By: M. Javedanfar

07/08/2005

Just before his resignation as Israel's Finance Minster Benjamin Netanyahu (Bibi) looked at the market and saw that his own “stock valuation” (ie political position) is at its peak. The market loves him for his reforms and he seems to be the only politician in Israel who can push through much needed budget cuts over the screams of the unions and the leftist Israeli parties.

However as far as his “company” (ie the Likud) was concerned, their price in the coming months in the local “market” (ie Israeli political arena) is going down. Likud's popularity is being eroded daily because of the disengagement. The situation for Likud will get worst as pictures of settlers being pulled out of their homes in Gaza is transmitted to the TV sets of Israeli voters.

Therefore in line with his strong market instincts Bibi decided to sell when his own valuation is at its peak, just before it starts its descent.

This is why he waited until now to quit, despite the fact that he had his chance on many occasions before. By staying until now and pulling out just days before the “moment of truth” in Gaza, Bibi wanted to make sure that the timing of his decision would add value and significance to his political standing.

Being a skilled trader, Bibi's ultimate long term strategy is to re-enter the market when the prices are low again.

In other words, Bibi's decision to resign is based on his forecast that Sharon government will either fall or will become weakened after the disengagement.

Therefore by resigning now the plan is that the anti disengagement Likud voters will see him as a man true to his word and principals.

By resigning now Bibi also beat other potential candidates for replacement of Sharon in the Likud party especially Silvan Shalom. Although Silvan Shalom likes to have the image of a tough politician, in reality he has always trailed behind the smooth talking and experienced Bibi. The fact that Bibi followed his words by action by resigning over the disengagement plan whilst Silvan Shalom decided to stay means the distance between them in the popularity contest has become even wider.

Although Bibi was an important player in Likud, his absence in the government is unlikely to stop the disengagement plan. Furthermore until the disengagement plan is over it is unlikely that Bibi will mount a leadership challenge against Sharon. Like any skilled trader he will have to wait and assess the suitability of the market conditions for his re-entry strategy. As any tactician would tell you, timing is one of the biggest success factors of any operation, no matter how good your intelligence and your forecasting tools are. Judging by Bibi's actions in the last few days, Bibi is well aware of this important factor.

Meanwhile Bibi's loss will be most felt in the halls of the Tel Aviv Stock Exchange (TASE) and this is already evident by the relatively steep falls on the day of his resignation.

Although his economic reform plans which called for reduced expenditure on social security made him unpopular in some sectors of Israeli society, nevertheless his efforts to break up established monopolies in the Israeli economy won him limited yet deserved praise locally, and even more so internationally. Therefore in the short term we are likely to see loss of international confidence in the Israeli economy.

However such consequences are also part of Bibi's grand strategy to re-enter the market in the future.

Working on the assumption that Sharon does not survive, Bibi can use his economic achievements which will be most felt in his absence as part of his marketing campaign to say that Israel needs him for political and economic reasons thus increasing his chances for re-election as Prime Minister.

Meanwhile should Sharon survive the disengagement it is very possible that he will certainly be at a weaker position than before. Bibi can then use the depressed market conditions for Likud as an opportunity to launch a political and economic ambush on Sharon's leadership.

As the famous quote from Louis Pasteur says “chance favours the prepared mind”. Bibi's preparations to become the next Prime Minister have already started, now he just needs the chance.

End of Analysis

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