Karnit Flug appointed Bank of Israel Governor

The Jerusalem Post, John Benzaquen, 10/20/2013

 

After 112 days without a Bank of Israel governor, Prime Minister Netanyahu and Finance Minister Lapid appoint first ever woman for chief BoI post; former governor Fischer widely believed to have wanted Flug to succeed him. 

Karnit Flug. Photo: REUTERS/Baz Ratner

Prime Minister Binyamin Netanyahu and Finance Minister Yair Lapid have appointed Dr. Karnit Flug to be the next Bank of Israel governor, after more than 100 days without a treasury chief and a roster of nominees who came and went.

Following the announcement on her appointment, Flug thanked Netanyahu and Lapid and expressed her determination to tackle Israel's economic challenges.

"There are great challenges facing the Bank [of Israel] and the economy and I look forward to working in cooperation with the dedicated and professional staff at the Bank as well as with government officials in order to meet these challenges," she said.

Flug, the deputy Bank of Israel governor, has served as the acting central bank chief since former governor Stanley Fischer's resignation in June.

Flug completed her doctorate at Columbia University and served as an IMF economist before joining the Bank of Israel in the 1980's.

Former Bank of Israel governor Stanley Fischer selected Flug as his deputy in 2011, and was widely believed to have wanted her to serve as his successor, a prospect several members of Knesset publicly supported after Fischer's resignation.

After the appointment Netanyahu and Lapid said in a joint statement: "We were impressed by Dr. Flug's performance in the last months as [acting] governor of the Bank of Israel. We are confident that she will continue to assist us to advance the Israeli economy to further achievements amidst the global economic turmoil."

Female MKs Aliza Lavie (Yesh Atid) and Tzipi Hotovely (Likud) expressed satisfaction of the appointment, dubbing it another milestone on the way to gender equality.

Justice Minister Tzipi Livni, however, stressed that gender had nothing to do with the appointment.

"Finally, even in Israel, [they] figured out that gender is no longer relevant when it comes to professionalism, and [they] are not afraid to appoint a woman to a senior financial post, even if it is considered a 'masculine' role," she said.

"I have no doubt [Flug] will efficiently and successfully fill the big shoes Stanley Fischer left behind - not because she is a woman, but because she's a worthy professional," she added.

Opposition leader Shelly Yacimovich said she "tips her hat" to Prime Minister Netanyahu for choosing Flug, despite previous reservations he had.

Meretz chairwoman Zahava Gal-On joined the congratulating, but turned her focus to criticize Netanyahu and Lapid for taking too long to make the decision.

"The fact it took Netanyahu and Lapid 112 days to appoint the acting Bank of Israel governor, whose appointment was obvious to begin with, points above all to a very concerning leadership failure," Gal-On said.

"I hope [Flug] promotes economic goals beyond inflation and growth, such as reducing inequality and eradicating poverty, that have grown in recent years to worrying proportions," she continued.

Professor Zvi Eckstein, who was also in the running for the post, also congratulated Flug and wished her luck in her new job.

In July, former Bank of Israel governor Jacob Frenkel withdrew his nomination for the position following an ongoing scandal over an alleged shoplifting incident at a duty free shop in a Hong Kong airport.

A few days after Frenkel's withdrawal, Netanyahu and Lapid's next choice for governor, Leo Leiderman, announced the withdrawal of his candidacy.

Netanyahu previously rejected Flug's nomination for the post, despite the fact that she was seen as a natural choice not only by Fischer but also by Lapid and many others.

Flug has worked at the Bank of Israel since 1988, apart from a period between 1994-1996 when she worked as a senior research economist at Inter-Bank in New York.

When she returned to the Bank of Israel, she was appointed to head its research division. According to some, the reason that Netanyahu initially objected to Flug's nomination dates back to when she began this position at the research division that coincided with his first term in office. Flug wrote a research paper then in which she argued that Israel's economic growth in that period could not be attributed to Netanyahu's economic policies but were rather connected to the country's growth in exports at the time.

Netanyahu likely gave in and appointed Flug because he was impressed with her performance as acting chief once Fischer left. But maybe he appointed Flug because he believed that she was the lesser of all evils.

Niv Elis, Tovah Lazaroff and Lahav Harkov contributed to this report.

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