Stanley Fischer, 61, currently vice chairman of Citigroup the
largest bank in the world, has accepted an appointment as the
next Governor of the Bank of Israel (BOI). His economic
approach is said to be similar to that of outgoing Bank of
Israel Governor David Klein and previous Governor Frenkel, so
continuity is expected on the job.
Fischer will be making considerable personal sacrifices to
take the new position. He will have to become an Israeli
citizen and give up his American citizenship. Government
regulations forbid holders of high office to retain dual
citizenship. Also, the approximately $140,000 a year salary
of the Governor of the BOI is, according to observers, about
a 90 percent cut from what he was making at Citigroup. It is
also by no means obvious that the position he is assuming has
greater power or responsibilities than his previous posts.
Mr. Fischer was born in Zambia in 1943. He took the B.Sc
(Econ) and M.Sc. (Econ) at the London School of Economics
from 1962-66, and obtained his Ph.D. in economics at MIT in
1969. He was the Killian Professor and Head of the Department
of Economics at MIT until 1988, when he became Vice
President, Development Economics and Chief Economist at the
World Bank. From September 1994 until the end of August 2001
Mr. Fischer was the First Deputy Managing Director of the
International Monetary Fund.
Nonetheless, Fischer accepted the post in Israel. He has had
ties with Israel, formal and informal, for several decades,
and has advised various Israeli public figures.
Fischer does speak Hebrew, though not fully fluently. The
prime minister's office said his Hebrew is "very good." Bank
of Israel and board of governors meetings will continue to be
conducted in Hebrew. It is said that Fischer has personally
written more articles in Hebrew for the Riv'on Hayisraeli
Lekalkala (Israel Economic Quarterly) than all the other
14 Israeli candidates combined, so he knows something about
the language.
The term of the current governor of the Bank of Israel David
Klein's ends on January 17, and it is virtually certain that
Fischer will not be able to take over immediately. The Bach
committee will need a few months to approve Fischer's
appointment as it is a senior government position. Fischer
will also need time to conclude his affairs as vice chairman
of Citigroup, and to immigrate as a citizen with his wife to
Israel.
The legal options of the government to appoint an acting
governor, or extending Klein's term for a limited period, are
being examined. Klein has applauded the choice of Fischer and
has agreed to serve however long is necessary to make the
transition smoothly.
It is hoped that in addition to his duties within Israel,
Fischer's extensive international connections will allow him
to be a goodwill ambassador on behalf of the prime minister
and minister of finance. Fischer is also expected to play a
significant role in economic negotiations with the
Palestinians and with Arab countries. Arab countries
supported Fischer as a candidate for president of the World
Bank, even though he was well known as a Jew and a
Zionist.
Fischer is expected to employ US management methods and to
demand a US level of professionalism from Bank of Israel
employees.
There was criticism voiced over the choice of a non-Israeli
for the sensitive post. But advisory panel chairman Judge
Gavriel Bach added that the nomination is still subject to
the opinion of the regular committee, which is to meet and
make recommendations to the cabinet, whose approval is needed
for confirmation.
A statement issued by the Prime Minister's Office said:
"Stanley Fischer is an American Jew, and a Hebrew speaker. He
has long-standing connections with the state and the economy
of Israel. Among other things, he was involved, as a member
of the U.S. administration, with the stabilization plans of
the Israeli economy in the mid-1980s. He also studied at the
Hebrew University, Jerusalem."
He advised the Israeli government in formulating its economic
reform program in 1985, when hyperinflation was raging, and
which helped tame inflation from hundreds of percent a year
to 10-20 percent.
The choice of Fischer was made over a list of local
candidates including former treasury director general Prof.
Avi Ben-Bassat, appraiser Yitzhak Swary, ex-banker Victor
Medina, Prof. Amir Barnea of the Interdisciplinary Center of
Herzliya, and Prof. Leo Leiderman, who is currently with Bank
Hapoalim.
He is considered a close associate of Jacob Frenkel, the Bank
of Israel governor who preceded David Klein and who is
believed to have recommended Fischer. Today Frenkel holds a
high position at the insurance giant AIG, but he wields
considerable influence at the Prime Minister's Office.
Finance Minister Benjamin Netanyahu came out Monday morning
against the widespread criticism of the decision to name
Stanley Fisher as the new governor of the Bank of Israel.
Netanyahu said Fischer was one of the world's top economists
and despite being an American, has full knowledge of Israeli
economy and society.
"When we spoke by phone, I was surprised to hear he was
willing to consider the position," Netanyahu said.
The finance minister concluded, "They said he does not know
the Israeli economy. He does. They say he does not know the
problems of our society. He does."
