The Gas Deal: Should We Approve or Reject?

​The gas deal is still on the table and yet to be approved. Months have gone by with no final approval in sight. Opposition to the deal is strong, and the Coalition partners can't seem to agree.

I am not going to go into the deal's myriad of technical and economic details for the following reasons:

1. I have not had time to read the probably thousands of pages describing the arrangements.
2. I think that many of the arguments about this or that detail are skewed because of political or other interests. 

Now, I think that its fair to say that the Government wants to pass the deal because governments like to do things, especially if it means more money in the kitty that they can dole out to the public (it increases their chances of getting reelected). The Opposition, on the other hand, will find something wrong with anything that the Government does, because that prevents the Government from doing something, which increases the Opposition's chances of being the desirable 'alternative' in the next election.

As an ordinary citizen trying to figure things out, I am therefore in a quandary. Who do I believe? The Government, which tells me that they have a good deal, or the Opposition, which tells me that it is a bad deal.

Among the plethora of opinions, one opinion stands out: that of Karnit Flug, the Governor of the Bank of Israel. Karnit Flug is probably the most powerful economist in Israel. She not only has an entire building full of economists to help her figure things out, but she also doesn't have to worry about being reappointed till 2020. Furthermore, she is a powerhouse as an economist in her own right. She was Stanley Fisher's choice for Governor when he left office, and that is an excellent recommendation. On the other hand, there is no love loss between her and Bibi. She was not Bibi's choice for Governor. Not only that, Bibi did everything that he could to find someone else (because he didn't agree with her economics).

Let's remember who Bibi's pre-Flug choices were:

• Mario Blejer, a former governor of Argentina’s central bank
• Lawrence Summers, former US Treasury secretary
• Jacob Frenkel, former Bank of Israel Governor
• Leo Leiderman, chief economist at Israel’s Bank Hapoalim

Now that we've established that Karnit Flug is not a Bibi crony, let's see what her position on the gas deal is. One would expect that she would have an ax to grind with Bibi and might try to get 'even' with him for opposing her appointment. 

At the High Court of Justice on August 10, 2015, she said:

By the nature of negotiations, the outline does not achieve the ideal result, but it does contain many advantages for the economy.

The Bank of Israel’s position is that under the circumstances created, the new outline provides a reasonable response to the needs of the economy, particularly for the purpose of speeding up the connection of an additional natural gas pipeline and the promotion of development of the Leviathan and Karish and Tanin reservoirs.

In other words, she approves the deal. To her credit, she has chosen the best interest of the Israeli economy over any possible malice toward Bibi (how refreshing!).

So, when I think about who is right on the gas deal -- either naysayers Keren Neubach, Shelly Yachimovich, etc. on the one had, or the Government on the other, I think I will go with the Government. Yes, I really do think that Bibi is right on this one, and the reason is Karnit Flug.