- The Washington Times - Sunday, January 23, 2005

TEL AVIV — It would be difficult to top the resume of Stanley Fischer, the nominee of Finance Minister Benjamin Netanyahu and Prime Minister Ariel Sharon to become Israel’s new central bank governor.

But the vice chairman of Citigroup and a former deputy at the International Monetary Fund still has something to prove.

When a reporter from the Jerusalem Post last week asked Mr. Fischer for a comment in English, the presumptive Bank of Israel governor insisted on responding in Hebrew.

No immigrant has been offered such an influential position since David Ben-Gurion, Israel’s first prime minister, invited Albert Einstein to serve as the nation’s president.

If Israel’s Cabinet confirms the nomination this week, a free-market economist once considered a potential successor to Alan Greenspan at the U.S. Federal Reserve will be made responsible for the shekel and interest-rate policy in the relatively tiny economic island in the Middle East.

The financial community cheered the Jan. 9 nomination, which helped boost the Tel Aviv Stock Exchange to an all-time high.

Mr. Fischer’s nomination reassured investors about continuity in the Bank of Israel’s inflation-fighting interest rate policy of the past 15 years and stoked optimism that international financial institutions would raise Israel’s foreign credit ratings.

“This isn’t something that happens every year, or even every two years, but given the high caliber of someone like Stanley Fischer, there’s agreement that this is very sensible,” said Leo Leiderman, the chief economic adviser at Bank Hapoalim Ltd. and a former candidate for the post.

“The combination of Sharon as prime minister, Netanyahu as finance minister and Fischer as Bank of Israel governor is going to be treated by capital markets as a winning team,” he said. “The risks of adopting wrong policies have been greatly reduced. They’re now nil.”

Mr. Fischer perhaps is known best for managing the recovery from financial crises in the 1990s, especially in Asia when values of national currencies plunged in South Korea, Indonesia and Thailand.

His nomination sparked some criticism in Israel. Although Mr. Fischer — an American Jew born in Zambia — brings to Israel’s central bank the clout of a leading international economist, detractors wondered whether offering the job to an Israeli would have been preferable.

As Mr. Fischer’s confirmation approached, however, leading politicians who initially criticized the nomination fell silent.

Labor Party parliament member Avraham Shochat, a former finance minister, initially expressed puzzlement that qualified Israeli candidates had been passed over for the job, but this week retracted the statement.

Mr. Fischer’s ties to Israel go back more than four decades. He volunteered on a kibbutz in the 1960s and learned basic Hebrew. A few years later, he held a visiting professorship in the economics department at Hebrew University of Jerusalem.

When Israel suffered hyperinflation in the mid-1980s, he advised the government on implementing critical reforms that helped stabilize the economy.

Mr. Fischer’s positive response to Mr. Netanyahu’s invitation — which means giving up lucrative job opportunities on Wall Street — is considered by many an expression of Zionist dedication.

An editorial in Ha’aretz declared: “Happily, the Law of Return applies also to people like Stanley Fischer, for whom Israel is not only a life preserver or the means of making a hallucinatory dream come true. It applies to people who could succeed anywhere else, yet choose to do so in Israel.”

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