fugitive peace

Picture: Hadar Naim

Yesterday the unthinkable happened. I stood in front of a large audience at a conference in Tel Aviv and said that I thought Binyamin “Bibi” Netanyahu was Israel’s best choice for prime minister. (Actually I said “most interesting”, not “best”, but if we’re being honest, what’s the difference.)

If my Palestinian friends find out they will stop talking to me. Maybe most of my Israeli friends too. Politically I’m somewhere to the left of Meretz. Was I out of my mind?

It was the Globes annual business conference, and I was speaking about Israel’s long-term economic prospects. The main problem, I said, was political stability. Governments change so often that it inhibits serious policymaking.

I took the world financial crisis as an example. Israel should not be feeling the pain much. Its markets were hardly exposed to the strange financial instruments that have brought the rest of the developed world to its knees. Its exports will suffer, but that should only produce a mild slowdown. But the banks are panicking and shutting down credit, ignoring the Bank of Israel’s sharp interest-rate cuts, and that is causing the whole economy to shudder. Growth will be around 1.5% next year by the Bank of Israel’s estimate; in per-capita terms, that’s a recession.

What’s needed is a fiscal stimulus plan. But with Israel yet again in an election cycle, it’s impossible to get a serious one passed. There is a package, but frankly, it’s a joke.

When Netanyahu was finance minister he did a lot of good things. He introduced sensible fiscal management, which provided greater economic stability - the month-long war in 2006 hardly caused a blip in the economy - and reformed the financial markets; one effect of those reforms was to separate banking, insurance and asset management, specifically to prevent a crisis in one part of the financial system infecting the rest of it.

He also did a lot of harm to the poor and the middle class because, as is often the case with economic reforms, it was the rich that benefited first. The welfare-to-work “Wisconsin programme” got lots of people into work, but it didn’t make them better off, just increased the numbers of the working poor. The number of mortgages has been falling steadily too, which is a bad sign for the middle class’s health. But I’ve talked to some of Bibi’s policy whizkids over the years I’ve been here, and I think they recognise the mistakes.

So if we’re talking about economic policy, he has a more ambitious and intelligent one than his rivals. And a Likud government will be more stable than either a Kadima or Labour one, and more able to make reforms happen. For Israel, this is better.

For the Palestinians, of course, Likud is a different story.

Bibi says he doesn’t want to reach even a vague final-status agreement with Abbas now, as Olmert has been trying to for the past year. He talks instead about something called “economic peace”. This translates as: we’ll try to boost the West Bank economy enough so that they stop wanting to bomb us, and then, once they’re nice and quiet, we’ll think about talking about negotiating about working towards possible moves that might, in the fullness of time, when the moment is ripe, and without prejudice to Israel’s right to bomb the hell out of anyone it thinks is a threat, lead, eventually and in the long run, to Palestinian independence. Oh, and let’s not even mention Gaza.

You can guess what I think of that.

However, the fact is that neither Kadima nor Labour is offering the Palestinians anything better. Olmert’s offer of a “shelf agreement”, along with half-baked measures to boost the West Bank’s economy while strangling Gaza in an attempt to get the Palestinians living there to turn on Hamas, amounts to pretty much the same thing, just dressed up more nicely.

In fact, it’s better for the Palestinians to have an Israeli prime minister who doesn’t even pretend he wants to give them a state than one who claims to be working on it very hard while indefinitely stringing the process along because s/he has nothing else to offer as a policy platform. It may not be better for Abbas himself; his political survival depends on stringing out the process just as much as Olmert’s did and Livni’s will. But if that’s the best he can offer his people, he should go too.

Furthermore: if Olmert were, by some already thankfully remote chance, to reach a shelf agreement with Abbas before the election in February, it would be a disaster for the Palestinians, and for Abbas personally. Armed with that agreement, Bibi would be in an even stronger position to say that there is nothing more to talk about.

(I don’t, by the way, set much store by the argument, typical of certain hopeful leftists, that Israel’s biggest peace concessions have been made by Likud leaders. Netanyahu handed over most of Hebron to Palestinian control signed the Wye River Memorandum when he was prime minister in 1988, but under duress, not because, like Ariel Sharon with Gaza or Menachem Begin with the Sinai, he suddenly woke up and decided that it was the right thing to do.)

The other main thing to give one pause is that Bibi, to whom we owe the immortal fear-mongering line “It is 1938, and Iran is Nazi Germany”, is the man most likely to send Israeli fighters to bomb Iran’s nuclear facilities and possibly start another war to bring the entire Middle East down in even more flames than are engulfing it already. But I think if Israel had any window for bombing Iran, it ends when Barack Obama is sworn in. Without at least tacit support from the United States, he can’t do it.

So I say Bibi for prime minister. And by as many seats as possible. The Israeli left needs a total defeat if it’s to rise as a serious political force again.

I just outlined this reasoning to one of my Meretz-voting Israeli friends. He said, “Wow. You’re thinking like an Israeli.”

(And, just to make it clear, this is not the official position of The Economist.)