Greece is Nearby...Corruption and Economic Downfall Go Hand in Hand

The corruption scandal rocking Israel now, has made spectacular headlines in the local press. The average Israeli, while repulsed and angered by the abuse of public trust implicit in the accusations, does not think that the corruption affects their pocket or the country's overall economy as a whole. The salient stain in their mind is the ugly monstrosity that hangs over Jerusalem's southern skyline, the HolyLand Complex, our own monument to corruption.

Dear Fellow Israelis: Think again and look across the Mediterranean. The lesson from Greece is clear: Corruption leads directly to sovereign economic downfall. Goldman Sachs is an easy scapegoat. Profligate government spending is irresponsible and bad economics. But, the root of the economic problems is the corruption that Greek Officials and politicians engaged in. Corruption erodes both the trust of investors and the stability of countries. Investor trust is obviously tied to stability and predictability of the rule of law and countries processes and procedures. When investors lose trust, countries cannot finance their debt or growth. Foreign investment dries up and impacts stability at all levels, even regular civilians.

This is why we must root out corruption in Israel, both perceived and actual. Governor of Bank of Israel Stanley Fischer is right to go after the "tycoons" who control approximately 50% of the economy in Israel, at least one of which, Dan Dankner, has been implicated in the corruption scandal. The government needs a persistent process and policy to attack corruption at every level of government. Dealing only with the HolyLand project is insufficient. We need to look at the causes of corruption as well. Long and complicated bureaucratic processes for building, land, privatization and licensing are breeding grounds for corruption. Leaving public officials and bureaucrats in their positions for a long time makes corruption enticing. Allowing public officials to parachute into the conglomerates controlled by "tycoons" begs for bad judgment and corruption. It confuses them as to who their master really is.

We need to address the core issues and not the symptoms. Corruption is corrosive both to national solidarity and to the health of the economy. It is a national issue and it is fundamental. We must not rest on the laurels of our healthy economy here in Israel. We must be vigilant to root out corruption. Greece is not that far from here.