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It's the Economy, Stupid?

As Ariel Sharon starts his own party, Israeli politcs might finally focus on economics.

11:00 PM, Dec 20, 2005 • By DANIEL DORON
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"STAYING IN THE LIKUD means wasting time on political struggles instead of acting for the good of the state." This is how Israel's Prime Minister Ariel Sharon explained his dramatic departure from the Likud, a party he helped establish, and his forming of a new party, Kadimah (Forward), from a motley crew of Likud and Labor pols plus a few independents, whose main affinity is obedience to Sharon. Sharon's move was heralded as an "earthquake" in Israeli politics.

But while the reshuffling of political alignments may introduce some rhyme and reason into the Byzantine affiliations of Israeli politics, it is not likely that it will address the two main causes for the governmental paralysis about which Sharon rightly complained: a stranglehold by an unaccountable bureaucracy that paralyses government, and the freezing of key government decisions by an increasingly activist Supreme Court.

Politics is pervasive in Israel because of the government's domination of the economy, a remnant of Israel's Socialist past. Since the government is the chief source of wealth, distribution policies trigger incessant political struggles. They also radicalize politics as each group of special pleaders tries to cloak itself in some adversarial "national purpose."

A MILITARY MAN accustomed to command, Sharon does not seem to consider "political struggles" between differing views, especially within his party, a legitimate feature of democracy. In Kadimah, he and his son, Omri, call all the shots. They frame policy and they alone choose who is to be elected to the party's Knesset slate and who will fill ministerial positions. All other party notables, including the veteran Shimon Peres, are essentially window dressing.

Sharon was outraged when members of Likud--the party he had led to victory--refused to follow his radical shift in policy concerning the Israeli settlements. The Likud rank and file could not comprehend why, contrary to his long and strongly held convictions about the strategic and ideological necessity of all settlements (many of which he has established), Sharon suddenly decided to evacuate one of the most successful settlement blocks without quid pro quo from the Palestinians; why the terrible repercussions he once believed would follow a unilateral Israeli withdrawal, especially from the dangerously radical Gaza strip, suddenly did not matter to him; and, above all, why his dramatic turnaround was so hasty--and coincided with serious legal challenges to his tenure. (Sharon's eldest son was indicted for fraud in the internal Likud election when Sharon overcame Benjamin Netanyahu, while his younger son has received large sums of money from a contractor seeking favors from his father. In both cases people found it hard to believe that Sharon was not aware of the problems.)

When resistance within the party grew and a movement to depose him began to coalesce, Sharon agreed to bring the dispute to a vote in the Likud's central committee. But when he lost the vote he simply ignored it, as he has ignored other party resolutions.

THE ISRAELI POLITICAL SYSTEM--35 billion dollars, over half of the government's budget, which swallows a whopping 55 percent of Israel's GNP, is devoted to transfer payments--has been progressively torn apart by the struggles between conflicting vested interests. And as the power of the parties and of the government weakened, the void was filled by the bureaucracy--(which employs 800,000 people out of Israel's 2.4 million person labor force)--and by an increasingly activist judicial system. The bureaucracy has often relied on judicial cover to maintain the status quo. It has extended its powers by creating ever higher barriers to entry by private initiatives into its domains. But it also often clashes with the legal system, creating additional gridlocks. The end result is an ever growing paralysis of government (its takes a decade to get a major real estate project approved) and a growing willingness to resort to corruption in order to get things done.

The new political alignments are not going to change any of this. Instead, since the Israeli system is already far too centralized - a state that paradoxically leads to its fragmentation and to a growing inability to govern - the additional concentration of power may even make matters worse.

Sharon's new party, Kadimah, has nothing new to say. It offers slogans about "peace with security," but gives no indication as to how Sharon plans to extend his policy of unilateral disengagement, or how he is going to handle the worsening terrorism emanating from Gaza as a result of his unilateral withdrawal and his puzzling reliance on Egypt to curb terrorist infiltration from the Sinai.