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Its About Politics, Money, and Tycoons, Mr. President

Accepting a lavish Bank Hapoalim salary revealed a shocking disconnect from Israel's harsh social realities

Dear President Peres,

Like many other Israelis, I saw the video you recently made, together with your granddaughter, about looking for work after the Presidency, and once again was inspired by your youthful vigor and energy, your fresh and contemporary outlook, and your self-deprecating humor. As the last of the Founding Fathers, and as someone who has served the State of Israel since its very beginnings, you are truly a national treasure.

That is why it was so painful, so outrageous, so humiliating to us as Israelis that you seemed ready to compromise the aura and the prestige of the presidency by hiring yourself out to Bank Hapoalim for $30,000 a month. You did something right, very right, in canceling the contract, and for that you are to be congratulated and thanked. Thank you Mr. President! But there is still something wrong with this picture, something that urgently needs to be fixed. In an interview on Channel 2 the evening after Independence Day, you said that you had “done nothing wrong,” in contracting with Bank Hapoalim, that the public had misunderstood, and that you were canceling, not because it was the right thing to do but because of “gossip” and “appearances”.

Mr. President, in this matter, you are very wrong, and the public, whose judgment you question, knew exactly what they were doing and why they were so incensed. It is important, Mr. President, for you to understand why.

You are the winner of a Nobel Prize, among numerous other awards and honors. Another Nobel Prize winner, the economist Paul Krugman, recently wrote about Israel’s economy in a New York Times column called “Israel’s Gilded Age.” As a lifelong member of the Socialist International — of which you were once international vice president — the facts which Mr. Krugman presented must have made you feel sad. At least I hope they did. Krugman said that Israel, from its early egalitarian days, has developed into a nation with one of the highest rates of inequality in the Western world. This has coincided with a quadrupling of the percentage of children growing up in poverty — many hundreds of thousands of children — among other disturbing and depressing phenomena.

In Israel, Mr. Krugman adds — and this is crucial, Mr. President — it’s not even the famous “one percent” who have absorbed the lion’s share of the lopsided wealth equation. It’s our own homegrown oligarchs, the 20 families who the Bank of Israel itself says control, through “convoluted and obscure pyramids,” fully 50 percent of Israel’s stock market. Twenty families. Fifty percent of the wealth. Do you understand, how disturbing this is?

Stanley Fischer,another storied economist and the Bank’s former governor, has repeatedly warned that the concentration of such immense wealth in the hands of so few limits competition and opportunities for the rest of us. You may have also heard that a series of broad based studies, published over the past few years, have definitively shown that inequality is just plain bad for everyone. The studies show that in 11 different categories — including mental health, physical health, education, drug abuse, imprisonment, teenage pregnancy and violence — countries in which there is more inequality were significantly worse off regardless of the absolute wealth of the country. Worse off for the poor. Worse off for the rich.

Shari Arison, who would have been your new employer, is owner of Bank Hapoalim, the largest Israeli bank, and also Shikun veBinui, one of Israel’s biggest construction and infrastructure companies. She is, of course, one of those oligarchs. It’s crucial for you to understand, Mr. President, something about how these oligarchs came to be oligarchs — although I suspect you probably know a lot more about this than I do. As your fellow Nobel Prize winner Krugman points out in his column, the Israeli oligarchs — much like their Russian counterparts — did not achieve their great wealth and the control they now exert on the Israeli economy through innovation, high tech, or biotech. “Israel’s oligarchs owe their position not to innovation and entrepreneurship, but to their families’ success in gaining control of businesses that the government privatized in the 1980’s.” That’s bad enough, but here’s the kicker: “And they arguably retain that position partly by having undue influence over government policy, combined with control of major banks.” Publically and demonstrably extending this “undue influence” to you, perhaps the most renowned and celebrated symbol of Israel alive today, is not just a random move in the chess game, it’s part of the baked-in strategy of the entire oligarchic system.

Mr. President, you are a sophisticated and intelligent man, a visionary, with an intellect capable of grasping the revolutionary potential of technology and social media. Do you really not understand that Israeli society, like much of the world, but even more acutely, is in the grips of a dangerous illness that threatens the fabric of democracy and the ability of the economy to thrive? In Hebrew, there is a catchy phrase for this illness, Hon-Shilton, the confluence and marriage of big money and government.

By hiring yourself out — for a hefty sum — to one of Israel’s leading oligarchic institutions, you were about to become a poster-boy for Hon-Shilton. You may have not broken a law — not everything that should be a law is a law. But you would have stretched the norms of public behavior far beyond the boundaries of what is acceptable, lending your prestige to the wrong side of perhaps the most crucial issue in Israeli society today, after questions of security and peace. And it does not matter that you are no longer president.

When a country confers its greatest honor on a person — and in your case it was an honor well deserved — that honor is a badge and a responsibility you wear forever. No one thinks of you as a private citizen. No one can excuse you from upholding, until your last breath, the principles of Israel’s Declaration of Independence including “the development of the country for the benefit of all its inhabitants…freedom, justice and peace as envisaged by the prophets of Israel…complete equality of social and political rights to all its inhabitants.” If you think that selling the prestige of the presidency to one of the 20 families that already control half of Israel’s wealth helps to promote equality and develop the country to the benefit of all its inhabitants, please, help us understand.

You say you did nothing wrong. “What’s all the fuss,” I can imagine you saying, in your elegant, slightly sardonic and lightly Slavic intonation. You are canceling because of “appearances.” But Mr. President, in order to save our democracy and our society, the line between appearances and reality is very thin.

So, for example, in regards to Haifa Chemical and cancer, another disturbing story from this past week. Haifa Chemicals was a government company bought for a song by the Ofer Brothers, another of our dear 20 oligarchic families. For more than a decade, environmental organizations and activists have warned that poisons being dumped into the air and water by Haifa Chemicals were causing high rates of cancer among the citizens of Haifa. This past week, a leaked internal report of the Ministry of Health stated this outright — but then the Ministry seemed to backtrack. The Mayor of Haifa courageously shut down the offending factories, pending investigation, but why had previous mayors failed to take this step? Was it the fact that the Ofer brothers, like all the oligarchs, had close personal ties to top Israeli leaders? Or was it the fact that they had donated 75 million shekel to build a soccer stadium in Haifa? It’s all so confusing, Mr. President, and that is the point:, the smoke and mirrors of the “obscure and convoluted” relationship between the tycoons and our high officials undermines our faith in democracy and in the political system. In this issue, Mr. President, appearances are exactly the point.

One more thing, Mr. President. I know you studied Talmud as a youth. Do you remember that one of the deep ethical insights of the Talmud is that even the greatest and holiest sages are prone to being subconsciously influenced by material gain? A series of stories in the Talmud tell how some of the greatest sages recused themselves from judging cases after having received even the slightest favor from one of the petitioners. One story tells of how a great sage recused himself from a case even after having refused a favor that was offered — and then, listening in on the case, caught himself making mental arguments on behalf of that person in any event. So it does not really matter if you would have donated your salary to the Peres Center for Peace or that you intended only to give lectures, not to lobby on behalf of the bank. Your judgment, like that of the great sages of the Talmud (or perhaps even a bit more) would already have been impaired.

And, Mr. President, we need your judgment unimpaired. There is a battle shaping up for the soul of Israel, for the nature of its democracy, a battle to create a more equitable society in which the tremendous human and natural resources of our nation will be put to the service of all its citizens. It’s a battle whose first skirmish occurred three years ago, when hundreds of thousands took to the streets during the summer of social protests. We need you on the right side of that battle, on the right side of history. So please help us. Don’t say you don’t understand what the fuss was about. Focus the same brain cells you use for understanding nanotechnology on another important challenge: creating a truly fair and egalitarian society in Israel.

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