“Kahlon for finance minister” as a campaign slogan will likely turn into reality for Moshe Kahlon after a strong showing for his upstart Kulanu party in the Israeli election won by Prime Minister Benjamin Netanyahu.
On Sunday, Netanyahu offered the finance post to Kahlon — who as communications minister delighted many Israelis by slashing the prices of cellular services by boosting competition — if he joined a Likud party-led governing coalition after Tuesday's vote.
Kahlon, 54, the son of hardscrabble Libyan immigrants, now has ambitions of reforming the housing and banking sectors to bring down real estate prices, which have doubled since 2007, and bank fees.
Netanyahu and Kahlon spoke briefly after voting ended, but a spokesman for the Kulanu leader said negotiations on a political partnership had yet to start.
“Netanyahu and Kahlon worked many years with each other and know how to work together,” the spokesman said. “I think Netanyahu will feel comfortable with Kahlon as finance minister.”
Kahlon would replace Yair Lapid, who was dismissed by Netanyahu before the election was called.
During his term as finance minister, Lapid proposed a controversial plan to eliminate the 18 percent value added tax for some first-time home buyers, but it was never implemented.
While opposing monopolies and cartels that block competition, Kahlon has been vague on his plan to lower prices. But he has talked about competition in the banking sector by adding Internet banks and similar initiatives.
His comments on banks sent their shares lower over the past few days. But analysts believe very little will be done — at least for now.
Micha Goldberg, head of equity research at the Excellence Nessuah brokerage, believes Kahlon would be better suited for housing minister, where he can make a more direct impact.
As finance minister, Kahlon would initially be busy with the 2015-2016 state budgets and then focus on the housing market, likely putting off any discussion on banking competition.
“The finance ministry has no impact or say on the banking sector,” said Goldberg, adding that previous attempts at competition have failed.
Israel has five large banks but two dominate — Hapoalim and Leumi, and it is the country's central bank, the Bank of Israel, that regulates the commercial banking sector.
With Kahlon aiming for a drop in the cost of living, inflation is expected to stay low, which will keep interest rates low, analysts said.
Still, if Kahlon joins up with Netanyahu, “his tenure as the finance minister will not be easy, as part of his socioeconomic platform is contrary to the capitalist world views of the right-wing parties led by the Likud”, said Modi Shafrir, chief strategist of Mizrahi-Tefahot Bank's finance division.
With ultra-Orthodox parties expected to exact a heavy price to join the coalition, it will be “harder for the next finance minister to allocate funds to support socio-economic growth-supporting goals”, Shafrir said.
