It was an extremely unusual turn.
After four election campaigns, three years of political upheaval and two collapsed governments, in the fall of 2022 Binyamin Netanyahu and the right-wing bloc won the absolute victory in the elections.
But quite surprisingly, even before the ink was dry on the results, Bezalel Smotrich's assistants received a surprising offer, which is revealed here for the first time.
"Tell him to come to the Ministry of Finance, he will be the Minister of Ministers," was the message.
Those who passed it on to Smotrich's people in a series of discreet conversations were none other than the senior officials of the Ministry of Finance.
At that preliminary stage, Smotrich still did not really know which portfolio he would ask for in the coalition talks.
He had no financial background, and the Ministry of Finance is usually a political graveyard.
So after his success in the Ministry of Transportation, the possibility of an expanded infrastructure portfolio, or even the Ministry of Defense - as it was briefed externally - beckoned him much more.
The senior officials in the Treasury did not give up.
They were eager to get themselves a boss whose name had gone before him.
In the series of conversations with Smotrich's associates, they promised help, answered questions, allayed concerns, pledged to help with the settlement of the Yash, promised to come towards the sector he represents, and even made proposals that helped religious Zionism in the coalition negotiations.
This dynamic, it must be said, is unusual, not to mention very problematic.
Itay Beit-on /L.A.M., Sound: Ben Peretz /L.A.M
A senior Treasury official who was involved in the process presents it in a conversation with "Israel Hayom" in a different way.
According to him, it was a "professional presentation of the situation, as they did in front of a candidate for the position of Minister of Finance".
But this description of things is far from accurate.
Senior officials, who are supposed to avoid political engagement, initiated a move (and in fact an office) towards the persona they desired.
The process is doubly unusual if we assume that Smotrich's views are 180 degrees opposite to those of most senior finance officials.
Still, that was the sequence of things.
A billion shekels upwards.
A connection operation at the third grade level.
Senior Treasury official: "This means half a percent increase in VAT for the entire country"
The beginning was indeed on the right foot financially.
The honeymoon between Smotrich and his people and the finance officials continued into his first weeks in office.
His libertarian positions were the fantasy of finance officials for generations, and they also knew and appreciated him from his previous positions as a professional minister and as a quick-witted person.
"He is a phenomenon," said a senior Treasury official, who later came out against Smotrich's policies.
His political accounting was also minimal compared to Likud ministers, who depend on political alliances with mayors throughout the country.
"At the Ministry of Finance they 'fly' on Smotrich, it's like working with Netanyahu who rescued the Israeli economy from a crisis in 2003," the officials instructed the economic commentators at the beginning of 2023.
The beginning of a flood
But soon the spirit of the articles changed - and they themselves are also worth dwelling on for a moment.
During the months of work at the Ministry of Finance, Smotrich discovered that his office was run by the economic press.
Transcripts of discussions were leaked when their participants were just getting up from their chairs.
Letters from the professionals were published in "Calcalist", "Globes" and "The Marker" even before they landed in the minister's office.
In a country where cabinet secrets roll in the open - he and his people knew they had no chance of stopping the flood.
It seems that three reasons caused the crisis in relations.
The first was the legal reform.
Those senior officials who longed for Smotrich really thought that the end of democracy was coming, and that as a result the economy would collapse.
"If there are no gatekeepers of democracy - investors will not come", they argued in the discussions.
Ministry of Finance.
Transcripts of discussions were leaked, photo: Oren Ben Hakon
"It is possible to debate whether the reform itself or the protest against it caused the economic damage, but our positions were purely professional," insisted the official, who participated in the discussions at the time and opposed the policy.
according to him,
"The credit rating companies started asking questions. If the rating were to go down, the Israeli citizen would pay a lot of money for it. Our job was to warn."
Not everyone will agree with this clean description, to say the least.
The second reason for the explosion was the budgeting for ultra-Orthodox education.
Desperate for the promises Netanyahu made to his ultra-Orthodox partners, Smotrich ordered to close the wage gap between ultra-Orthodox teachers and those in general education.
It seems that if it were up to him alone, the generous budgeting would be conditional on more fundamental reforms in ultra-orthodox education.
But the room for political maneuver was limited.
That is why the 2024-2023 budget included programs for professional training and core studies, both for students and ultra-Orthodox adults.
But these will be done mainly outside the Torah Talmud and Beit Midrash, and definitely in a partial way.
The senior finance officials were upset by these payments.
They saw them as an economic error that would cost the country capital in the long run and would contribute nothing to the economy.
This, in contrast to investing in general education, which has an economic benefit at the end of the road.
This criticism, it should be said, is not far from reality.
In a series of conversations with Smotrich's associates, prior to the formation of the government, senior finance officials allayed concerns, pledged to help settlement in the Yush, promised to come towards the sector he represents, and even made proposals that helped religious Zionism
In any case, from that moment the "coalition funds that destroy the economy" campaign was launched.
It is not important that these are small amounts in terms of national expenditure.
Finance officials briefed the journalists against budgeting for groups and ministries that are not in their favor.
There are former senior officials in the Treasury who see this smear campaign as "a deliberate attempt to harm the Israeli economy by those senior officials in the Treasury, because of political opposition to the government."
How do you know that the argument against the "coalition funds" is political and not economic?
When the Bennett government added 90 million shekels to the LGBT community in 2021, as part of the coalition agreements with Meretz and Yesh Atid, no one complained. Even about the many ministers in the previous government, the same professional level filled their mouths with water. Only when an amount lower than that is transferred to ultra-Orthodox teachers - The commentators, on the clerical mission, jump in. That's how the system works.
And so, the compliments were replaced by frightening predictions.
"The Marker" commentator Merav Arlozorov, who praised Smotrich in January 2023, wrote a year later that he was "poking a finger in the eye of the credit rating company and failing Israel's rating."
"Irreversibly sabotaging Israel's economy", it was written under the name of "Professional Factors" in "Calcalist", and so on.
For a year someone briefed the economic commentators to say that Smotrich is "the worst finance minister in Israel's history".
It was, and still is, the spirit of the pushovers.
Because there was another reason for the rupture.
As he and his people got deeper into the bowels of the Ministry of Finance, they realized how crooked and sometimes unprofessional the system was.
Things came to a head when the people of the budget department made a mistake in basic calculations of plus and minus.
For example, in the discussion with the budget department where the estimates of the civilian costs of the war were presented, the officials made a mistake in calculating the amounts by 3 billion shekels upwards.
It is a simple connection operation that children learn in the third grade, one that Excel takes half a minute to calculate.
"The meaning of such a mistake is half a percent increase in VAT for the entire country," explains another senior official at the Treasury. How wrong the numbers provided by the bureaucracy can be, and perhaps biased, Smotrich's people learned a few months earlier, while dealing with ultra-orthodox education budgets. In the first version, which was supposed to be approved by the government, the budget department claimed that the cost of the payments to the ultra-Orthodox would be NIS 302 million. An examination by the minister's staff revealed that this number was impossible, and indeed, wonder of wonders, in the second version the cost had already dropped to NIS 177 million. In the latest version, which was approved by the government , the amount was reduced to 35 million, i.e. - about a tenth of the initial calculation. How could it be? For the solution officials.
What happened?
war?
These were not the only differences.
With the outbreak of the war, the ambition of the professional level was to reduce its civilian costs as much as possible.
In this miserly spirit, they wanted to send the residents of the north to shelters in their bombed-out settlements, instead of evacuating them.
Those treasury boys were shocked when Smotrich told them that the war would be long and would include ground entry into Gaza.
"They had a mistake in reading the situation, they didn't get the signal that a war had started," says a senior Treasury official.
On the third day of that terrible week, Smotrich came to the emergency meeting with clear demands.
He told the management of his office: "There should be an expanding policy. I don't want to see Gaidamak tents. The state has violated the security contract with its citizens. I am not ready to violate the economic contract. This is the time to give aid to the local authorities in the Otef and the north, and a grant of NIS 1,000 per day to each A family that was evacuated. There is a real need to strengthen identification with the state, so that they know that she did not run away."
The finance officials were amazed.
"This is private money of the Honorable Minister?!"
They asked rhetorically, and texted the instructions.
For a whole week they rejected the instruction to give a support grant to the evacuees with a thousand and one objections.
The problem was solved through a property tax administrator, who found the fast bureaucratic way to solve the problem.
"They presented the minister with unrealistic economic forecasts regarding the civilian expenses of the war, and it doesn't start there," says a senior Treasury official who was not privy to the details.
"In previous positions, I have seen how large budgets are managed professionally. In the Treasury, on the other hand, the budget management is done in a scandalous and unprofessional manner. The numbers are constructed according to the world view of the senior officials, and the public does not know how transparent the state budget is to the Knesset, the government and the public."
Indeed, there have been cases of gross negligence, even in basic questions.
For example, when Smotrich and his men wanted to understand how much free budget there was for the war, and how much needed to be cut from other sources, there was no clear answer.
There was a gap of 50 percent between the budget department's figure regarding the free budget and the one that the accountant general gave - not exactly a small mistake that might happen to anyone.
This entry of Smotrich and his men into details and numbers also drove the senior officials crazy.
They actually lost the powerful control they had over the office, which added to the tensions.
Smotrich and his men asked difficult questions.
In the perspective of a year, it is quite clear who was right and who was wrong.
The predictions of horror that the senior officials in the treasury used to threaten Smotrich, the government and the entire public, crumbled like the houses in Gaza.
Despite the protest last year, and despite four months of severe war this year, the Israeli economy ended 2023 with excellent performance.
Growth stood at 2% - not alarming, but completely fine, certainly in relation to the prophecies of rage.
The annual inflation amounted to 3%, and this is the first time since the corona crisis that it is within the range set by the government.
Even before the US, the Bank of Israel lowered the interest rate by 0.25% - also for the first time since the pandemic - and is expected to continue doing so. Unemployment is at a historic low of 2.8%. The shekel strengthened in 2023 in a way that even the Treasury cannot explain. Investments, especially in high-tech, They did go down, and more than in the rest of the world. Here one must ask if the senior officials of the industry who actively acted against the Israeli economy did not pull the rug from under our feet. In any case, the export of high-tech industries remained stable.
Israel's credit rating, contrary to all the scary headlines, was not lowered by any company.
At the height of the war, the government easily raised NIS 10 billion in bonds within ten days.
The Chief Economist of the Treasury and Director of the Securities Authority, who returned in the last few days from trips abroad, spoke of the great admiration for the strength of the Israeli economy during wartime.
If so, in all the main indicators "we are a very strong economy, period. Most citizens do not even understand the strength of the Israeli economy", says a senior member of the Treasury, who is actually one of Smotrich's critics.
If so, I ask him, why did he and his friends flood the newspapers with prophecies of disaster?
"There was a fear of downgrading the credit rating, which would have taken the economy one step backwards. That's what we said. The journalists write what they want."
He and his minister would surely agree on that.
"There is no financial communication in Israel," Smotrich used to say.
He is not wrong.
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