget."
Have you worked on this program with Trajtenberg? Is it acceptable to him?
"I worked on it with Bloomberg. This is the program he built and implemented in New York. I've spoken to Herzog about it a great deal."
But Trajtenberg's housing plan is different.
"He gave general outlines for construction and also for renting. My program is the way to realize it with the private and financial sectors. And there's another program I started on even in opposition: setting up seven new growth areas in Israel, like turning Beersheva into a cyber capital. From 1999, when Barak laid the foundation stone there, until 2011, nothing happened. I set up the first technology incubator as an entrepreneur, and later on we introduced simple legislation in the Knesset: participation by the state for four years in 40% of the salary of every worker. Within two years, we brought 1,100 workers there. And we can do that if we are in government. If we lead the next government, within 5-7 years there will be 30,000 technology workers there."
At one time you spoke out openly against the monopoly owners. Since elections started to be rumored, you have gone silent. Did someone silence you?
"The Monopolies Bill, under which every monopoly, including privately held monopolies, will have to file a detailed financial statement with the director of the Anti-trust Authority, became stuck in the middle of the legislative process. We will certainly go back to it immediately after the election."
Even if your party wins? This is after all a party that supports the large and powerful workers committees of the monopolies that abuse their strength.
"The government led by us will carry out the reforms at the Israel Electric Corporation, the parts, and in the public sector, in cooperation with the workers and not by declaring war on them. And this doesn't mean that there won't be battles. A different vision is needed to take the economy to a different place. Reform is required in the public sector that will enhance it."
Should the fiscal deficit be expanded?
"All the deficits that Netanyahu and Lapid took are like building a bridge into the sea. If you want to expand the spending rule, you have to present a plan that will bring in revenues. What is the IMF's criticism? That Israel fails to invest in its social growth engines. One section of the population after another is excluded from the economy's growth, one geographic region after another is excluded from growth. They say, show us a plan for integrating haredim in the workforce, bring the Arabs population into the plan. And there is a plan like this, drawn up by Raanan Dinur, who was director-general of the Prime Minister's Office under Olmert. I was party to it, it exists, but Bennett, Lapid and Netanyahu didn't implement it. It should be part of our multi-year program."
Where will the money come from?
"From the state budget, and for this it's possible to raise the spending rule. The new rule for the annual increase in public spending that Lapid introduced is scandalous. It's 2.5%. It has no connection to the growth rate. What happens when growth is 4%? There are gaps, and then no-one benefits. What is the Ministry of Finance's motive in the multi-year plan to reach a 60% ratio of debt to GDP? I want to know how many legs Israel's economic table stands on. Are the haredim involved or not? Are the Arabs involved or not? Do you know how many people do not participate in Israel's economic activity because the state doesn't give them a chance?"
Avigdor Liberman has said he will only join a right-wing government, Arieh Deri and Eli Yishai have declared that they will recommend Netanyahu for prime minister, as has Bennett. Only Kahlon is neutral. With whom will you form a government?
"With Yesh Atid, with Meretz, Kahlon, and even Liberman if he is prepared to sign onto coalition guidelines of two states and a regional settlement. And of course, the haredi parties with which we have been partners in recent years on employment, while Lapid attacked them over army service and used them as political fuel for incitement. So I think that Deri, Litzman and Gafni will be part of the coalition we will build."
Will you join a unity government with Netanyahu?
"We are conducting a campaign with the aim of forming a government."
What campaign? Within the party itself there's harsh criticism of the fact that it has no campaign, no-one's directing it.
"I saw that last week we returned to talking about social and economic issues. If you look at the public, it is filling halls to come and hear discussions on serious subjects, and we want to shift the campaign to economic programs, such as housing and the cost of living, concentration in the economy, and small business."
Published by Globes [online], Israel business news - www.globes-online.com - on February 17, 2015
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