"The process of choosing a new bank governor was appalling," Finance Minister Yair Lapid told Channel 2 on Sunday, following the announcement that Dr. Karnit Flug was named the new Bank of Israel governor.
Flug, who has been serving as deputy Bank of Israel governor for the past three years, was endorsed by former Governor of the Bank of Israel Stanley Fischer as his replacement, and has been serving as acting central bank chief since Fischer left office in June. The nomination sage saw Flug passed over for the position twice -- over the botched nominations of former Bank of Israel Governor Jacob Frenkel and Bank Hapoalim Chief Economist Leo Leiderman -- and she subsequently announced that she will be leaving the Bank of Israel.
"No one could have predicted the fiasco of Frenkel's appointment," Lapid told Channel 2, further stressing that he had "supported Karnit from day one. We have the right governor." The statement contradicted remarks made by the finance minister just last week, when he said that "Flug will not become the bank governor, it will be one of the three professors" [referring to Professor Mario Blejer, former Bank of Israel Deputy Governor Tzvi Eckstein and former Finance Ministry Director-General Victor Medina, who were shortlisted for the position].
Last week, Lapid was quoted as saying that "no one really opposes Flug. She's a fine woman, she's a worthy person and she's doing a good job. Flug is worthy of being governor, but anything I say right now will only offend her. She won't be the governor -- many other people won't be the governor either." Lapid also insisted at the time that the differences between him and Netanyahu over the identity of Fischer's replacement were solely professional and that they contributed to ensuring the right person was chosen for the position.
"I don't mind apologizing to Flug if it will make everyone feel better. We were in the wrong -- she did nothing wrong. This entire thing went on for too long. I also think that being appointed to such a position is both a compliment and an apology. She seemed happed to accept the offer," he told Channel 2 Sunday.
Lapid said the decision on Flug's appointment was made in complete agreement with Prime Minister Benjamin Netanyahu. "We sat down and talked and we were able to reach an agreement. It's the right decision and she will be an excellent bank chief. There are maybe 15 people in the world worthy of the position and Karnit is one of them. This appointment deserves congratulations."
As for why Netanyahu agreed to the appointment, Lapid said: "If you ask the prime minister, he will say it was the way she conducted herself over the past four months as acting Bank of Israel governor."
'Flug is the right choice'
Netanyahu and Lapid's decision to name Flug as the first women to serve as Israel's central bank chief was lauded Sunday by the political echelon and the financial and business sectors, representing a rare, across-the-board consensus.
Fischer, who is currently in New York, lauded the nomination saying, "In the eight years during which I served as the bank's governor I have come to know and appreciate Karnit, her judgment and her decisions. I have witnessed her leadership skills, her prudence, her ability to manage people and situations and the profound professional dialogue she holds with government bureaus and economic institutions. Over the past few years, Karnit has been a key figure in making important decisions, which has trained her to be a worthy bank governor."
President Shimon Peres telephoned Flug on Sunday afternoon and offered her his congratulations: "This is a day of celebration. I would like to offer you my heartfelt congratulations on your appointments, which is just and worthy. You have great credentials to head Israel's economy. It takes talent, character and vision and I'm sure you possess all of these qualities."
Flug thanked the president, saying, "I will do everything in my power to justify the faith placed in me."
Opposition Leader and Labor Chairwoman Shelly Yachimovich praised Netanyahu over the nomination: "I take my hat off to Netanyahu over this appointment. Dr. Flug is the most experienced, qualified and worthy candidate for the position, even if I personally don't agree with all of her positions."
Commenting on the nomination debacle that preceded Flug's appointment, which included the botched nominations of former Bank of Israel Governor Jacob Frenkel and Bank Hapoalim Chief Economist Leo Leiderman, Yachimovich said: "The nomination process and the search for male stars, who were embarrassingly disqualified one after the other, was flawed and ridiculous. That's why it took courage on Netanyahu's part to admit he was wrong and correct his mistake. At the end of the day, he made the best possible decision."
Justice Minister Tzipi Livni also welcomed the appointment saying, "I have no doubt that Dr. Flug will be able to successfully fill Stanley Fischer's big shoes -- not because she's a woman but because she's a worthy professional."
Energy and Water Resources Minister Silvan Shalom said, "Dr. Flug is the right choice for the position of Bank of Israel governor and I have no doubt that she will be instrumental in leading and bolstering Israel's economy."
Deputy Transportation Minister Tzipi Hotovely (Likud) said that "naming a woman as Bank of Israel governor is a historic milestone in the promotion of equality between men and women."
Meretz Chairwoman Zehava Gal-On welcomed the appointment, but added that the "embarrassing nomination saga that preceded it indicates a disconcerting failure by Lapid and Netanyahu."
MK Reuven Rivlin (Likud) said, "The decision to name Karnit Flug as the governor of the Bank of Israel proves that even a late decision can be a wise one. The State of Israel can now boast having its first woman [central bank] governor. May this trend continue."
Knesset's Finance Committee Chairman MK Nissan Slomiansky (Habayit Hayehudi) wished Flug success in her new position, adding, "As it turns out, there was no need to seek greener pastures -- the hidden treasure of economic wisdom in right here."
State Comptroller Yosef Shapira, who is currently attending an international conference in China, telephoned Flug to congratulate her on the appointment, as did President of the Manufacturers Association of Israel Zvi Oren. "Dr. Flug has proven her concern to the needs and challenges faced by the business sector," Oren said.
Eldad Tamir, founder and CEO of the Tamir Fishman Group, one of Israel's largest investment firms, noted that "Karnit Flug is an excellent and professional appointment. She should have been named for the position right from the start."