Yuval Steinitz looks back at 23 years in Israeli politics

Twenty-two years ago, a newcomer to the Knesset, Likud MK Yuval Steinitz, gave an interview to The Jerusalem Post’s Liat Collins.

The article highlighted Steinitz’s unique background as a philosophy professor and writer of bestselling books, but even more so his former activism in Peace Now, until he was “mugged by reality,” as Irving Kristol once said of liberals-turned-neoconservatives. It even quoted from an article he wrote in the quintessential American neoconservative publication Commentary, warning of a Palestinian guerrilla war against Israel less than a year before the start of the Second Intifada. “Ever the philosopher,” as the Post article quipped, he had warned that Israel was as vulnerable as ancient Greece was to an attack from Sparta.

The prescience that Steinitz showed in 1999 would repeat itself throughout its career in key junctures for Israel.

These days, Steinitz is one of Israel’s longest-serving lawmakers, who recently announced he would be stepping away from the political field after an illustrious career in which he was chairman of the Knesset Foreign Affairs and Defense Committee, Finance Minister, Intelligence Minister, Strategic Affairs Minister and Energy Minister.

Sitting in his Knesset office, this week, on a background of newspaper cartoons depicting him at various times in his career, along with photos of himself with former and current US presidents Barack Obama and Joe Biden, Steinitz told the stories of some of the most pivotal decisions he made in his 23 years in office.

“I think I was the best Finance Minister Israel has ever had.”

Yuval Steinitz

Finance Minister

“I think I was the best Finance Minister Israel has ever had,” Steinitz said, but then backtracked. “[Opposition leader Benjamin] Netanyahu won’t like that I said that, so I’ll say I was one of the best.”

Ahead of the 2009 election, Netanyahu promised Steinitz that if he becomes prime minister, he will appoint him to one of the top three ministries: foreign, defense or finance. Steinitz had focused primarily on national security issues until that point and was not particularly interested in economics, but he considered the political map and realized that he would end up finance minister.

"The whole economic order was collapsing"

This was in the days of a global recession and “it looked like the whole economic order was collapsing,” Steinitz recalled. “Israel was in negative growth for two quarters and there was talk about 15% unemployment like there was in Italy, Greece and Spain.”

Steinitz launched into a crash course that he said his past in academia prepared him for well, having developed the ability to absorb and analyze massive, in-depth texts. He read books and articles, and invited two economics professors to share their expertise.

After the election, he held meetings with heads of industry, hi-tech, tourism and more, as well as Bank of Israel’s then-governor Stanley Fischer, and produced a report that said Israel needed to do two things.

The first was to institute a two-year budget.

“This was the opposite of what Europe and the US were doing, which was a new budget every few months because they were giving out stimulus packages of tens of billions of dollars,” Steinitz said. “I said that, because of the uncertainty in the market, we needed a long-term plan that will allow the government to function better and focus on solving the crisis and passing long-term reforms, plus it will give the local market greater stability. We will send a message that we see the crisis as an opportunity to plan for the long term.”

The other recommendation was to reject the Keynesian approach, which at that time was taking the form of bailouts. Within a week of becoming Finance Minister, Steinitz recalled, he announced that failing companies would have to find their own solutions.

Points of financial contention

This was a point of contention between Steinitz and Fischer, a world-renowned economist, who supported the government infusing more money into the economy, the minister said.

“I took a more conservative approach and said I will not increase spending more than 1.05%,” he said. “We lowered corporate taxes and passed a law to encourage investments in hi-tech and the periphery.”

Keynesians, Steinitz argued, “aren’t letting people get fired from factory jobs, but eventually, the bailouts will end, and the companies won’t be able to develop and expand. The approach prevents long-term investment in the market. I decided to get Israel out of the recession by investing in development.”

The year after Steinitz entered office, Israel had 5.5% growth, the highest in the West, and Israel retained first place throughout his time in the Finance Ministry. Israel also topped the rankings of foreign investments. Steinitz also successfully pushed for Israel to join the Organization of Economic Cooperation and Development (OECD), the group of the world’s top economies.

In the early days of the pandemic, the Netanyahu-led government, in which Steinitz was a minister, did take a Keynesian economic approach, but Steinitz said the situation was different.

“We realized that would be short term, a year or two at most, and businesses were shut down because the state forced them to close. It’s like compensating factories in the South that close during military operations in Gaza,” he said.

At the same time, Steinitz added, “there is no doubt [the payments] caused inflation. Everyone is just printing money.”

Steinitz said that he and former US treasury secretary Larry Summers were the only people publicly warning about inflation before it began last year and described being pooh-poohed by the Knesset Finance Committee at the time.

Intelligence and Strategic Affairs Minister

Steinitz entered his new ministry with the task of being Israel’s liaison to the world powers negotiating a nuclear deal with Iran after the 2013 interim deal, a job that continued until the Joint Comprehensive Plan of Action (JCPOA) was reached in 2015, as well as responsibility for the strategic dialogue with the US.

That year, 2013, was also when Syrian President Bashar Assad launched major chemical weapon attacks on his country’s civilian population. Then-US president Obama declared that chemical weapons were a red line that would lead to US military intervention and the world was watching to see what Washington would decide to do.

“Obama was very reluctant,” Steinitz said. “He said this would be a one-time attack [on Syria]. That would not really create deterrence and could even have the opposite effect; if you know you won’t be attacked again, you can absorb it. From an Israeli security perspective, we thought this would not be good for us.”

Israel had viewed Syria’s stockpile of 1,300 tons of nerve gas, mostly sarin, with great concern for 40 years by that point. Steinitz recounted his own experience training in the Golani unit in Israel’s North with a gas mask on to prepare for a possible chemical attack.

“There were estimations that if the Syrian rebels surrounded Damascus and Assad thought that was the end, he might shoot scud missiles with chemical weapons into Israel, which would cause serious harm. He had missiles that could reach Haifa, Gush Dan and Jerusalem, and kill thousands or tens of thousands of Israelis,” Steinitz said.

Israel had good intelligence and missile defense systems that could neutralize a fraction of the threat, but “there wasn’t a lot to do,” Steinitz said.

Steinitz, Russia and Syria's chemical weapons

One morning, Steinitz gave an interview to Israel Radio in which he mentioned that Israel had proof that Assad gave the order to attack civilians with nerve gas. Within a few hours, his office got a call that Russian Foreign Minister Sergey Lavrov was sending a messenger to speak with him as soon as possible.

Russia, at that time, was claiming that the rebels were responsible for the attacks, and strongly opposed American action in Syria out of a concern that it would lose its only foothold in the Middle East.

The messenger asked Steinitz for the intelligence about Assad and Steinitz was unable to provide it because of security protocols.

But Steinitz had a different offer that he had cooked up right before the meeting with his office’s director-general and former intelligence officer Yossi Kuperwasser.

“The US didn’t really want to attack Syria. The Russians didn’t want them to attack and, in the end, an attack wouldn’t even deter Assad from using chemical weapons. How do we take advantage of this for the good of Israel?” Steinitz said. “I decided to ask Russia to neutralize the chemical threat.

“We had the idea to offer the Russians to make a deal with the Americans that Russia would use its massive influence on Assad to get him to give up his chemical weapons to be destroyed in exchange for an American promise not to bomb them,” he said.

“You’re the only ones who can force Assad to give up his chemical weapons,” Steinitz told the Russian representative. “He can’t say no to you. This is a win-win for everyone. It’s a win for Russia that is doing something good for the world and stopping the US attack. It’s good for the US that doesn’t really want to strike Syria, but wants to stop Assad from using chemical weapons. And it’s a win for Israel after 40 years of suffering, preparing for the threat, building sealed rooms and distributing gas masks. Assad is the only one who pays a price.”

Steinitz promised that Israel would keep its part in the deal a secret.

Lavrov’s messenger took out a yellow legal pad and wrote down the proposal, and said he was taking it seriously and would make sure it gets to Moscow that day.

Steinitz said he then dashed from his office to Netanyahu’s, after realizing he had just freelanced on a major foreign policy initiative without the prime minister’s knowledge.

“You might be mad at me,” Steinitz told Netanyahu, “but this is what I offered the Russians. I think it’s great for us, but you should call the Americans right away. Tell them the truth that I did this without authorization.”

Netanyahu had Obama on the phone within the hour, and the latter supported the plan. A few days later, the Syrian foreign minister was in Moscow, accepting the “Russian initiative” to destroy Syria’s chemical weapons.

For years, Steinitz said, Israel kept its part in the situation totally quiet. The only person who wasn’t directly involved, who told Steinitz he knew about it, was former French foreign minister Laurent Fabius. His role was eventually revealed in former ambassador to the US Michael Oren’s 2016 book Ally.

Looking back, Steinitz said he and Kuperwasser “took advantage of an opportunity that, in the end, had long-term strategic value. The strategic threat of nerve gas on missiles from Syria will not return.”

The Iran nuclear threat and the weak deal

IN HIS years as Strategic Affairs Minister, Steinitz became known for warning against the Iran nuclear threat and the weaknesses of the deal reached with world powers to stem it.

“The JCPOA, signed in 2015, is a bad agreement. It’s insufficient and was only for 15 years, de facto only for 12 years because there is not much left after that. It will allow Iran to be a nuclear threshold state.”

Yuval Steinitz

“The JCPOA, signed in 2015, is a bad agreement. It’s insufficient and was only for 15 years, de facto only for 12 years because there is not much left after that. It will allow Iran to be a nuclear threshold state,” he said.

“Israel demanded the total dismantling of the Iranian nuclear infrastructure and we just got a pause for about 12 years,” he added. “The moment there is total dismantlement, like in Libya, the chance for them to start over is almost nonexistent. It’s a huge expense. Partial dismantlement gives an incentive to try again in the future because you have the infrastructure that costs billions and you’re motivated not to waste it.”

A better agreement could have been reached with more pressure because Iran was afraid of US military action, Steinitz argued.

Israeli suggestions made their way into the JCPOA and strengthened it, Steinitz said, such as reducing the uranium enrichment ceiling to 3.5% and limiting stockpiling to 180 kg., when Iran had much more than that enriched to 20%. That demand got into the deal because France pushed it, while the US refused, he said.

“Without Israeli intervention, the agreement would have been much worse,” he said.

Steinitz expressed concern about the current situation, in which Iran is enriching uranium to 60%, more than ever before, and the Biden administration has sought to return to the JCPOA, which the Trump administration left in 2018.

“Trump left the deal in 2018, but only in the last year, under Biden’s watch, did Iran dare to enrich to 60%,” he said. “When I analyze what happened here, what was lost is the US military threat. For the first time, the Iranians evaluated that they can get close to a nuclear weapon without going to war with the US over it.”

The military threat is more important than whether or not there is an agreement, Steinitz said, because “the agreement is not worth much without a big stick behind it.”

As such, Steinitz was disappointed in Biden’s visit to Israel, which he said was not a success for Israel because Biden did not make clear that there is a military threat to Iran. Though Biden told Israel’s Channel 12 that he would take military action as a last resort, Steinitz argued that is not enough because we are already at the point of the last resort.

“Instead of a clear red light for Iran to stop, they almost got a green light or at least a chance to safely run a red light,” Steinitz said, though he was careful to add that he still views Biden as a friend of Israel.

Energy and Water Minister

Steinitz’s involvement in Israel’s natural gas began before he ever knew he would be Energy Minister. As Finance Minister, he fought to implement the recommendations of the Sheshinsky Committee to increase the level of energy resources from 20% to about 60%, resulting in a massive pressure campaign against him by companies involved in searching for gas and oil in Israel, including from the White House on behalf of Noble Energy.

In 2015, he entered the Energy Ministry and learned that, although Israel discovered its greatest natural resource, the massive Leviathan gas field – the largest in the Mediterranean Sea – in 2010, and the Karish Tanin reservoir, in 2011, they had yet to be developed, and Israel was still importing coal and oil for most of its energy.

“The ministry’s previous director-general told me not to touch natural gas, because there is so much public hysteria about it and protesters will say we’re only doing it to help the tycoons,” Steinitz said. “But I’m a contrarian. Three days later, I stood up at an annual energy conference and said that there is no way that on my watch we will not develop Leviathan and Karish Tanin.”

Israel's natural gas policy

Three weeks later, he said, he put forward the outline of Israel’s gas policy, which turned into another major political battle, because the Left argued it was too favorable to the corporations involved in gas exploration and extraction, as well as a High Court of Justice case.

“The absurd thing is that our gas outline was the toughest in the whole Western world,” Steinitz said.

Among the major points in the outline was breaking up Delek and Noble Energy’s monopoly after the company found three gas reservoirs, requiring them to sell two of them and setting a price limit for the gas that is lower than its price in Europe. Now that there is competition in the gas market, the price is even lower than the legal ceiling. In addition, Steinitz said Israel is the only country limiting gas exports such that it retains 50% as a strategic reserve for the coming decades.

“The advantage to Israel was great in terms of public health and the environment,” Steinitz said. “We reduced air pollution from power plants by 75%... Thousands or maybe tens of thousands of Israelis were saved by lower pollution.”

Plus, Steinitz said, “in 2021 alone, the Israeli market saved NIS 65 billion because of income from natural gas... Buying Israeli energy costs less than importing coal from abroad. If we had to import our energy, we wouldn’t have had economic growth this year; we would be in a recession.”
Steinitz also took advantage of the geopolitical value of gas, which brought Israel closer to Jordan and Egypt through exports, the greatest economic cooperation between Israel and its neighbors. He established the Eastern Mediterranean Gas Forum with his Egyptian counterpart to continue in that vein.

And now, in light of the war in Ukraine and sanctions on Russia, Europe is courting Israel and working on a natural gas deal.

A return to academia?

BACK IN December 2000, Steinitz told the Post that he believes he’ll return to academia someday.

“After I’m prime minister, I’ll have to go back to work somewhere,” he said in a tone the article characterized as half-joking.

Steinitz made it very high up Israel’s political totem pole, though not to the very top, and he still said he hopes to go back to academia and teaching, which he said he enjoyed.

“I’m not saying I won’t return to politics, but after over 23 years, our politics have become very cruel,” he said. “I decided I need to breathe a bit of fresh air.”

The degradation of Israeli political discourse

Steinitz lamented the deterioration of the political discourse in Israel, with personal insults coming from all ends and greater provocations for the sake of getting attention.

“Maybe that’s why most academics don’t survive” in the Knesset, he posited, pointing out that most other professors entered the Knesset to great fanfare but flamed out after one or two terms. “If there were other researchers in science, philosophy and history, then our political work would look more serious.”

Hero-worship of Netanyahu?

Asked specifically about the hero-worship of Netanyahu in Likud, Steinitz said he doesn’t think the situation is so exceptional to his party and that Yesh Atid MKs do not criticize Prime Minister Yair Lapid, and the same goes for Defense Minister Benny Gantz in Blue and White.

“There is a norm of support that, to a certain extent, is appropriate,” he said. “In Likud, criticism does come out sometimes. I’ve disputed Netanyahu in public. I opposed the death penalty for terrorists because I thought it would do more harm than good. I managed to block it after the preliminary vote... I wasn’t in the famous picture with Netanyahu [in court at the start of corruption proceedings against him] because I didn’t think it was appropriate to criticize the judiciary in the courthouse.”

Steinitz also pointed out that Likud has leadership primaries and many senior figures in the party have challenged Netanyahu over the years: “Likud is less authoritarian than most parties in the Knesset.”

“Likud is less authoritarian than most parties in the Knesset.”

Yuval Steinitz

Asked if in today’s Likud, right-wing populism outweighs the classic liberal tradition in the party, Steinitz said he sees himself as one of the liberal side’s flag bearers.

“There are big groups being established in Likud that push that side, such as the Liberals in Likud and the New Likudniks, with a lot of support from young people. Prominent MKs like Amir Ohana and Yariv Levin identify strongly with the economic liberal approach,” he said.

At the same time, he said: “The populist side is and always was strong.”

And this is where his philosophical side kicked in.

“There is no politics without populism,” Steinitz said. “Plato saw it over 2,000 years ago, which is why he opposed democracy. Democracy has many great things and advantages but naturally has a lot of populism.” ■