Finance Minister Israel Katz has big dreams. No visitor to his office doesn't receive a detailed briefing on "regional peace trains" that will leave from Israel, travel through Jordan and reach Saudi Arabia and the Gulf States. No one misses his lecture on building an island off the coast of the Gaza Strip that will bring peace to the region, and ports that will make Israel into a global trade nexus.
Slowly and tenaciously, Katz promotes his dreams, but then he opens Haaretz and reads that he's the "worst finance ministry in Israel's history," watches the evening news and sees analysts claim that his ministry is falling apart as people in senior positions leave, that the credit rating will be a smack in face for the Israeli economy, and other awful predictions. It infuriates him.
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"Look at what happened here with the credit rating. For days, analysts and politicians predicted and hoped for a drop in the rating, and then the wonderful news came that it wasn't being lowered. So instead of the analysts admitting they were wrong and wiping the egg off their faces, they claim that the credit ratings agency got it wrong.
"There are biased commentators who are out of date. They don't understand anything. They are joined by politicians like [Yesh Atid leader] Yair Lapid, who said, 'Of course the rating will drop.'
"Maintaining our credit rating is a certificate of merit for the Israeli economy and a purple heart for Israel and a winning answer to all the pundits. On Friday, I knew that at 11 p.m. when the New York Stock Exchange closed, S&P would put out the message, and I saw the analysts sitting in studios and predicting a drop in the rating and a collapse of the economy. Maybe hoping for it, too.
"I heard left-wing commentators respond in a way that is so typical: 'The ratings company doesn't understand the numbers and doesn't understand anything, it doesn't read articles every week.' It's just bizarre, these commentators. They have no shame.'
Q: What does Israel maintaining its credit rating mean for the general public?
"It's hugely significant. The best way to explain it is to think what would have happened if it had been lowered: money in Israel would become more expensive. Today, money is raised in the international market, people receive long-term loans at minimal interest, and money can be allocated to businesses and people on credit, so we get cheaper money. There is room to breathe.
"Keeping our credit rating is also a measurement of market stability. They look at our ability to recover in the future, at stability, at whether Israel will return to a path of growth – and find that the answer is 'ye.' These are serious companies who talked with the experts in the ministry and with me, not the gossip and false hopes of commentators who held a day of mourning when the rating didn't drop. These companies dropped the ratings for England, Italy, and Canada. They don't give anyone special treatment.
"Maintaining our credit rating means that what we're doing about COVID is right. The amounts we're spending on aid to the self-employed, salaried workers, business owners, are right. In July, when the number of COVID cases started to rise, I got up thinking that we needed to build a safety net for the unemployed. By then, we had been extending the aid each month.
"I said in a meeting of the ministry management, 'Let's give people a safety net until next June that we'll update as things develop.' This safety net costs 90 billion shekels [$26.8 billion], and later we added another 10 billion [$3 billion] to it. But it means that the unemployed, the self-employed, and business owners will get grants based on clear criteria."
Q: If you provide a safety net like that, why should people go back to work?
"That's a marginal issue compared to this great act of giving. A few days into the second lockdown hundreds of thousands of people were out of work. Now they know they have a safety net. The unemployed don't want to be unemployed; anything who thinks people want that is wrong. When the market gets back to work, the unemployed will go back to work. Beyond that, we put in a new incentive: someone who was unemployed for 75 days and returns to their work will receive a four-month grant to top off their earnings. We give incentives for people to go back to work instead of punishing those who don't by not giving them money."
Q: There are a lot of experts who expect Israel's credit rating to drop six months from now because of the situation in the market.
"I'm not making prophecies. Don't forget that this is the worst economic situation in the history of the country, and we're dealing with it well."
Q: Why do the commentators come after you? Is it all political arguments between Right and Left?
"Absolutely, nothing else."
Q: How many unemployed are there in Israel?
"A couple of weeks ago we hit a record number for this go-around, which was around 850,000 unemployed. The record the first time was 1.4 million. When I took on the job, there were 1.2 million. That's a high number. But we gave employers incentives to keep on staff. Employers learned to managed, and people learned to work from home. At the same time, I fought to reopen the economy. Every time businesses opened, they brought workers back. This time, we reopened faster.
"The number of unemployed is a direct result of the extent of the lockdown. If the entire economy opens up, we'll see a drop in unemployment. In August we were already down to 450,000 unemployed, and then the number of cases rose again and so did unemployment. We're handling it.
"I want to build an administration that will be in charge of professional training. We'll take people on furlough, keep paying them, and give companies and employers money to train them and take them in. A person who earned 6,000-7,000 (~$2,000) a month will earn 10,000 (~$3,000) after being trained."
Q: Can we say that when COVID is over, there won't be unemployment?
"Definitely not. If I said that, I'd be joining the commentators who predict the future. We need to be realistic. The trend, the process, and the data indicate that when we come out of a health crisis, the economy takes off."
Q: You like to present yourself as a bulldozer, but might the Finance Ministry not demand mercy, too?
"One of the reasons why I'm attacked is because of the mercy I show. They realized that I see the people, the weak ones and the little ones. The new aid program is adjusted to and touches them. I'm attacked because the ministry turned into a ministry that hands out aid. The way the commentators see it, if there aren't a million people screaming and going hungry in the streets, it won't be a good economic policy. People aren't restive, because people are getting money. I am implementing Menachem Begin's approach – a free economy with social sensitivity. Because of my social sensitivity I'm attacked."
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Q: You have an image of being out of touch, unlike former Finance Minister Moshe Kahlon.
"Forget about image. What I've done for the periphery in all my government roles, no one else ever did. Bringing train service to Sderot, to Netivot, to Ofakim, to Beit Shean, to Migdal Ha'emek, and Afula has had the biggest socioeconomic impact they've ever seen."
Q: There are a lot of shops with 'For Sale' or 'For Rent' signs. Things don't look good on the street."
"I fought for the street front shops, I lobbied for them, until they were allowed to open. They don't have a lobby or an organization. And look at how happy they are now, they have customers and long lines.
"No one accuses me of closing businesses. The situation closes businesses. The current economic situation is the worst one in the country's history. The real test will come when the crisis is over. We'll help them in other ways."
Q: Business owners are collapsing because of people who shop from abroad online. What do you think about that?
"I'm not changing the terms of competition. If you want to buy from abroad for less money, I can't tell you no. Everyone has a right to make their own decisions. However, I expect the people of Israel to buy 'blue and white.'"
Q: How much taxes will we all have to pay to cover the COVID expenditures?
"This year, we won't raise taxes, and I promise that next year, they won't go up, either."
Q: How would you rate the government's handling of the COVID crisis?
"The first time around, our handling of the illness was very good, but the handling of the economic fallout was less good. In the second wave, the economic approach was better, but the heal care missed the mark. Since the last lockdown the health care has gone back to a high level."
Q: What do we need to do to avoid another lockdown?
"I said … that the government should be in charge of one decision only – to open or close thing. You can't run after every loose end. I suggested opening almost everything, other than event venues, where there is a real problem of people hugging, dancing, and eating. I suggested we determine an index made up of a few parameters that would decide when it's time for a lockdown."
Q: That sounds like removing responsibility from the government.
"No. We'll be in charge of oversight, there will be enforcement. But the government needs to decide on a central goal and not chase after every business. That's leadership."
Q: What do you think about the issue of vaccines?
"It should be said that Israel took immediate action with Moderna and Pfizer. They are in an immensely strong position. The entire world is waiting in line. India has 1.4 billion people. The US alone is 600 vaccinations. We're only 9 million, and that gives us a disadvantageous starting point, but comparatively, we're in a good place."
Q: We wasted a lot of money on a deal with Pfizer, and in the end, Moderna's vaccine is more effective.
"I'm familiar with the deals. We didn't waste money. At a time when you're spending 100 billion to fight COVID, a few million more isn't a lot. I told the prime minister that money was no obstacle."
Q: How much have we spent on the vaccines?
"The details are secret, but we need as many vaccinations as possible. I told the cabinet that we aren't in close enough contact with the Russians, and they have a vaccine, too. The prime minister said he agreed and called [Russian President] Putin. It's the American administration that could shorten the timeline and give us vaccinations from their quota, The Americans are supposed to get 600 million vaccinations. If they gave us 4 million, we'd be in good shape."
"We need to be in a situation in which we aren't squashed in line. The prime minister's conversations with the CEO of Pfizer shortened the line. There weren't a lot of options. If we hadn't made deals with these companies, would anyone have forgiven us?
Q: What about reopening cultural venues?
"They had rotten luck. Every time they were about to open, a decision was made to close down. Why did that happen? Not because there is more infection there. They submitted plans that would allow them to reopen, with oversight, but they were at the back of the line. That's why I'm saying we need to reopen nearly everything, and not randomly.
"Even now, the Health Ministry has never supplied data about how much spread there is in every sector. So I say, let's determine a maximum for everyone. We'll say what cannot be opened, and open everything else. Cultural performances, too."
Q: You say harsh things about the Health Ministry.
"I look at reality like it is. I back the Health Ministry on health issues, so we don't find ourselves losing control. But within the frameworks we set up, I argue with them all the time about reopening things. We present numbers, against an absence of data. I fought to open businesses that don't admit the public. Now it sounds inconceivable that they weren't allowed to operate. The damage to the economy was 8 billion shekels [$2.4 billion] in two weeks.
Q: Let's talk about politics. Blue and White leader Benny Gantz claims there was no reason not to submit a state budget back in August, and certainly not to postpone it until December.
"I announced that I was going to present a budget for 2020 quickly and was moving along with the budget for 2021 … The cabinet will pass the budget by December, and then we'll submit it to the Knesset for the legislative process. If Blue and White doesn't forbid its ministers to talk to us, we'll have dialogue. We will submit the budget to the prime minister, and I suggest to Benny Gantz that I present them to him as well, and then to the cabinet. No process could be quicker or more professional."
"The question of the budget has become a bargaining chip for the rotation for Blue and White. It turned out that after all the formulations in the coalition agreement, they forgot to close the loophole of dissolving the government over the [lack of] a budget. So they are focusing on it. Suddenly they become experts on the budget, suddenly they know that we need a two-year budget. It's all nonsense. I'm the finance minister, I present the budget. Want a political argument? Please, have one."
Q: Why didn't you present a budget in August?
"The coalition agreement that was signed about presenting a budget in August wasn't realistic."
Q: Will there be a compromise that will avoid an election?
"If that doesn't happen, it will be solely because of an internal political dispute in Blue and White.
Q: What do you think about Yamina gaining traction in the polls?
"It's natural. The people are right-wing. The government is leading the handling of the COVID crisis, which includes both public health and economic aspects. There are a lot of difficulties, and naturally the bitterness works for the opposition. But we aren't holding an election yet. If there is one, things will change.
"I also think the Left will find a candidate [for prime minister] and the election will be between two camps. The first time, Yamina didn't make it past the minimum electoral threshold, and then they changed their leadership, and ended up with six seats.
"Naftali Bennett should have joined the current government and needs to be a partner in the next one. He might have more than the six seats he got in the last election, there were Likud satellite parties that had more seats than that. They're a satellite party, not an alternative to a Likud government. The better Bennett defines things for himself, the better he'll do in an election. Since 1977, the Right hasn't had an alternative besides the Likud. Either we lose, and the Right stays in the opposition, or we win, and the head of Likud is the prime minister."
Q: You've declared a few times that you want to be prime minister. Do you still want to?
"Yes. The day Netanyahu steps down, there will be a race for leader of the Likud. I've held nearly every job – transportation minister, foreign minister, finance minister. I have the experience and I have the ability.
