Credit crunch? Who cares?

By Daniella Peled, October 3, 2008

Israel is one of the few Western countries where economics does not play big on the political scene

It is an ill wind that blows nobody any good. And the current stiff breeze chilling the collective tuches of the world's bankers is - to stretch a metaphor a little painfully - actually blowing some political careers right back on course.

Take our own Gordon Brown, for instance. It would have seemed logical that the man who was not only the incumbent when trouble hit, but who directed the UK's economy for 11 years, might have taken a further beating when our current monetary woes kicked in. Instead, the polls show that he has halved the gap - one might say chasm - between Labour and the Conservatives over the last week.

The public might still dislike him, but at least he has a record as a competent Chancellor. Amid such uncertainty, the electorate is not yet ready to trust the downy-cheeked duo of Cameron/Osborne with their economic wellbeing.

In Washington, the bailout plan has given George Bush perhaps his last chance of salvaging any vestige of national leadership. But more significantly, it stands to serve one Barack Obama quite well. American voters traditionally run to the Democrats for comfort and cuddles when the economy gets nasty, and Obama has been busily tapping into this. After all, last time things were this bad, FDR and his New Deal came along to rescue the US economy and set it on the path to financial superpower status.

Claiming credit for reining back the eye-watering bailout plan and exploiting public anger, Obama is building up ground lost over national security and foreign policy to McCain, who is now a little on the defensive.

So how does this fiscal trend play out in Israel? As ever, trends in the Holy Land seem there to be bucked, if not entirely debunked. Here, it is most definitely not the economy, shlemiel. One might think that such financial ills would boost the standing of Likud leader Binyamin Netanyahu. After all, as finance minister in Ariel Sharon's second government, he presided over a period of it-hurts-but-it-works Thatcherite economic reform.

Endless groups of foreign investors were treated to his creaking allegory of his days as a commando, which provided his justification for slashing the public sector: if the little guy has to carry the fat guy, no one gets ahead. He cut taxes, he cut benefits and he privatised like all hell, a process long overdue for Israel's outdated centralised economy.

But his resurgence in the polls over the last couple of years has had nothing to do with his financial acumen and everything to do with the discredited nature of the Olmert administration. The fact is that the Israeli public does not feel the urge to look for an economic saviour. An intriguing phenomenon of Israeli politics has always been the lack of correlation between people's economic wellbeing and their voting patterns. In 1984, the country was facing a financial meltdown verging on hyperinflation, and yet that was not enough for them to boot Likud out of power after seven years of economic mismanagement. It fell to a national-unity government to muddle through the crisis.

The financial hysteria does not quite have Israel in its grip as yet. The Bank of Israel is monitoring the situation but its chief, Stanley Fischer, feels confident that the Israeli system is strong enough to weather the current storm.

The simple fact is that Israeli voters are obsessed with national security. It is less a question of a chicken in every pot than a missile-defence system in every backyard.

Labour or Meretz might promise better economic dividends to voters, but in Israel people want to feel secure. And if possible they want the luxury of hope. Failing that, they'll go for a safe - or clean - pair of hands.

Daniella Peled is the JC's foreign editor.

Last updated: 11:46am, October 2 2008