Fischer lauds Flug’s ‘worthy’ nomination

Lapid admits it was ‘a shocking process,’ after rejected Bank of Israel deputy finally gets top job; politicians praise appointment of first female governor

Newly appointed Bank of Israel Governor Karnit Flug gives a statement to the media outside the Bank of Israel building in Jerusalem October 20, 2013. Photo credit: Yonatan Sindel/Flash90)
Newly appointed Bank of Israel Governor Karnit Flug gives a statement to the media outside the Bank of Israel building in Jerusalem October 20, 2013. Photo credit: Yonatan Sindel/Flash90)

Karnit Flug’s appointment Sunday as the new Bank of Israel chief was warmly received by politicians from left and right, and praised by Stanley Fischer, her predecessor and former boss, as the correct choice.

After four months of deliberations, Prime Minister Benjamin Netanyahu and Finance Minister Yair Lapid named Flug as Bank of Israel governor Sunday. Flug, who has served as acting governor since Fischer’s resignation took effect on July 1, will be the first woman to fill the position.

Netanyahu and Lapid initially said they would not appoint Flug, who was Fischer’s deputy and preferred successor, instead naming a series of candidates, all of whom dropped out of the race for various reasons. Netanyahu was said to oppose aspects of her economic philosophy, and Lapid insisted that she would not be made BOI governor as recently as last week.

“I can’t deny that it was shocking process,” Lapid said on Channel 10 news on Sunday night. But he said no one could have foreseen the circumstances under which other candidates for the post pulled out, including a former BoI governor, Jacob Frenkel, who became embroiled in a mini-scandal over what he said was a misunderstanding about paying for an item in a Hong Kong airport duty free store. “I don’t mind apologizing” to Flug for what had happened in recent months, Lapid said, “though she looked pretty happy” when accepting the position.

Lapid said he had “supported her candidacy all along.” Netanyahu reportedly came around when he realized the Lapid didn’t support his latest preference, Prof. Zvi Eckstein, when Fischer telephoned him to again press her candidacy, and when he internalized that Flug had held the governorship impressively in the acting capacity in recent months. Netanyahu and Flug met a few days ago and had a particularly smooth conversation, Channel 10 news said.

Fischer lauded Netanyahu and Lapid’s decision, saying, “I know that the decision wasn’t easy, but I know that they were looking for the most appropriate candidate for the benefit of the market the entire time.”

“Karnit was a central influence in making important decisions, something that trained her to be a worthy governor, and I wish her and the employees of the bank the best of luck,” Fischer said.

President Shimon Peres called Flug to congratulate her. She told him she would “everything I can” to make a success of the post.

Flug is “an experienced candidate, who is talented and more than suitable for the role, even if I do not agree with all of her positions,” opposition leader Shelley Yachimovich (Labor Party) said. “Although the process of nomination was problematic, it took courage for Netanyahu to go back on his mistake and correct it.”

Flug was “good” and “worthy” for the post, MK Isaac Herzog (Labor party) added. “It is a shame,” he said, that the government did not accept Fischer’s recommendation in the beginning, which would have “saved themselves from embarrassment.”

MK Tzipi Hotovely of the Likud party said that Flug “has demonstrated the right abilities [for the position] and I wish her success in the role. Flug’s appointment, Hotovely said, was a “historic and important stepping stone” in the effort for gender equality in Israel.

MK Reuvin Rivlin (Likud) said that “even a delayed decision can be a wise decision.” He added that it wouldn’t be easy to lead the central bank “during a difficult period,” but Flug is a “top-notch” professional who would be able to fill Fischer’s shoes.

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