Tuesday, June 12, 2007

Fischer popular as Israel's bank chief

From the news wire.

Sun Jun 10, 1:31 PM ET

JERUSALEM - Israel's central bank chief, Stanley Fischer, was standing in a Cyprus airport when an Israeli recognized him. The traveler wanted to pick Fischer's brain on a pressing economic issue.

It was more than just an amusing exchange. It was a sign of acceptance for Fischer, who has emerged as a surprisingly popular figure since leaving a high-profile career on Wall Street, immigrating to Israel and entering the cutthroat world of Israeli politics two years ago.

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

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 Bernanke was his student — long before he became chairman of the Federal Reserve .

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.

Fischer may be a newcomer, but his connection to Israel is old. Fischer, 63, who was born in 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. He also said he has many friends and relatives here.

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

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

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.

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

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 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," said Nehemia Strasler, the chief economic editor at the Haaretz daily.

But just as important, experts say, is how 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 media interviews and holds high-level meetings.

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

"I say what I think. I try not to talk to much. I talk when I have something to say," he said. "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, said that when Fischer spoke, everyone listened.

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

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.

Fischer said he intends on completing his five-year term, but hasn't decided what to do after that. He said he has a "strong attachment" to the U.S., 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 said. "Despite the fact that public life is very tough in Israel, I would say I‘m enjoying it."


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