Israel Inspires Georgian Politicians. For All the Wrong Reasons
Four years after rising to power in 1977, Israel’s Likud party was about to be dealt a major blow in the parliamentary election scheduled for June 30, 1981.
Likud’s leader and PM, Menachem Begin, was a newcomer to the business of government. Having spent almost 30 years in the opposition, his party won following a wave of protests against the social injustices inflicted by the white Jewish-Ashkenazi majority against their Sephardic brethren in 1977. Yet, instead of improving the lives of its underprivileged electorate, Likud’s liberalization policies, coupled with rampant spending on social programs, led to a massive devaluation of the currency, 3-digit inflation (133% in 1980), and a deepening of poverty and inequality.
Polls held at the very end of 1980 provided little hope. Likud was widely expected to receive about 24 seats (20%) in the 120-member Knesset. Only 22% of those polled considered Menachem Begin to be fit for the top job.
Although lacking in practical governing experience, Mr. Begin was no softy. At the age of 20, he created a self-defense group to stand up to bullying by anti-Semites in Polish universities; in 1944-6, he ordered deadly terrorist attacks as part of a Jewish insurgency seeking to drive British authorities out of Palestine.
He was ready and willing to put up a fight.
ISRAEL’S 1981 ELECTIONS: A CASE STUDY IN POLITICAL BRIBERY
In January 1981, Begin appointed a new Finance Minister, Yoram Aridor, whose mission was to “lighten the yoke” on the people of Israel. And Mr. Aridor delivered, big time.
On February 1, 1981, barely two weeks on the job, Aridor announced the government’s decision to reduce taxes by 10 to 15 percent on small and medium-sized cars, color television sets and a long list of electrical appliances. As reported by the Washington Post at the time, “Israelis scooped up an estimated 8,000 new cars, 10,000 television sets and 20,000 major electrical appliances in the first month – an enormous buying binge for a country with fewer than 4 million people.”
WP’s “Israel's New Economics: Tax Cut for Every Pocket as Voting Nears” is worth replicating:
“The huge Boeing 747 cargo planes lumber one after another into Ben-Gurion International Airport from West Germany and the United States laden with color television sets and luxury appliances.
The goods arrive none too soon for frenetic Israeli customers, who buy the reduced-price goods off delivery trucks double-parked in the main shopping streets.
Docks at the port of Haifa are crowded with newly imported cars, their duties slashed 10 percent, and the buyers line up at the showrooms clutching checkbooks […]
It is election time in Israel.”
In mid-March, Aridor expanded the tax cuts to additional categories of consumer goods and unveiled further plans to eliminate or reduce taxes on income, inheritance and property.
All of these measures contributed to a consumer bonanza, but improved access to color TV sets became a real game changer. The demand for color TVs shot up thanks to a previous government decision to lift the Soviet-style ban on color television broadcasting – in force until then, – making Israel “the last country in the free world to change to color”.
Though recognizing it for what it was – blatant election bribery, Israelis were happy with Aridor’s “supply-side economics”. His tax cuts even led to a lull in inflation, at least for as a long as it mattered, until June 30th. Yes, the surge in the importation of consumer goods may have depleted the country’s foreign currency reserves, but that was an issue to be dealt with after the elections.
Likud's started to improve in public opinion polls – to the consternation of the opposition Labor Party. However, that was not enough. Something else was required, something appealing to the voters’ psyche, rather than their pockets.
This ‘something’ came on June 8, 1981, three weeks before the elections. That day, when Israeli citizens turned on their color TVs, they were astonished to find out that Israeli jets had “bombed and destroyed an atomic reactor near Baghdad that would have enabled Iraq to manufacture nuclear weapons”. As reported by the New York Times, the action was justified by Prime Minister Menachem Begin as being “essential to prevent the ‘evil’ President Saddam Hussein of Iraq from attacking Israeli cities with atomic bombs of the type dropped on Hiroshima during World War II.”
* * *
We will never know whether the Iraqi reactor – built by French and Italian companies – was intended for military purposes. What we do know for certain is that:
• Menachem Begin went on to win the elections, albeit by the smallest of margins;
• Yoram Aridor’s policies led to a near doubling of inflation – from 102% in 1981 to 191% in 1983;
• In June 1982, Begin’s government waged a senseless war against the Palestinian factions in Lebanon, resulting in the Sabra and Shatila massacre and a 3-year long occupation (in which I took part as a young paratrooper);
• Mr. Begin retired from public life in August 1983, telling colleagues: “I cannot go on any longer”.
GEORGIA’S 2018 PRESIDENTIAL ELECTIONS SUPPLYING UNPLEASANT DÉJÀ VU MOMENTS
Having emigrated to Israel in 1977, my parents were able to afford their first color TV in spring of 1981, at the height of Aridor’s baksheesh election politics. I therefore had a strong sense of déjà vu on November 20, 2018, when my Facebook newsfeed suddenly exploded with reactions to the announcement of a government-negotiated deal to write-off the debts of more than 600,000 Georgian borrowers, removing them from the lenders’ “blacklists”. Speaking at a press conference just a week prior to the second round of Georgian presidential elections, Georgian PM Mamuka Bakhtadze explained that the “deal” involves Georgia’s commercial banks and the Cartu Foundation (a philanthropic organization established by the Georgian Dream’s founder and chairman, Mr. Bidzina Ivanishvili). According to Bakhtadze, it will apply to nearly GEL 1.5 billion (USD 564 million) in small loans of which the principal balance does not exceed GEL 2,000 (USD 754).
I had another déjà vu moment when driving my kids to school the following morning. Giant “No to Nazis, No to Evil” posters stared at me from Tbilisi’s billboards, portraying the opposition’s presidential candidate Grigol Vashadze in the company of the deeply unpopular Mikheil Saakashvili and his political associates. The language and the unflattering images brought up memories of a brutal smear campaign waged by Israel’s right wing nationalist groups in 2009 against Naomi Chazan, my Hebrew University teacher and president of the New Israeli Foundation (NIF). Chazan’s NIF was found guilty of supporting Israeli NGOs having the guts to criticize the indiscriminate bombing of Gaza by Israel’s Defense Forces. “Unpatriotic” Chazan was portrayed with a horn, intent on piercing the Israeli flag.
As I found out, both smear campaigns had something (or rather somebody) in common: Moshe Klughaft, a maverick political strategist and spin-doctor from Israel. As we all know, Mr. Klughaft’s brutality did not bring Israel an inch closer to resolving the Gaza crisis or to keeping itself safe. Likewise, it is unlikely to make Georgia a better place.
* * *
Israel represents a daring experiment in the reconstitution of an ancient nation (and its language); in defying Mother Nature’s laws and building an agricultural empire in the desert; in successfully defending a newly acquired statehood against much larger enemies; in harnessing the Jewish people’s chutzpah and innovation capacity to make up for the lack of natural resources. Israel can and should inspire Georgian policymakers for all those reasons. Not for the ugly aspects of its political system.
About the author:
Eric Livny is Founder and President at Tbilinomics Policy Advisors. In 2007-2018, he served as President with the International School of Economics at Tbilisi State University (ISET). His current advisees include the Caucasus University and the Finnish International School project.
THE ISRAEL OF THE LATE 1970s was only “thirtysomething”, having barely survived a war with its much larger neighbors. It was not the “Startup Nation” that it is today; instead, it supplied the world with deadly weapons, Dead Sea minerals, and oranges.
Likewise, Israel was very far from anyone’s democratic ideal. From 1948 till 1977, it was governed by Israel’s Labor Party (MAPAI), which dominated not only the country’s politics but also its economy, print media, education system, and military. Even worse, Israel’s Jewish-Ashkenazi majority – MAPAI’s political base – failed to properly integrate immigrants from North Africa, Iran and Iraq, relegating them (and their children) to life in the periphery, literally (in remote settlements) and figuratively (as far as Israel’s economy, society and politics were concerned).
By Eric Livny
