The Prime Minister's National Economic Council has recently presented an ambitious plan titled "Socio-Economic Agenda for Israel 2008-2010". As appropriate, the media highlighted the objective of reducing the number of households below the poverty line from 20.2% to 17.2% by 2010 thus raising 60,000 families above the poverty line.

Unfortunately, the NEC's recommendations are unlikely to be implemented. The plan's key weakness is that it requires continuous and systemic cross-agency cooperation in planning, decision-making and implementation. This will not happen.

The timeframe for the plan is three years. However, the chances that the current government will survive that long are slim. In practice, only the Begin-Shamir government of 1981 served its full term of four years. The next government will not be obligated to Olmert's agenda, just as the current government is not obligated by the decisions of its predecessors.

The essence of this weakness lays in Israel's political and electoral system and our poor culture of government. This system creates short and unstable tenures, fragmented executive and legislature and powerful incentives for sectarian, short-term, and populist behavior.

The result is weak government and Knesset. Nearly all issues of national importance are handled by a number of ministers representing different parties that do not have any real obligation to implement the Prime Minister's or the Government's decisions. The current Knesset, like its predecessors, is fragmented into many parties, each with its own agenda. Moreover, party and coalition discipline is hard to come by, as evidenced multiple times by the current Knesset. Thus, for the government to enact a new agenda, it has to bargain with a double-digit number of ministers, parties, and individual MKs.

But, how is Israel different? Indeed, reservations about the quality of government are common in all countries.

The answer can be found in the World Economic Forum's 2005 Competitiveness Report. Whereas the performance of Israel's private sector is 8th (!) world-wide, its public sector drags along in 29th place. Yet in the US, Taiwan, and Japan - other countries whose public sector is underperforming compared to its business sector - the size of the public sector as a portion of GNP is significantly smaller than in Israel. The Israeli government is large and ineffective. Israel's ability to govern – to design and implement policy – is much weaker than other countries at a similar level of development.

We shouldn't be surprised that in nearly all fields that require effective government intervention, Israel is in crisis compared to other developed countries. The common link between failings in the education system, law enforcement, the integration of the Arab citizens of Israel, and public transportation in Tel-Aviv is weak government.

The clear conclusion is that Israel's problem isn't in the content of its policy but the structure of its government. Long and stable tenures and congruency between the identity of the Prime Minister and the government and Knesset will permit implementation of more and varied reforms. As important as they are, the National Economic Council's recommendations do not address the heart of the problem: Israel's government structure and electoral system, not the content of its policy. Changing the electoral system should be the primary concern of the Prime Minister's socio-economic agenda.

This post was published on NRG (in Hebrew) on 4/29/07.

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Gidi Grinstein is founder and president of the Reut Institute. The views expressed in this blog are his own and do not necessarily reflect the views of the Reut Institute.

For additional information regarding BloGidi see his original post: A Link in the Chain.