Expanding the Economy: Minister talks commerce, trade and business

Eli Cohen, the minister of economy and industry, spoke with the 'Post,' touching on joint economic projects with Palestinians, exports and other issues.

By JOHN BENZAQUEN
Updated: SEPTEMBER 24, 2018 03:36
Eli Cohen (photo credit: OPHIR AVEY)
Eli Cohen
(photo credit: OPHIR AVEY)
Eli Cohen is the minister of the economy and industry. He was appointed in January 2017, and by all accounts he has been a very successful minister. One of the reasons is that he has worked in the private sector, gaining wide experience in business and getting things done.
In an interview with The Jerusalem Post , he had this to say: “I will continue to work tirelessly to promote the economy in general and industry in particular, with an emphasis on developing industry in peripheral areas. I will continue the fight against the high cost of living and will continue to combat the anti-business atmosphere in our country. “From my first day in office, I put an emphasis on promoting innovation as one of the main means of increasing growth. Increasing growth is important in itself, but growth should benefit everyone. That is why I placed an emphasis on socioeconomic development. In my view, sustained growth includes increasing productivity per capita as a means to increase salaries, create jobs to prevent unemployment, fortify small and medium-sized businesses which are the core of the economy, and lower the cost of living, which will benefit primarily the low-income sectors of the economy.
“In 10 years’ time, a judicious economic policy will include Israel among the world’s biggest economies by GDP per capita. Our export trade has already passed the $100 billion mark and continues to expand. Our economy is robust and growing. Recently, the S&P Global Ratings raised Israel’s credit rating to –AA with a stable outlook. This is a result of a growth-oriented and responsible economic policy which ensures growth that is centered on science-oriented industries and exports, low inflation and a positive debt ratio.”
Expanding trade also means good relations with our trade partners. Recently, French President Emmanuel Macron invited you and your Palestinian counterpart, Abeer Odah, the minister of national economy, to the Elysee Palace in Paris. Did your meeting deal with increasing trade?
Not specifically. It dealt with economic, political and social issues. Promoting joint economic projects between Israel and the Palestinian Authority in the interest of both parties. Consequently, this meeting had other dimensions beyond the economic one. From the economic perspective, cooperation between both parries will have benefits for both: Israel will be able to address its acute shortage of labor, and the Palestinians will be able to reduce unemployment.
Will the number of Palestinians permitted to work in Israel be increased?
We discussed many issues, such as removing bureaucratic obstacles that Israel places on the Palestinian Territories, assisting them in their export trade, and increasing the number of work permits for Palestinians, all this without jeopardizing Israel’s security.
You are the minister in charge of exports. Exporters complain that the strong shekel is having a negative effect on their profitability.
Yes, the strong shekel is having a negative effect on exports, but the strong currency is the result of a strong economy and strong exports. What can be done to curb the rise in the value of the shekel? Very little. The shekel is a freely traded currency, which means its value is determined by supply and demand in a free market. Demand for the shekel is high because of the strong economy. Whatever can be done is being done.
Over the past 10 years, the Bank of Israel spent $120 billion buying foreign currency in an effort to curb the rise in the value of the shekel. Despite the rise in its value, exports passed the $100 billion mark in 2017. According to our predictions, the $100 billion mark would have been achieved only in 2020. In 2017, exports rose by 7% compared to 2016. Exports are strong because we have good products and services to sell and, in no small part, because of the multiple free trade agreements we have with other countries.
The science-oriented industries are showing very healthy growth rates, but haven’t they created a divide?
The science-oriented industries are without doubt the engine of growth of the economy. In addition, they are a major means of reducing socioeconomic inequalities. Science-oriented companies generate a healthy income and can consequently offer large salaries. In addition, consumer services create other circles of economic activity such as catering, transportation and entertainment. The increased growth in this sector will have a positive effect on the economy as a whole.
Israel’s technological prowess is a major boon for the state. The modern economy is based largely on innovations, and we excel in this area. Every year, a great number of start-ups are created. Large technical multinationals are operating in Israel either as development centers or as centers of production. I recently met with the management of Intel. They are very pleased with their operations in Israel and are planning to make a further investment of $5 billion.
The proposed merger of Bank Mizrachi and the Union Bank of Israel, which was approved by the Bank of Israel, would have improved efficiency in the local banking system. Your and Finance Minister Moshe Kahlon’s opposition to the merger was one of the reasons the deal fell through. Why did you oppose the move?
I disapproved of the move because it would have increased the centralization in the banking system, and centralization does not promote a cut in prices or a reduction in bank fees. Consequently, it is not in the interests of the average consumer.
I know that the Bank of Israel approved the merger, but the central bank should be more sensitive to the well-being of the consumer, the households, as well as the small and medium-sized companies. With the Mizrachi-Union merger, they were much more concerned with the impact on the banking system and much less concerned, if at all, with the interests of the consumers.