- The Washington Times - Friday, June 15, 2007

JERUSALEM — srael’s central bank chief, Stanley Fischer, is standing in a Cyprus airport when an Israeli recognizes him. The traveler wants to pick Mr. Fischer’s brain on a pressing economic issue.

“Should I change money here or in the hotel?” the traveler asks.

It is more than just an amusing exchange. It is a sign of deference to Mr. Fischer, who left a high-profile career on Wall Street, emigrated to Israel and entered the cutthroat world of Israeli politics two years ago.

When then-Finance Minister Benjamin Netanyahu tapped Mr. Fischer for the job, there were few doubts about his professional qualifications.

Mr. Fischer was a vice chairman at Citigroup Inc. at the time. Before that, he held senior positions at the World Bank and the International Monetary Fund, and headed the prestigious economics department at the Massachusetts Institute of Technology, where a young economist named Ben S. Bernanke was his student long before he became chairman of the Federal Reserve.

However, critics attacked Mr. Netanyahu for not picking an Israeli economist. They targeted Mr. Fischer’s limited command of Hebrew, noted he wasn’t even an Israeli citizen and questioned his commitment to the job. In a notoriously informal country, Mr. Fischer remains an anomaly. The wiry, bespectacled banker favors tailored suits in a world of open collars. His soft-spoken demeanor stands out in the high-decibel Israeli society, and his English-accented Hebrew is a constant reminder of his outsider status.

But since accepting Israeli citizenship and joining the bank, he not only has won the respect of the political establishment. He also has become an unlikely celebrity, thanks to a booming economy and a widespread perception that he didn’t take the job for personal gain.

“People … know who I am when I walk around. Israel being Israel, they come up and talk to me,” Mr. Fischer says. “It took a while for people to get used to this unusual phenomenon. I started as an outsider, and (I’m) probably still viewed somewhat as an outsider, but I think there’s a growing acceptance.”

Mr. Fischer may be a newcomer, but his connection to Israel is old. Mr. Fischer, 63, who was born in the British colony of Rhodesia, now Zimbabwe, was active in a Jewish youth group during his childhood in Africa. As an economist, he spent sabbaticals in Israel and helped craft a 1985 U.S.-sponsored “stabilization” plan to halt runaway inflation.

“I wasn’t totally a foreigner here,” he says. “Here was an opportunity to do something for Israel instead of talking about it. I knew this was the only opportunity I’d get, so I took it.”

Even so, Israeli officials said at the time that they considered Mr. Fischer a long shot, and were pleasantly surprised when he agreed to accept the job.

The position of Israeli central bank chief is a world away from Wall Street.

During Mr. Fischer’s tenure, the country has gone to war in Lebanon, battled militants in the Gaza Strip, seen a prime minister incapacitated by a stroke and watched a string of leaders, including the finance minister and prime minister, become embroiled in financial scandals.

“This is a tough country,” he acknowledges.

Mr. Fischer’s biggest challenge has been at the bank itself. He inherited a host of problems, including a bloated bureaucracy and employee salaries that the Finance Ministry says are far too high for the Israeli market. The ministry has even tried to force some bank employees to return parts of their salaries.

Mr. Fischer has tried to carry out a number of reforms, streamlining operations, trimming staff and salaries and reaching a wage agreement with the workers’ union.

Those efforts, involving talks with workers, the prime minister and Finance Ministry, have made little headway, and some have criticized Mr. Fischer for mishandling the negotiations.

“I haven’t been able to achieve those things yet. So I have a lot to do,” he says.

Mr. Fischer’s calm demeanor has helped him during this turbulent time. His public standing has been boosted by his strong international reputation — he reportedly was a candidate for the just-filled presidency of the World Bank — as well as Israel’s sizzling economy.

With the economy projected to grow more than 5 percent for a fourth consecutive year, analysts say many external factors have fueled this boom. Still, they say Mr. Fischer has contributed by keeping interest rates low and controlling inflation. He recently lowered rates to 3.5 percent.

“People believe in him. The government, the politicians, the people, all of them believe he knows what he’s doing,” says Nehemia Strasler, the chief economic editor at the Ha’aretz daily.

But just as important, analysts say, is how Mr. Fischer managed to integrate himself into Israel’s close-knit leadership.

From the beginning, he insisted on speaking Hebrew, a gesture that has been widely appreciated. Today, he has mastered the language enough to deliver speeches, give press interviews and hold high-level meetings.

He also says he has worked hard to forge good working relationships with politicians, a skill he developed as first deputy managing director at the IMF.

“I say what I think. I try not to talk too much. I talk when I have something to say,” he explains. “That’s my view, and I get along well with most of the people I have to deal with. Most of them are good people trying to do difficult things.”

Michael Sarel, a former chief economist at the Finance Ministry, says that when Mr. Fischer speaks, everyone listens.

“He knows how to define an issue very clearly, how to present a problem and the solution,” Mr. Sarel recalls. “In general, there is a respect for the governor of the Bank of Israel. … With Mr. Fischer, it was even more so.”

Mr. Fischer also has won over the public by speaking out on everyday issues. He has urged leaders to fight poverty, called for improvements in higher education and accused the country’s commercial banks of charging excessive fees to individual customers. He recently proposed legislation to improve competition in the banking sector.

Mr. Fischer says he intends on completing his five-year term but hasn’t decided what to do after that. He has a “strong attachment” to the United States, but now considers Israel his home.

“Social life here is very warm, very friendly. It has an intimacy and a warmth that is possibly much greater than that in the United States,” he says. “Despite the fact that public life is very tough in Israel, I would say I’m enjoying it.”

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