How Stanley Fischer Advanced Neo-Liberalism in Israel
Shir Hever: Fischer steps down as head of Israel's central bank, known for pushing economic "reforms" that led to greater inequality; before this working for IMF, he helped develop privatization in Russia - February 20, 2013
Members don't see ads. If you are a member, and you're seeing this appeal, click here
I support The Real News Network because I am tired of lies and biased journalism. Long live TRNN! - Roberto
PAUL JAY, SENIOR EDITOR, TRNN: Welcome to The Real News Network. I'm Paul Jay in Baltimore. And welcome to this week's edition of The Hever Report with Shir Hever, who now joins us from Germany.Shir reports on Israel/Palestine, and he's studying the Israeli occupation of the Palestinian territories for the Alternative Information Center, which is a joint Palestinian-Israeli organization.Thanks for joining us again, Shir.SHIR HEVER, ECONOMIST, ALTERNATIVE INFORMATION CENTER: Hi, Paul. Great to be here.JAY: So what have you been working on this week?HEVER: Stanley Fischer, the chairman of Israel's central bank, just announced that he's resigning from his position as the chairman of Israel's bank. Stanley Fischer is a very interesting figure in Israel's economic scene, and also a very important political figure in Israel. He'sâalthough he was not born in Israel and he only immigrated to Israel a few years ago, he came immediately to take the position of the centralâthe chairman of the central bank of Israelâa very important position.JAY: I mean, he was actually hired to be chairman before he was living in Israel. Is that right?HEVER: Exactly. And he used his ability as a Jew to immediately become a citizen of Israel. So he was actually offered the job before being an Israeli citizen; became an Israeli citizen; immediately took on this job. JAY: Now, he's considered a fairly popular figure, if I understand it correctly. But at the same time, the Israeli economy'sâinequality has grown tremendously. There have been mass demonstrations in the streets about unemployment and cost of living and such. But does he not wear responsibility for some of this?HEVER: Interestingly, no, he does not. He rarely appears on the media anyway because his Hebrew is not so good, and when he does, it's usually in a scene, in conditions of his choosing, so giving a speech in a conference, for example. So, actually, as the chairman of a central bank, it's his responsibility to make sure that things like cost of living, cost of housing don't get out of control. In fact, they do get out of control. Israel, the cost of an apartment compared to the average wage is about twice as in most countries in the developed worldâit's about 160 months of salary to buy an average apartment, and that's about double compared to the United States. And as chairman of the central bank, he kept saying there is no problem in the real estate market, there is no bubble of prices. And he actually did nothing about that. He also did nothing about the incredible power that banks have in Israel. The banking sector in Israel is extremely powerful, and it's very interesting to see that every time there is sort of conflict, a sort of war, or a Palestinian intifada, uncertainty rises, stock prices drop, and at the same time the bank stocks increase, and the bank profits increase as well. The banks strive from uncertainty and stress.And there is a lot of protest in Israel because of the very high commissions, very high fees charged by the different banks, and Stanley Fischer actually did also almost nothing about that. He defended the banks, although he's supposed to be the regulator who controls them and keeps them [crosstalk]JAY: And how are the banks making money out of the wars?HEVER: The banks are lending and loaning. But when people are desperate, for example, when there is a situation of war, peopleâin the war of 2006, for example, tens of thousands of Israelis left their homes close to the border of Lebanon and fled to the south to live in hotels, and at that moment, they would take a loan from the bank to pay for their hotel stay, regardless of what kind of interest the bank would take from them. Later on, the insurance companies kick inâalso supported by the governmentâto pay compensations to people who had their property damaged or lost days of work, and then a lot of money flows into the economy all of a sudden, and then these people have to decide what to do with the money. They go to the bankâthey want to invest the money or to save the money. And again, they don't have any choice, they don't have any options, except for what the banks offer them. So this is a good example of how banks are able to exploit the consumers more when there is a situation of crisis, when there's a situation of urgency.But the one thing that Stanley Fischer did do as chairman of the central bank is to buy a lot of U.S. dollars. And that is because he became chairman in 2005, but in 2008 the global crisis of capitalism became all too apparent, and there was severe worries about the United States, and Stanley Fischer started to buy dollars in very large amounts. In fact, this was the one policy that has been associated with him during those seven years that he served as chairman of the bank. And he bought so many dollars that in fact an entire annual budget of the Israeli government is just sitting in the vault of the central bank of Israel, even today, in the form of dollars. So that's something which certainly supported the U.S. economy. Israel is very small, a very small economy compared to the U.S., of course, so the fact that Israel was buying these dollars is not what saved the dollar globally. But it contributed something. And I think if you look at that policy within the context of his policies regarding housing and in his policies regarding the banking sector, then what you actually see is that he was constantly buying more time, he was constantly postponing the inevitable collapse of the Israeli economy. During the crisis, he said Israel has entered the international crisis in a very good position, in fact, better than most countries in the world, and therefore Israel will not be affected by the crisis. As we know after the protests of the last two summers in Israel, of course Israel was extremely affected by the crisis. It affected people's cost of living, ability to access jobs and housing.But interestingly, Stanley Fischer remained aloof. Beyond all that, he was not affected, he was not targeted by the protesters as somebody who is responsible for the deterioration of their standard of living. And now he's being considered possibly to a ministerial position after leaving his position as chairman of the central bank.JAY: Which means even more neoliberal economics in Israel.HEVER: Yeah. And I think it's also interesting to see the history of Stanley Fischer, because he was usually critical of Israeli policies in the sense of the occupation, and he actually wrote a few papers about how Israel could stand to benefit from promoting the peace process with the Palestinians and eventually having a two-state solution from an economic point of view, something which he wrote in the '90s during the Oslo processâcompletely neglected that topic as soon as he was offered a job by Netanyahu.But also very interestingly, when the Soviet Union was collapsing, he was appointed first deputy of operations for the International Monetary Fund and he was in charge in many ways to advise, to pressure Russia and the other former Soviet republics on what kind of economic policies they should adopt. When Boris Yeltsin was struggling with privatization of many government assets and trying to bring a capitalist economy into Russia, this caused a lot of protest within Russia. Stanley Fischer then gave a statement that he believes that Russia should work at full speed to hasten privatization even more, to hasten the progression into a capitalist economy as fast as possible. And at some point Boris Yeltsin decided to impose martial law in Russia. And that coincides with a time when hundreds of thousands and eventually approximately 1 million people from the former Soviet Republics, and mainly Russia, have immigrated to Israel. Of course, those who had some kind of Jewish background or someone Jewish in their family had a better chance of succeeding to emigrate into Israel. They were fleeing the very harsh conditions that existed at the time in the Soviet Union, something which Stanley Fischer is very much involved in. And, actually, Joseph Stiglitz pointed some accusations at Stanley Fischer for his role in destroying the Russian economy. And then, a few years later, Stanley Fischer came and followed these people into Israel and also did his little immigration and once again came into a position where he could control economic policy regarding these people.JAY: Alright. Thanks very much for joining us, Shir.HEVER: Thank you, Paul.JAY: Thank you for joining us on The Real News Network.
DISCLAIMER: Please note that transcripts for The Real News Network are typed from a recording of the program. TRNN cannot guarantee their complete accuracy.
Our automatic spam filter blocks comments with multiple links and multiple users using the same IP address.
Please make thoughtful comments with minimal links using only one user name.
If you think your comment has been mistakenly removed please email us at email@example.com