• Thu. Oct 5th, 2023

Ex-Chief of Bank of Israel Criticizes PM for Ignoring Warnings of Economic Risks

Feb 5, 2023

A former chief of Bank of Israel, Jacob Frenkel had been the chair of JPMorgan International until recently.

He issued a warning about the negative impact of the far-reaching plans of the coalition for altering the justice system on Saturday.

He also criticized Prime Minister Benjamin Netanyahu for ignoring the concerns of international economic institutions about the judicial overhaul plans.

The warning

The ex-chief said that he was surprised at what the prime minister was doing. He said that a recommendation from JPMorgan should always be taken seriously.

He was referring to the internal memo of JPMorgan that had been released on Friday, which had included a warning of the increasing risk of making investments in Israel.

More than $3 trillion worldwide are under the management of JPMorgan. The situation in Israel has also been compared to Poland and the memo from JPMorgan did the same.

According to Frenkel, this shows that there is a possibility of the situation deteriorating. He said that Poland’s credit rating had dropped, citizens had been harmed and prices had gone up.

In addition, Poland had also seen a reduction in its ability of borrowing on the international markets. He said that citizens of countries that had reduced their judicial oversight had had to suffer.

The criticism

Frenkel said that the prime minister he had worked with had been cautious, careful and had not taken any chances.

He stated that ignoring professional reports issued by relevant bodies just because they are thinking differently is extremely dangerous.

He had served as the chairman of the Bank of Israel from 1991 to 2000. He also addressed the critics who were putting the blame on economic doomsayers for inflicting harm on the economy.

He gave an example of a fire and said that no one blames the firefighters when they are next to the fire. He said that they wanted to avoid the fire and had issued warnings.

He also added that Israel had made astounding achievements under the Prime Minister, which means they have a lot to lose.

The risks

He went on to say that the emergency had not arrived as yet, but they could end up losing everything they had achieved.

Frenkel said that the public should not panic, but they should demand that their opinions be heard. He said that it was not the way to conduct any reforms.

The chief recalled that he and Netanyahu had introduced reforms in the foreign currency market in Israel, which they had done gradually. He said that this was not how they had done so.

According to reports, Netanyahu has asked Rom Dermer, the Strategic Affairs Minister, to talk to credit rating agencies and international financial firms that have been concerned about the judicial overhaul impact.

The move is considered unusual because it is the Finance Ministry that usually handles such moves and not political figures.

Frenkel was asked about this move and he said that it showed contempt for organizations that were issuing warnings.

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