While many of the world’s economies were tanking during the great recession that began during the Bush administration, Israel’s seemed to be one of the strongest and grew when others were shrinking.
Much of the credit for that performance has been given to Stanley Fisher, the retiring Bank of Israel governor. He is being mentioned now as a possible success to his former MIT doctoral student Ben Bernanke, when his term as chairman of the Federal Reserve ends early next year.
President Obama left little doubt that he does not intend to reappoint Bernanke when, in an interview last week with PBS’ Charlie Rose, he praised Bernanke’s “outstanding job” over the past eight years and said he has “already stayed a lot longer than he wanted or he was supposed to,” The Hill reported.
Fischer, who holds dual US-Israeli citizenship, said he hasn’t been given any job offers but left the door open. In an interview with Bloomberg Television he said, “No, I don’t want to retire. I won’t retire. We’ll see what happens next.”
In a meeting with the Knesset Finance Committee last month Bernanke took a rare step outside banking issues to suggest Israeli leaders were “making irresponsible and tendentious excuses for not pursuing” peace with the Palestinians, Haaretz reported.
“We must continue to provide ourselves with defense, but the allocation of more money to defense is not the only solution. We must also try to find other solutions, and try to achieve a peace agreement with our neighbors, including with the Palestinians,” Fischer said. “The phrase, ‘there is no partner for peace’ is a self-fulfilling phrase. You need two for an agreement, and if we don’t want to look for a partner, we will remain in the current situation.”
Those views may sound like criticism of Prime Minister Netanyahu but they are in synch with the thinking of President Obama.
Long before he became governor of the Bank of Israel, Fischer played an important role in rescuing Israel from one of its worst financial crises.
Israel was battling inflation threatening to hit 500 percent in 1985 when it asked Washington for $1.5 billion in emergency assistance. Secretary of State George Shultz called in two colleagues with whom he shared links to MIT and the University of Chicago, Fisher and Herb Stein, to examine the Israeli economy and make recommendations to help stabilize it.
Perhaps Shultz thought picking a pair of highly regarded Jewish economists would lend greater credibility to their recommendations, but he didn’t need the cover; he was already considered one of the best friends Israel ever had in that post. His recommendations were accepted by the Israeli government and incorporated into a successful reform program that revived the Israeli economy and led the way to dramatic growth in the years ahead.