Mathias Cormann meets Israeli cabinet

Secretary General of the Organization for Economic Co-operation and Development OECD, Mathias Cormann, attended the meeting of Israel’s Cabinet Sunday morning.

Mathias Cormann was formerly the Australian Federal Minister for Finance.

He was warmly greeted by Prime Minister Naftali Bennett who took the opportunity to give somewhat of a pep talk into the bright side of Israel’s economy.

The OECD is an international organization that works with governments, policymakers, and citizens on a range of social, economic, and environmental challenges. Mathias Cormann was appointed as the Secretary-General of the OECD on 1 June 2021, for a five-year term.

Bennett opened the meeting by declaring that Israel’s economy is on a good track. “We’re recovering from the latest Covid wave remarkably well with rapid growth as you’re well aware of,” he said. “This has to do with our decision to keep Israel’s economy open throughout the fourth and fifth wave, while diligently fighting the virus. So we’re not on any extreme; we know the virus is much more than just flu but on the other hand, we’re not in the hysteria that we need to close everything.”

But many Israelis do not agree with the Prime Minister’s optimism. Just last week he unveiled a new plan for dealing with the high cost of living in the country. Israelis have been angry over how prices are so much higher in Israel over many basic items from toiletries to medications to housewares than they are in Europe and the US. Bennett held a press conference where he promised new tax breaks for parents and reductions in tariffs on olive oil, flour, eggs, meat, fish and even kitchen utensils.

This came after sudden hikes in the price of both gasoline and electricity in the country. The price of vegetables also jumped, in part, due to recent harsh winter storms.

However, Naftali Bennett lauded his government’s economic policies. “We’ve formed our model which is many, many small actions to allow the economy and the conditions for parents to go to work,” he explained, “for children to go to school, for shops to remain open and for life to go on.

The Prime Minister went on to explain that he sees Israel holding several avenues for economic growth. The first is what he called “our fantastic hi-tech sector” and touted his government’s decision to release tens of thousands of young Haredi men into the work force adding that Israelis are, “going to have to embrace them and that will be a huge engine [for growth] because these folks are really smart and when they are injected into the hi-tech sectors and others, we’re going to see a huge boost.”

He also spoke about building new bridges in the region with countries like the United Arab Emirates saying, “I see this as another engine. A further engine is integrating the Arab sector—the young Arab men and women—into Israel’s economy.”

“By and large, the trajectory is good,” he added. “It’s taking time but it’s good. We’re seeing modernization, better education, but we have a long way to go. If I were an investor, I would definitely invest in Israel.”

Bennet did, however, acknowledge the challenges that now face Israel’s economy. He called for reforming “the stagnant parts of our economy” and declared a need to increase competition in order to help lower the cost of living in the country by lowering the end prices faced by Israeli consumers. “We don’t have enough domestic competition,” admitted Bennett, “and that’s something that’s always tough because there is always a good reason on why you need to slow down on that. And we need to have the courage to take these actions.”

Bennett concluded his remarks by calling his government unique, and the most diverse coalition in Israel’s history, a coalition of eight different parties. “We’ve got religious and secular; we’ve got Jews and Arabs; we’ve got right and left,” he said. “And in a very polarized world today, where you see other countries that are paralyzed because of this polarization, Israel is showing an example of how folks with very different ideas, here around this table, can get together to build a much better future for Israel while working through the disagreements.”

The average Israeli might disagree with the Prime Minister’s optimism. Most polls show that his own party would be lucky to be reelected to the Knesset should new elections be held. Some observers expect his government to fall should former Prime Minister Benjamin Netanyahu be forced to retire from politics, thereby depriving all of those parties of their common enemy. Israelis will certainly expect to see results from their government’s economic plans in the near future.

Later on, Mathias Cormann met up with Minister for Defence Benny Gantz and Science and Technology Minister Farkash-Hacohen.

Gantz commented: “Science and Technology Minister Orit Farkash-Hacohen and I held a productive meeting with OECD Secretary General Mathias Cormann. We discussed a range of issues critical to Israel’s economy and security: pandemic recovery, high-tech ecosystem, AI developments, climate change and international cooperation. During the discussion, I emphasised the important role of Israel’s defence industries and technological military units in developing and supporting Israel’s economic and operational resilience.”