The wizard of Israel

WHILE GAZA WAS falling definitively, in mid-June, into the hands of Hamas, creating a security disaster on Israel's doorstep, and an almost inevitable humanitarian disaster as well, Israelis were looking in the other direction.

We amused ourselves with a largely meaningless contest for the Labor Party chairmanship -- meaningless, because it was a horse race that focused on personalities rather than the party's loss of identity or mission -- and an even more irrelevant race for the presidency, a ceremonial post whose outgoing incumbent has been fighting assorted charges of sexual abuse.

But mainly, beyond even these political entertainments, Israelis have been transfixed by the amazing exploits of a one-man three-ring circus that could be called the Arcadi Gaydamak Show.

Gaydamak, a 55-year-old Ukrainian-born billionaire who now makes his base in three homes in Israel, is the stuff that tabloid editors' dreams are made of. Dashing, with a chiseled, craggy face that looks like it has seen a barroom brawl or two, Gaydamak has become a hero by putting his money where his mouth is. Even as he snaps up local firms left and right, he distributes philanthropic largesse to border communities that the authorities have failed to defend from rockets, gets into very messy spitting matches with Prime Minister Ehud Olmert, and throws mammoth parties for the public.

All the while Gaydamak deflects questions about the sources of his fortune, much of which is invested in Russia. He is under investigation in Israel for money laundering, and is wanted in France, where he lived in the 1970s and '80s, on charges of illegal arms dealing and tax evasion.

Unfazed by his legal problems, Gaydamak speaks often (in English; his Hebrew is minimal) of his aspiration to hold public office -- mayor of Jerusalem, prime minister, whatever. (One informal poll conducted by a local paper in Jerusalem revealed that 60 percent of respondents said they would support a Gaydamak mayoral bid.) And he's been in talks to buy one of the country's two commercial TV stations and one of its three largest newspapers. Imagine a foreign-born version of Italy's Silvio Berlusconi, or Donald Trump, or maybe Rupert Murdoch with a dash of George Soros and your favorite James Bond villain thrown in. You get the picture.

Gaydamak is an amusing, even riveting, figure, but his rise to prominence is starting to set off warning bells. "He buys himself amity with money," wrote the Haaretz columnist Uzi Benziman last fall, "and thus contradicts the rules of the game by which Israeli democracy has so far existed."

And yet, any suspicion Israelis may have about this mysterious tycoon is nothing compared with the near-total disdain with which they regard their elected leaders. The Olmert government, which has an approval rating well below 20 percent, is like a revolving door leading from the cabinet room to the police investigation chambers. Not that people trust the police -- or the courts, or the media.

In other words, Gaydamak's rise is troubling not only in itself, but for what it says about the state of Israeli society at this crucial juncture. The popularity of this Wizard of Oz-like character, with his intuitive grasp of what Israelis want to hear, has done more than any opinion poll to measure the public's despair of its elected government and its preference for superficial answers to complex problems, as well as the unconditional surrender of public opinion to the dynamics of celebrity.

Gaydamak is more street fighter than bleeding heart, but as Hebrew University philosopher Moshe Halbertal observed to me, people here regard him with the same sort of tolerant attitude they always reserved for Ariel Sharon: "He may be a bastard," the logic goes, "but at least he's our bastard."

Certainly, Gaydamak makes no apologies for himself. Last fall, he predicted in an interview with the daily Yediot Ahronot that if he decides to run at the head of a political party, "I will get 40 seats in the Knesset." More recently, he observed to an interviewer, with characteristic modesty, "I'm not just popular, I'm very popular."

Gaydamak has been an Israeli citizen since he first came here, as a 20-year-old immigrant in 1972, but only in the past two years has he become a household name. He began by buying up sports teams: first a soccer club with a strong right-wing fan base (Beitar Jerusalem), and then a basketball franchise (Hapoel Jerusalem) identified with the Labor movement. He also made a generous and well-publicized gift to a winning but impoverished soccer team in an Arab town in the Galilee.

Then he moved into philanthropy. As Israel has slashed entitlements and privatized virtually everything but the army, poverty has soared, and private funders, ranging from institutional charities like the United Jewish Communities to dozens of family foundations, have stepped in to approximate the safety net once supported by the government. But while this loose network of NGOs operates largely according to professional considerations and in coordination with local and state authorities, Gaydamak has taken on the persona of the gvir (Hebrew for "lord") of traditional Jewish Diaspora life: the big man who takes care of many of the community's basic needs, very publicly and according to very personal criteria.

"Foreign donors were always careful not to enter the direct role of government," notes Halbertal. But for Gaydamak, it's a point of pride. Is there a crisis? Gaydamak will dip into his own pocket and make a heavily publicized gift to handle the problem.

Last summer, during the Lebanon war, he set up a tent village on a Mediterranean beach, far out of range of Hezbollah's Katyusha rockets, where refugees from the North could wait out the fighting. More recently, he set up a similar operation in a Tel Aviv park, and offered respite for residents of Sderot, the town on the Gaza border that's been bombarded by Qassam rockets fired by Hamas and Islamic Jihad.

Each gesture is accompanied by declarations about the government's incompetence. Rather than embracing the tycoon, turning him into a partner, the touchy Olmert has responded by trying to dissuade local authorities from accepting Gaydamak's gifts, and even invoking bureaucratic regulations to prevent them from using his money.

Gaydamak has shot back, calling Olmert "a nothing," and "stupid," adding that he himself is doing only "what any Jew ought to do." He has also forced the government to play catch-up: When Gaydamak also offered to equip Sderot residents' homes with defensive armor, the government responded by promising the same, seven years after the Qassams first began hitting the town.

The significance of Gaydamak's rise can only truly be understood in the context of Israeli history, and the decline of its once-pervasive social-democratic mores. In the six decades since its founding, Israel has gone from an egalitarian, quasi-socialist society of modest means to one with a per-capita income approaching Canada's and Great Britain's. And yet, a quarter of the country's residents live below the poverty line, soup kitchens are a growing industry, and homelessness is now a common sight, especially in Tel Aviv, even as a government web site seeking foreign investment boasts (citing 2004 figures) that the country now has four billionaires and "10,000 millionaires."

Money is no longer a dirty little secret here: Consumption is in, and the more conspicuous the better. That's the case even among politicians. No longer do former prime ministers emulate David Ben-Gurion, who, when he retired from public life, lived in a modest residence ("the shack") on Kibbutz Sdeh Boker, in the desert. Yitzhak Rabin, too, though he was known to favor the company of millionaires, lived modestly to his dying day, and was never suspected of corruption. His successors Benjamin Netanyahu and Ehud Barak, however, have traded on their fame to make fortunes in the private sector and on the lecture circuit -- and have displayed a newly developed taste for Cuban cigars.

Haaretz social-affairs reporter Ruth Sinai recently wrote that the rise of Gaydamak was an inevitable consequence of government policy. "The architects of the market economy, privatization and smaller government," she suggested darkly, "created a monster that turned on its maker."

In the manner of a demagogue, Gaydamak presents himself as an outsider, a little guy who's taking on the system and "the elites," the legendary Ashkenazi Labor aristocracy of European origin that supposedly controls the country. "He understands that perverse need to resent the political elites," notes Halbertal. "By rallying around Gaydamak, we declare our lack of trust in the system."

And it's true that only a few hand-wringers seem exercised by the whole slew of question marks surrounding how Gaydamak finances his munificence. He denies any wrongdoing in France despite the arrest warrant, which was issued in connection with a complex series of arms-for-oil deals in Angola during the 1990s. In response to a seemingly endless Israeli police investigation of suspected money-laundering, he claims (in large ads purchased in the papers) that the politicians who are persecuting him merely feel threatened by his popularity. "They are afraid," he has said.

Gaydamak has taken steps to create a new political party, even what he has called a "social movement." But his keen intuition, of both business and the public mood, may need to be reevaluated, as the Gaydamak juggernaut has recently appeared to stumble.

Three weeks ago, the tycoon announced he was buying Tiv Taam, a small but rapidly growing supermarket chain, offering to pay a premium of 80 percent over the stock-market price. Tiv Taam is perhaps best known for its pork and other treyf products, items not sold in the larger chains. Immediately, Gaydamak announced that the store would discontinue selling pork, and would close down on the Sabbath. He said he was acting out of respect for both Jewish and Muslim tradition, and that he himself had never eaten pork.

At the same time that he was making this appeal to the wider public, Gaydamak was acting against the interests of the Russian-immigrant population, which makes up the largest proportion of Tiv Taam's consumer base, and which has always been presumed to constitute the center of his future electoral base. He even used the opportunity to take a clear swipe at that community, explaining, "I don't want to be popular among those who, on principle, must drink their vodka with lard."

But this time, the wizard may have reached too far. When it became apparent that taking Tiv Taam kosher might not be such a straightforward task, Gaydamak backed out of the deal, revealing himself, according to Haaretz business reporter Rotem Starkman, to be "amateurish, almost ludicrous." And overnight, shares in all the companies he recently took control of fell in the Tel Aviv Stock Market.

The mocking tone that greeted Gaydamak's missteps may be just a taste of things to come. The popular media in Israel, like their counterparts in the US, can turn vicious when heroes they helped create show signs of fallibility. And as the mysterious billionaire becomes more involved in political and business life in Israel, journalists are likely to confront him with much more exacting scrutiny. He won't be able to control that -- unless of course he buys them all.

David B. Green is an editor at the English edition of Haaretz.