(May 17, 2020 / Israel Hayom) The last time I interviewed Moshe Kahlon was a year ago, shortly after a tough election in which his Kulanu Party received only four seats and he announced he would be returning to the Likud. We talked about what image might symbolize the situation, and I suggested a roller coaster. This week I asked Kahlon again what image would best portray his situation.
“On the beach. Not Thailand—Givat Olga. I’m going home with a smile of satisfaction and happiness,” he says.
Kahlon has finished a 17-year stint in politics that began with him putting up posters at the Likud Party headquarters in Haifa and ended with him serving in one of the toughest jobs in Israel. Now, as Israel Hayom is the first to report, Kahlon has been offered two positions: one as a consultant for the OECD, and the other as a manager of international funds that work with friendly Arab states.
Kahlon is one of the longest-serving finance ministers in Israel’s history. He began the job on May 17, 2015, and on Sunday—exactly five years later—he vacated his seat for his successor, Israel Katz.
“I can only thank the Lord and the State of Israel for the opportunity I was given to come here and serve the people,” Kahlon tells Israel Hayom in an exclusive weekend interview.
Q: By the criteria of politics, you’re too young to leave. What happened?
A: I’m at the top, and from here there are two possibilities: to remain in place, or run for prime minister. I don’t want the job of prime minister, and it’s already filled. Staying in place means that from here, it starts to go downhill. I fulfilled my dreams. What will I do now? Make new dreams?
I’m 60, happy, Israel gave me an opportunity, a kid from a disadvantaged neighborhood who didn’t even finish high school. To do amazing things, things I believe in. I came with an inherent worldview. I don’t apologize for it, I’m proud of it, I’m proud of my work in the Finance Ministry as well as on diplomatic and security matters, like the fact that I’m a member of the team negotiating for the release of Israel’s missing and captives, which is currently active.
Q: What does ‘currently active’ mean?
A: There are things underway now, and we are doing everything to move them forward.
Q: What are the chances of success?
A: Good. The best they have been thus far, although I don’t want to mislead anyone. Chances [of releasing Israel’s captive citizens and fallen soldiers] have improved because of coronavirus, which created a reality and a humanitarian atmosphere that is enabling.
Q: An atmosphere with Hamas?
A: An atmosphere between us and the mediators. I don’t want to say anything more.
Kahlon, a married father of three and grandfather of three, lives in Haifa. He was born in Givat Olga to Yehuda, a construction worker, and Misa, a homemaker, the fifth of seven siblings. At age 14 he started working in the fisheries at Kibbutz Gan Shmuel to help his family make ends meet, and did not complete high school. At age 37 he received a B.A. in political science from the University of Haifa, and then a degree in law at Netanya Academic College.
He became involved in politics at a young age.
“Even as a teenager in Givat Olga I was excited by [Menachem] Begin’s speeches in city squares. I was active in the Likud election campaign, I put up posters,” he says.
His work at the Haifa Likud headquarters introduced him to Uzi Landau, who in 2001 became public security minister and appointed Kahlon his aide. In 2003 he was elected to the 25th spot on the Likud list as a representative of the Haifa district, and three years later came in first in the party primaries. He was later made chairman of the Likud Central Committee.
In the 2009 Netanyahu government, Kahlon was appointed communications minister and promoted reforms to the television and cellular phone markets. In October 2012 he announced he was leaving politics.
“I left for two years of ‘civilian’ life, and prepared myself to become finance minister. That was my goal. I worked on plans with academics, I built models of economic plans,” he says.
When he returned to politics in April 2014, he announced he would be leaving the Likud because the party had veered away from the social path that had previously characterized it and the radical right had taken control. He founded his Kulanu [“All of Us”] Party before the 2015 election, and it won 10 seats. He was appointed finance minister in the government formed following the election.
Before the April 2019 election, Kahlon positioned himself as the “sane Right.” Kulanu was teetering on the brink of not making it past the minimum electoral threshold, and eventually won four seats. Ahead of the do-over election in September 2019, Kulanu merged with the Likud.
Kahlon was close to completing a successful run as finance minister. The rise in housing prices was checked, more funding went to health care, growth was at 4 percent, and unemployment was the lowest in history (3.4 percent). The deficit was low (3.1 percent) and Israel had one of its best credit ratings ever. Then came the coronavirus. Despite his intention to resign in January of this year, he agreed to the prime minister’s request that he stay on during the crisis. The Israeli economy sustained a serious blow that left a million out of work, caused businesses to close, and the self-employed to collapse.
“We sacrificed the economy on the altar of health,” he says. “I won’t go into the question of whether that was the right thing to do or not, because I’m not from the health field. The health officials told us we needed to hit the economy for the sake of health, and we went along. The economy took a blow.”
Q: That is what people are criticizing you for—that you did whatever the health officials wanted, without a fight.
A: That’s not how it was. It was an unfolding event. At the start we didn’t know anything, and they came in with scary figures. Then we started to feel they were exaggerating a bit, so I issued instructions that went against what they were asking for. They wanted to stop all industry, and I didn’t agree to. I freed industry to work. Every manufacturer who had customers abroad was given a permit to continue operations. Manufacturing didn’t drop below 80 percent of full operations.
The dramatic day was March 15. I was sitting in my office, and I got a call from Netanyahu. He said, “Listen, we’re heading into a huge event. We need to see how people will have something to live on. See that they can do their grocery shopping. It’s not about flights, hotels, or vacations, it’s food, first of all.”
I said, “We need to give the people assurances that their salaries will be deposited. We immediately reached a deal with the Histadrut Labor Federation for all the salaried workers that would be on furlough or reduced hours, and then we went on to compensation for the self-employed, postponement of payments, and cancellations of city tax bills.
At one point, an outside consultant even brought up the possibility of handing out food vouchers, with rations of bread and cheese for families, like the leanest years of the 1950s. I dismissed that idea. I said the economy was strong, that we’d gone into the crisis strong and would be able to make it through.
Q: What grade would you give yourself on your handling of the corona crisis?
A: I don’t. The crisis caught us in great economic shape. Reserves of over NIS 30 billion ($8.4 billion), that’s a lot, and we also managed to raise money from all over the world. There was a demand for government bonds and good rates. Growth was high, the debt was low. We were ready. I found myself with an excellent, experienced leadership at the Finance Ministry. After five years at the Treasury, you’re calm in the face of the biggest stressors. We knew how big an event we were about to see, and I said, “Calm down, we’ll handle it.” We got through it without unnecessary drama.
Q: So, a 10?
A: I’m not giving myself a grade. I focus on what’s important. Here, right now, as we’re talking, I got a message that over 300,000 people have received grants for out-of-work self-employed.
Q: There was criticism of you for disappearing, for not speaking at the press conferences.
A: I decided not to give interviews at that time. I wasn’t standing up in front of journalists, but I was giving answers. There wasn’t a day when the people weren’t getting answers.
Q: There was a sense that you weren’t the one leading the event.
A: Nonsense. They say that because I wasn’t giving interviews. It makes me angry. I was there, I was present. I led this crisis. I made decisions, and no decision was made without me. Without mentioning names, the media tends to praise ministers who make a lot of noise as if they were doing a lot of work. I think that the right thing to do is talk when an event is over and not spend it jumping from one studio to another. Say little, but do a lot.
Q: Was there anything you did during the crisis that you could have done differently?
A: We should have pressed to free up the economy a little earlier. Of course, it’s easier to talk in hindsight—at the time of the outbreak no one in the world knew where it was going. We needed to make decisions in a time of uncertainty.
Still, we prevented massive economic damage. If we had done everything the health officials wanted, we would have three million unemployed right now. On the Saturday we were all called in ahead of the decision on a nationwide shut-down, the widely held opinion was that we needed to allow only vital employees to work, which would have meant cutting back from four million workers to 600,000-700,000.
At a meeting of ministry director generals, the opinion was that this was an act of God and there was no alternative. My ministry director general, Shai Babad, called me and said, “It’s not going well. They’re living in a fantasy—they want to shut down the economy and send Israel back to the Middle Ages. We’ll find ourselves with damage Israel has never seen and will take years to repair.” I told him, “Don’t worry, it will be fine.”
Before that meeting, we starting taking steps. We closed down flights, we closed event venues, and all cultural and leisure venues. We knew we were on stormy seas, but that was a moment when you realized a tsunami was about to arrive and wash everything away.
You see that people are losing a sense of proportion compared to what was happening, but everyone is trying to scare you, showing you nightmare scenarios, and you don’t have any answer to give. They say, “Look at the pictures from Italy, Spain, the United States, how bodies are starting to pile up. Look at the number of coffins.” What do you say? That they’re wrong? That it won’t happen? I told Shai, “Stay calm, everything will be fine.”
Q: They showed you pictures of coffins, and you said “stay calm”?
A: A person at the top of the pyramid has to project calm and confidence.
Q: But weren’t you afraid?
A: No. Fear is not a work plan. Yes, I was careful. I’m a cautious person, not a coward. But if you’re afraid, you freeze. If you’re cautious, you’re alert.
Q: Did the people at the Health Ministry go too far?
A: They didn’t know what would happen. Everyone looked at the data and told himself that there would certainly be a state committee of inquiry, and he didn’t want to have to explain why there were thousands of dead Israelis. So from the start there was the idea that we must not let the healthcare system reach the point where there were more patients in need of ventilators than ventilators.
Q: You’re saying that people acted out of fear of facing a committee of inquiry.
A: There’s no doubt that was there inside. Some people were afraid that the day after it was over, they would be held accountable, and decided to take the safest route of “I was being cautious” and “I did all I could.”
One Friday at 11 p.m. Barsi [Moshe Bar Siman Tov, director of the Health Ministry] brought up the most overblown proposal. He was sitting with [IDF] GOC Home Front Command Maj. Gen. Tamir Yadai and they were planning how the Home Front Command would direct a total lockdown of the country. It reached me and I said, “This won’t happen.”
I spoke with the prime minister and we came up with the term “closure with breathing room.” We took care that manufacturing would continue almost at full scale. We operated reasonably and wisely. We didn’t cooperate with everyone. We gave permits to continue working. Anyone who needed to manufacture and could operate a factory under the “Purple Tag” conditions—what does this event have to do with him? And if there is an outbreak among the elderly, why should I get stressed and stop 30-35-year-olds from working?
Q: So you issued permits and acted against the directives the government issued?
A: I didn’t take the law into my hands, but we exercised our judgment in the economic part of the event. We felt that the Health Ministry didn’t understand the extent of the economic damage. I don’t want to say they were ignoring it, but they didn’t realize what was happening in the Treasury.
Q: Where was the prime minister in all this? There are claims Bar Siman-Tov had his ear and didn’t let him hear anyone else.
A: The prime minister has the general responsibility. He listened to both sides. The moment we saw that the Health Ministry wasn’t counting the economic cost, we got to work. There were 20-30 emergency directives they issued, and not a single one was implemented in its original form. We made changes to everything.
At one stage I brought in all the ministers to show them the situation, and then things started moving toward easing restrictions. Two and a half weeks ago there was already a discussion about whether or not to open up retail shops. Barsi was whispering to the prime minister that it mustn’t even be discussed. He brought in epidemiologists who said that with over 10 new cases a day, it would be a catastrophe. I stood up and said, “This won’t happen.”
At the end of the meeting a decision was made to try out reopening shops. Three days later we said why some shops and not others, and opened more. We pushed to reopen schools and nursery schools, and for them to operate as normal.
Q: Was there a way of preventing the economic crisis?
A: I say, we’re in the smallest crisis of a huge story. We minimized the damage as much as possible.
Q: Every day stories come out about business owners who are losing their businesses.
A: We are one of the countries that are most generous to the self-employed. The U.S. gave $1,500 per family. We gave out sums of NIS 15,000 to NIS 16,000 ($4,200-$4,500) in three disbursements.
Q: Where did you find NIS 80 billion to pump into the economy?
A: We went into the crisis with a surplus of NIS 31 billion, and we made a “box budget”—a budget for a specific purpose. You allocate it, and at the end of the crisis they’ll need to decide how to reduce the debt. The next finance minister will be the one who decides.
Q: How much damage will it do going forward?
A: We’ll have to cut back. I assume steps will be taken, but not in the near future. I talked with Netanyahu about what would come next. I told him that first of all, the event needs to end. Then he can form an economic plan and decide about reducing the deficit in the space of a year, two years, or five years.
Q: What do we do about a million unemployed?
A: Hundreds of thousands are already back at work. We still don’t have accurate numbers, we’ll know them after they get their first paychecks and National Insurance [payments are] deducted. The more we open the economy, more people will go back to work. We also announced an additional grant that will incentivize employers to bring people back to work.
The term “a million unemployed” is incorrect. There is temporary unemployment. People are between jobs and waiting, or are on furlough. According to our projections, unemployment should automatically drop from 26 percent to 10 percent, without us doing anything. People are going back to work. By the end of the year, 80 percent to 85 percent will be back at work.
There will also be some who will have to get used to a new reality. The job market is changing, and there will be people who will have to be retrained. We’re allocating money for that, too.
Q: So how much has corona cost us?
A: About NIS 140 million ($39.5 billion), both directly and indirectly. I hope that will be it, that there won’t be another wave.
Q: And if there is?
A: Then we’ll have to learn to live with it. We can’t lock down the economy. It’s dangerous.
Q: Why are the health officials getting praised, and you in the Treasury are constantly being criticized?
A: The Health Ministry tells people to sit at home, and I’m the one who needs to deal with the unemployed. He [Bar Siman Tov] sends me “customers,” stops the economy, and I’m the one who has to cope with it … What happened in the Health Ministry? They said there would be a million cases and tens of thousands dead, and “look at what happened in Italy.” In the end there were only 250 dead—each one representing an entire world, and the heart breaks over each of them, but these aren’t the numbers they were talking about.
So when their predictions didn’t come true, it was seen as a success. But the economy isn’t like that. It doesn’t matter how much compensation I award the public—I won’t be able to compensate for the harm done. Israel’s business sector GDP is NIS 180 billion ($50.7 billion) a month, there’s no way of making up for [the loss of] that.
Q: You’ve seen the protests by the self-employed, seen people’s pain.
A: I understand them. A person builds a business with their own hands, whether he’s selling falafel or is an accountant or a real estate agent. He makes a nice living for 30 years, and one day, he loses his life’s work.
Q: Understanding is great, but what are you doing to help?
A: From the first day we were providing billions. The first NIS 10 billion went to health care, and then billions more to people who signed on for unemployment and furlough benefits. These are people who got money deposited into their bank accounts. Then we transferred money to the self-employed in more disbursements. We gave everything we could.
The self-employed need additional services. Their problem is more extensive, even before corona. We need to regulate their rights, like unemployment benefits, the paid grief leave they don’t get, and more.
Q: What grade would you give yourself for your term as finance minister?
A: I did what I believed, and I believed in what I did. Kulanu is the only party that lived up to everything in its party platform. That is thanks to the political power I arrived with, 10 seats. That’s important, especially in the Finance Ministry.
Everything I committed to doing—like the Mehir Lemishtaken [subsidized housing for first-time home buyers], putting a stop to land profiteering, salaries for soldiers, non-bank-operated credit cards, family benefits, reducing social discrepancies—I did.
Unfortunately, [my successor] Israel Katz will receive the results of corona, but before that, he’ll get a strong economy with good numbers and the potential for a huge economy with 3.4 percent unemployment and amazing growth.
Q: Israel’s poor haven’t disappeared.
A: Of course there are poor people. Poverty is numbers and measurements. In a country like ours, with socioeconomic discrepancies, we need to talk about the extent of poverty. A person who earns NIS 2,500 a month ($706) is poor, and so is someone who earns NIS 1,500 ($424). In my term the number who earn NIS 1,500 dropped and the number who earn more increased. In general, we need to battle poverty through education. That’s what the country needs to do. The more educated you are, the more possibilities you have.
Q: What do you most regret?
A: That the discrepancies weren’t reduced enough.
Q: Housing prices are still very high.
A: The insane rise in prices we saw here this past decade has been checked. We made the dream of 80,000 couples [to own a home] come true through Mehir Lemishtaken.
Q: Still, a young couple can’t buy an apartment.
A: I agree. A home is the biggest purchase a person makes in his life … but today it’s a lot easier to buy a home than it was four years ago. No doubt.
Q: The coronavirus showed us that Israeli healthcare system is in bad shape.
A: When I was finance minister, the health budget increased by 60 percent. The “basket” of subsidized medications rose from NIS 300 million ($84.8 million) to NIS 500 million ($141.3 million). There has never been such an influx of funds into the health care system like there’s been in the past five years … There is also a plan to add at least 2,000 more hospital beds. The health care system will add what is lacking.
Q: You were No. 2 on the Likud list. Maybe you could have been prime minister.
A: I never wanted to.
Q: Do you still have the same opinion of the Likud as you did when you founded Kulanu?
A: No. The Likud is different from what it was five years ago. It’s a lot more pragmatic. Look at the first 10 on its list—these are people who represent the views I am familiar with in the Likud.
Q: In the April 2019 campaign, Kulanu tried to portray the image of “a clean right.” You talked about Begin, about defending the High Court of Justice. Maybe that didn’t work with right-wing voters?
A: There was a lot of criticism from my colleagues on the right about our talk of defending the Supreme Court. There were a lot of cowards on the right who used me because they were afraid to defend the court. I’m not sorry about what I said. The Supreme Court is the last stronghold for the weak. Even when I was disappointed by some of its decisions, I still think we need to uphold the rule of law.
Q: Are you leaving politics because you’re angry at the public who left you?
A: Not at all … The agenda has changed. Politics is a tool. I’m not angry at the public. I still believe that socioeconomic issues will return to center stage, that a party will rise that holds Kulanu’s worldview. The public can’t abide an “anti” party, one that only says “no,” like “Anyone but Bibi.” The public is waiting for a party that says what it does want.
Q: In 2018 you said that Netanyahu can’t remain prime minister if he is indicted. You repeated that in 2019. And now he has been indicted, and you didn’t object to his continuing to serve. Could those statements have been the beginning of the end of your political career?
A: I have no reason to go into that. I’m already out.
Q: What is your opinion of the criticism directed at the attorney general and the State Attorney’s Office?
A: There’s no system that doesn’t need to be aired out, changed, reformed. I’m in favor of all those things, whether you’re a Supreme Court justice or whether your name is Moshe Kahlon. But I’m against trying to smash the entire system.
Q: What do you think of the new unity government?
A: It’s very important. [Blue and White leader] Benny Gantz made a bold move. He paid a price for it, and also got a lot. He comes from the cleanest, purest place there is. He isn’t there because of vested interests, but because of what is in the interest of Israel, and he’s under fire for it.
Q: What are the chances you’ll return to politics?
A: Very small.
Q: But there is a chance?
A: There’s always a chance.
This article first appeared in Israel Hayom.
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