Up in smoke - Haaretz

Up in = smoke

By Sara=20 Leibovich-Dar

Six = weeks before the=20 terrorist attack in New York, Larry Silverstein leased = the=20 Twin Towers for 99 years, paying $3 billion. Their = collapse=20 was also the collapse of the deal of his life, and = since then,=20 he has been trying to put the pieces back together in = the face=20 of fierce public criticism, some of it anti-Semitic. =
His=20 business dealings in Israel haven't given him much=20 satisfaction either

Shortly after the = events of=20 September 11, Prime Minister Ariel Sharon called Larry = Silverstein, a Jewish real estate magnate in New York, = the=20 owner of the World Trade Center's 110-story Twin = Towers and a=20 close friend, to ask how he was. Since then they have = spoken a=20 few more times. Two former prime ministers - Benjamin=20 Netanyahu, who this week called Silverstein a = "friend," and=20 Ehud Barak, whom Silverstein in the past offered a job = as his=20 representative in Israel - also called soon after the=20 disaster. Yaakov Terner, the mayor of Be'er Sheva, = sent a=20 letter of condolence.

Many Israeli politicians = are=20 acquainted in one degree or another with the = 70-year-old=20 Silverstein. For 10 years, he tried to bring about the = establishment of a free-trade zone in the Negev, until = the=20 project fell apart. "This is a tragedy," Silverstein, = deeply=20 disappointed, said then.

Now he has bigger = troubles.=20 The collapse of the Twin Towers after being rammed by=20 terrorist-piloted planes, in addition to being a = full-scale=20 American tragedy, shattered the dream of Silverstein's = business life, caused him immense losses, and thrust = him into=20 the midst of a public battle over whether to rebuild = the=20 towers.

Six weeks before the events of = September 11,=20 Silverstein leased the Twin Towers and buildings No. 4 = and 5=20 of the WTC complex for 99 years from the Port = Authority of New=20 York and New Jersey. He agreed to pay $3.2 billion for = the=20 properties. Becoming the owner of them, on July 24, = was the=20 high point of his career and marked the end of a = grueling=20 quest.

In February of this year, five days = before the=20 bids in the privatization process were due, = Silverstein was=20 injured in a road accident. In April he was informed = that he=20 had lost the tender. A few weeks later, though, events = took a=20 surprising turn. The winner of the tender dropped out, = leaving=20 Silverstein and his partners in Westfield America, who = had=20 finished second, as the new winners. Worn out but = happy,=20 Silverstein was photographed in the New York sun = holding the=20 symbolic keys to the towers, and spoke of a dream that = had=20 come true.

On September 11, his world lay in a = six-story heap of ruins. Above all, four members of = his staff=20 were killed and he himself was saved only because a = meeting he=20 had scheduled that morning with officials of the Port=20 Authority on the 88th floor of 1 World Trade Center = (the south=20 tower) was canceled at the last minute.

From = his home=20 on Park Avenue, he watched the results after the first = plane=20 slammed into the north tower. He rushed to his office = on Fifth=20 Avenue, from where he saw the second tower hit. He was = terrified for the fate of his children, Roger and = Lisa, who=20 sometimes worked in his offices at 1 WTC. One of his=20 employees, a woman, who survived by walking down 88 = flights of=20 stairs, arrived in the Fifth Avenue office covered in = dust.=20 There she found Silverstein shaking in every bone of = his body.=20 I see that you're in worse shape than me, she told = him.=20

In the afternoon of September 11, the Fire = Department=20 informed him that the smaller 7 World Trade Center = building,=20 which he owned, was going to collapse. It did so at = 5:30 P.M.,=20 followed by buildings No. 4 and 5. Silverstein, who = only six=20 weeks earlier had carried out the largest real-estate=20 transaction in the history of New York, was left with = nothing.=20 It was also the worst timing ever in American history = for a=20 business deal, the press said afterward. =

The buyer=20 continues to pay

The full economic = consequences of=20 the attacks became clear only later. Upon signing the=20 contract, Silverstein paid the Port Authority $616 = million. He=20 undertook to pay the rest, with the addition of about = $100=20 million in each of the next 10 years, even if = something=20 happened to the buildings. Silverstein is continuing = to pay=20 his debt to the Port Authority, but is no longer = receiving=20 rent from the firms that leased office space there. He = told=20 his friends in Israel not to worry because the = insurance=20 companies would pay. But that is not so simple.=20

Silverstein insured the towers for a $3.5 = billion=20 against any claim. He maintains that the towers were = hit in=20 two separate incidents, and therefore expects to = receive=20 compensation of $7 billion. The insurance companies = maintain=20 that there was only one event and are ready to pay = only $3.5=20 billion.

In addition, he is threatened by a = tidal wave=20 of lawsuits. Minutes after the first plane rammed the = north=20 tower, the public-address system in the south tower = informed=20 the panic-stricken employees in the south tower to = return to=20 their places and continue to work as usual. Those who = obeyed=20 the directive were killed. Lawyers say that = Silverstein, who=20 was responsible for the buildings' operation, could = face=20 negligence suits.

In the first hour after the = attack,=20 Silverstein was paralyzed with fright. A few hours = later, he=20 issued an emotional statement that ignored the = economic=20 implications of what had happened, focusing on grief = and pain=20 over the loss of life in the terrible tragedy. =

Two=20 days later, the tone had changed. Silverstein's = spokesman,=20 Steve Solomon, told the Reuters news agency that = Manhattan is=20 a world commercial center, and that Silverstein thinks = a=20 business district of the same area as the one that was = destroyed should be rebuilt. From that moment, = Silverstein=20 launched a campaign to restore his property - a = campaign that=20 is generating public opposition and mounting = criticism.=20

In the public debate that is being conducted = in the=20 United States over how to rehabilitate the area that = was=20 ravaged, Silverstein is presenting a clear position. = In the=20 first days after the attack, he said he would build = two=20 identical towers of 110 stories and 3.6 million-square = meters.=20 More recently, he has been talking about building four = towers=20 of 50 stories each, covering the same area as the = Twins. If he=20 builds smaller buildings, his revenues from leasing = office=20 space will be reduced accordingly.

Silverstein = is=20 waging his campaign at full tilt. On the day following = the=20 communique released by his spokesman, he gave an = interview to=20 The Wall Street Journal. It would be the mother of all = tragedies if this part of New York is not rebuilt, he = said, it=20 will give the terrorists the victory they are seeking. = The=20 city is not dead and it won't allow itself to die, he = said:=20 "We owe it to our children and our grandchildren." He = also=20 promised that in the future design, special areas = would be set=20 aside in memory of those who were killed.

In = the=20 meantime, Silverstein found himself in a sensitive = legal=20 situation. In August, a three-month overlap period = with the=20 Port Authority began. Sources in the Port Authority = intimated=20 that even though they were still in the vicinity, = Silverstein=20 was in control. Silverstein, for his part, reminds = everyone=20 that even though the towers belonged to him, the land = belongs=20 to the Port Authority. He wants to build as quickly as = possible.

Raring to = go

Silverstein was=20 brimming with energy at a real estate convention held = at the=20 Waldorf Astoria last week. He intends to start = rebuilding 7=20 WTC within about a year. At this time next year, = girders will=20 already be rising out of the ground, he said. = Construction=20 will be completed within 30 months. Construction of = the new=20 Twin Towers will be completed in another six years. = The Port=20 Authority can't understand why Silverstein is in such = a hurry.=20 The governor of New York State, George Pataki, told = reporters=20 that he is angry at Silverstein for talking publicly = about=20 rebuilding before the state and the Port Authority = have=20 decided what to do. Silverstein has no time. The = insurance=20 companies will pay compensation for the destruction = only if he=20 restores the situation to what it was.

The = public=20 debate over the future of the area is not taking = Silverstein's=20 insurance problems into consideration. Some 6,000 = families=20 regard Ground Zero as a sacred site, Hans Butzer, who = designed=20 the museum in Oklahoma City, told The Chicago Tribune. = (On=20 April 19, 1995, a car bomb exploded in Oklahoma City = and=20 destroyed the Federal Building, killing 168 people. A = museum,=20 which features an exhibition outside consisting of 168 = metal=20 chairs, one in memory of each of the victims, was = built at the=20 site.) All the families will have to be heard before = concrete=20 is poured, Butzer said.

Silverstein told his = friends=20 in Israel that for the next five years, he will be = busy=20 rehabilitating the site. It's the last project of my = life, he=20 explained to an Israeli acquaintance. To advance his = project,=20 Silverstein needs the support of politicians. He has = paid=20 three visits to Washington since September 11. As the = largest=20 private donor to Hillary Clinton, he has an open door = to the=20 office of the junior senator from New York. Other = senators who=20 received hefty donations from Silverstein have said = that they=20 are in favor of the project at Ground Zero.=20

Silverstein has meanwhile been targeted by=20 anti-Semitic hate-mongers - particularly on the = Internet. The=20 Nationalist site, run by a racist group that advocates = a=20 "white America" and makes use of neo-Nazi symbols and=20 terminology, claims that Silverstein is exploiting the = collapse of the Twin Towers in order to extort funds = from the=20 government. A cartoon on the site, captioned "Whose=20 homeland?", portrays Silverstein in the stereotypical = guise of=20 the hook-nosed Jew extending his hand to President = Bush in=20 order to take money. The frightened Bush agrees but = wonders=20 why Silverstein isn't willing to make do with $100=20 billion.

An optimist and a = gambler

Larry=20 Silverstein's road to the purchase of the WTC complex = and to=20 his friendship with Israeli prime ministers and = American=20 senators was long and tortuous. He was born in New = York and=20 has lived and worked in the city his whole life. His = father=20 owned a small leasing firm. Silverstein joined the = family=20 business in 1952, after graduating from college. It = was hard=20 to make ends meet, he told Crain's New York Business, = an=20 on-line magazine, in May. They subsisted on the salary = of his=20 wife, Clara, a schoolteacher, who earned $3,200 a = year.=20

The couple had three children: Roger, Sharon = and Lisa.=20 Roger and Lisa work in the family business, = Silverstein=20 Properties. In March of this year, Lisa told The New = York=20 Times that she hoped her daughters, too - they are now = eight=20 and 10 - would work in the company as well.

In = 1953,=20 after Silverstein observed the lawyers in his father's = office=20 sewing up and unraveling business deals, he decided to = study=20 law. At law school in Brooklyn he met Bernie Mendik, = who=20 married his sister, Annette, and became a business = partner. At=20 the end of the 1950s, the Silversteins and Mendik = decided to=20 buy buildings instead of leasing them. With a bank = loan, they=20 bought a loft on 23rd Street and also asked the small=20 merchants in the area to invest a few dollars in the = purchase.=20 The transaction was successful and the investors asked = them to=20 expand the business.

They continued to buy = properties=20 in various parts of the city. An especially profitable = deal=20 involved 711 Fifth Avenue, which they bought in 1977 = from=20 Columbia Pictures for $11.5 million and sold six years = later=20 to Coca-Cola for $57.6 million. Just when business was = thriving, the Mendiks decided to get a divorce and the = business partnership was dissolved.

After the = break,=20 Silverstein decided to move up a notch. In 1980 he bid = successfully for the construction rights to 7 World = Trade=20 Center, but for the next four years, he had trouble = finding=20 anyone to lease or buy office space in the projected = building.=20 In 1984, he decided to build, even though he had no = tenants=20 lined up. It's not for nothing that others in the = profession=20 call him an incorrigible optimist and a gambler by = nature. In=20 1985 the gamble turned out to be successful. The = investment=20 firm of Solomon Inc. agreed to lease half the office = space in=20 the building. A short time afterward, the company = informed=20 Silverstein that it was canceling the deal.

"I = thought=20 I would die," Silverstein related. His wife, though, = told him=20 it was better that way; that's how it was meant to be. =

Bizarre lawsuit

In 1987, = Solomon Inc.=20 decided to lease office space in the building after = all, and=20 signed a contract. Then everything went haywire again. = The=20 slowdown in construction, which had hurt most of the = major=20 entrepreneurs in New York, got to Silverstein, too. He = had a=20 hard time repaying loans and was forced to sell = properties.=20

In 1993, he became entangled in a lawsuit. = Harry=20 Miller, a Vietnam War veteran, sued Silverstein, who = owned the=20 Runway 69 dance club in Queens, for his alleged = involvement in=20 the trafficking of heroin. Also on the list of = defendants were=20 Richard Nixon, Bill Clinton, Ross Perot and Colin = Powell, who=20 were alleged to have perpetrated acts including serial = murder=20 for 25 years, since the war in Vietnam, as part of a=20 conspiracy to distribute heroin. In January 1994, a = New York=20 court threw out the suit; an appeal by Miller was = later=20 rejected.

Although the bizarre suit was not = reported in=20 the press, it bothered Silverstein. Information about = it=20 reached Israel. Opponents of the free-trade zone in = the Negev=20 said that Silverstein, who was involved in illicit = business in=20 New York, should not be allowed to be part of the = Israeli=20 project. It was not until the late 1990s that = Silverstein=20 began to recover. The leasing of the WTC properties = was to be=20 the climax of his life.

Why was he so eager to = get the=20 WTC contract, he was asked a week after the terrorist = attack=20 on NBC Television's morning show. Silverstein, = tearful,=20 holding the contract in his hand, replied that it had = been his=20 dream from the moment he completed the construction of = 7 WTC.=20 He looked up at the towers, he recalled, and felt an=20 uncontrollable urge to own them. In another interview, = he said=20 that the 47-story building No. 7 looked like a peanut = next to=20 the Twin Towers, and he didn't want another peanut.=20

Free trade in the Negev

Like = everything=20 in his life, the leasing of the towers was also a = rough ride=20 for Silverstein. He made the final preparations for = the bid=20 from his hospital bed, after a drunk driver hit him = five days=20 before the bids were due. Silverstein was positive he = would=20 win: He was close to local politicians, he had donated = $15,000=20 to the campaign of Governor Pataki. His business = relations=20 with the Port Authority were very good. After the car = bomb=20 attack at the Twin Towers, in 1993, Silverstein gave = the Port=20 Authority offices at 7 WTC in place of those that were = damaged=20 in the explosion.

After Silverstein lost and - = when=20 the winning firm backed out - was declared the winner = in the=20 bidding, he ran into problems with the Port Authority. = A=20 bitter argument broke out over the size of the first = payment:=20 The Port Authority wanted $800 million; Silverstein = was=20 willing to fork over no more than $616 million. Some = of the=20 Port Authority directors wondered whether Silverstein, = who was=20 just getting back on his feet after the real-estate = crash,=20 would be capable of operating the WTC properties, and = demanded=20 that the negotiations be broken off.

Finally, = to=20 prevent embarrassment (the Port Authority was afraid = of a=20 public backlash if talks with a second entrepreneur = were=20 broken off immediately after the first debacle), the = decision=20 was made to sign with Silverstein. Silverstein was = delighted.=20 He raised the rent of most of the towers' tenants by = 40=20 percent. Financial analysts said he would reap a = profit of $40=20 million in the very first year. Life seemed better = than ever.=20

His friends in Israel were happy for him. = Silverstein=20 has ties of various kinds in Israel. He is a donor to = Tel Aviv=20 University and to the Tel Aviv development foundation. = He held=20 a few fundraising events at his home in New York for = the=20 foundation with the participation of the then-mayor of = Tel=20 Aviv, Roni Milo. Silverstein is a nice guy and a = pleasant=20 conversationalist, not like most rich Americans, Milo = says.=20

Silverstein is also a member of the joint=20 American-Israeli commission for housing and community=20 development, which was established by former president = Bill=20 Clinton. In the early 1990s, he was involved in = projects to=20 build housing for new immigrants. The Israeli = political world=20 got to know Silverstein when he tried to create a = free-trade=20 zone in the country. He became friendly with Yitzhak = Rabin,=20 Benjamin Netanyahu, Ehud Barak and Ariel Sharon. =

Ahaz=20 Ben Ari, a former legal adviser in the Prime = Minister's Office=20 and the chairman of the Free-Trade Zones Council, = remembers=20 Silverstein as being "not easy to deal with, a = hot-tempered=20 type who spoke aggressively to the prime minister. He = had the=20 feeling that he was going to save the Negev and the = homeland,=20 but was not getting the response he deserved."=20

Silverstein conceived the idea of creating the = free-trade zone in 1989. He met with Shimon Peres, who = was=20 then the finance minister, and with his deputy, Yossi = Beilin,=20 and tried to convince them that the project was an = urgent=20 necessity. The idea was that he would be given land in = the=20 Negev and would establish tax-free industries there. = The Negev=20 would benefit by getting new jobs, and Silverstein = would=20 benefit by raking in plenty of money. Peres and Beilin = objected: Free-trade zones of the kind envisaged were = usually=20 created in the Third World and had the reputation of = being=20 slave markets. The local workers earn starvation = wages, while=20 the entrepreneurs enjoy full tax exemption and make = high=20 profits.

Silverstein did not give up. The = economic=20 difficulties he encountered in New York forced him to = look for=20 an additional source of revenues. In September 1992, = he met in=20 New York with the new finance minister in the Rabin=20 government, Avraham Shochat, and again raised the idea = of the=20 free-trade zone, claiming it would create 20,000 new = jobs and=20 make the Negev flourish. With Silverstein were his = partners in=20 the investment group, Larry Tisch, the owner of CBS, = and Sy=20 Sims, a major New York discount retailer.

"I = formed a=20 very good impression of them," Shochat recalls. The = investors,=20 however, were somewhat less impressed with Shochat. = David=20 Yerushalmi, from the West Bank city of Ma'aleh Adumim, = who was=20 their representative in Israel, writes on his Web site = that=20 Shochat had no understanding of economics, business or = free=20 markets. What impressed him was the fact that a group = of=20 leading Jewish businessmen wanted to invest without = asking for=20 anything in return.

The prime minister, = Yitzhak Rabin,=20 also supported the project, Yerushalmi notes, and he = then put=20 pressure on Shochat. However, Shochat didn't want to = make the=20 decision alone. He set up a commission headed by Yoram = Gabai,=20 the director of the State Revenue Administration, to = examine=20 the implications of establishing a free-trade zone. = Gabai was=20 against the initiative.

"I took a negative = view of=20 creating a zone like this of any kind," he says. "The = sponsors=20 wanted to create an island, which would be free of all = the=20 country's laws. That contradicted our basic approach, = which=20 espoused the homogeneity of the system. We rejected = the idea=20 outright."

Silverstein didn't like Gabai's = report and=20 tried to get it changed.

"One day, I was = summoned=20 urgently to the office of Yitzhak Rabin," Gabai = recalls. "I=20 was wearing a plain shirt - I had no idea I would be = called in=20 to the prime minister. I found a few American = investors there,=20 all wearing suits and ties, who had arrived on a = private=20 flight from New York and were going back that same = day. They=20 wanted to know why I had written what I had written.=20

"I explained to them that a zone of the kind = they=20 wanted was suitable for backward countries, but not = for a=20 developed country like Israel. I told them that in the = end,=20 the zone would become a money-laundering center and = that no=20 one apart from lawyers would make a profit from=20 it."

Shochat and Rabin ignored Gabai's report = and set=20 out to enact legislation that would make the = Americans'=20 initiative a reality. In October 1993, the government=20 submitted a bill to establish free-trade zones in = Israel. Its=20 terms were the fulfillment of every investor's dream. = In=20 countless conversations that Silverstein and his=20 representatives conducted beforehand with cabinet = ministers=20 and Knesset members, they emphasized that Israel would = not=20 have to invest a cent in the project, but the bill = stipulated=20 that the government would underwrite infrastructure = costs up=20 to the boundary of the free-trade zone, and would also = expropriate land.

No special qualifications = were=20 demanded of the franchisee, apart from the vague = requirement=20 that he be capable of managing the zone. The benefits = were=20 enormous. For 20 years, which could be extended for an = additional 20 years, the franchisee would be exempt = from=20 payment of all taxes, customs and levies. Most of the = Israeli=20 labor laws would not apply to those who worked inside = the=20 free-trade zone. The chairman of the Histadrut = federation of=20 labor, Amir Peretz, who submitted a private bill on = the same=20 subject, supported the initiative, he says, "because = they=20 promised 20,000 new jobs. From the point of view of = the Negev,=20 that could have been a welcome change." =

Bowing to=20 pressure

For about half a year, from the = time the=20 bill was submitted until it was enacted into law in = June 1994,=20 Silverstein and his representatives met with all the = relevant=20 MKs and cabinet ministers. "We fought a major = campaign," says=20 Dafna Barak, director-general of the Free Trade Zones = Council.=20 "We did everything except to lie down in front of the = prime=20 minister's door."

Their efforts produced = results. The=20 bill became law on June 20, 1994. Support for the = free-trade=20 zone cut across political parties. The debate in the = Knesset=20 before the second and final readings was a = demonstration of=20 support for the American millionaire.

Amir = Peretz=20 explained that, "With this track, we have the = opportunity to=20 assist and approach the entrepreneurs in the belief = that they=20 are not out to cheat anyone. We must not take a narrow = view of=20 the sponsors, because only an entrepreneur who makes a = profit=20 is one from whom we can later demand that he improve = the=20 workers' wages."

MK Michael Eitan (Likud): "If = these=20 investors and capitalists make a profit and don't pay = taxes on=20 it, what's wrong with that? It's true that they will = make a=20 profit, but I don't begrudge them that profit." =

The=20 party ended when senior Treasury officials argued that = the law=20 posed a threat to the stability of the economy and set = out to=20 amend it. In the original version, the companies = involved=20 received full tax exemption, whereas in the amended = version=20 only industrial firms were given that sweeping = exemption.=20 Instead of a majority in the regional council, as the = original=20 wording stipulated, under the amendment the = representatives of=20 the franchisees had only one seat on the council.=20

Silverstein fumed. He wanted the whole package = - "but=20 that would have created serious distortions in the = economy and=20 would have put our reputation at risk and created a = tax=20 haven," says Shochat, who was torn between political = pressure=20 and the good of the economy.

"The initial idea = for the=20 project came from a warm Jewish heart," says Ahaz Ben = Ari,=20 "but when they started making more and more demands, = we said=20 enough, there is a line we mustn't cross, even if the = price is=20 the salvation of the Negev. Anyway, it's far from = certain that=20 the Negev would have been saved."

The = assassination of=20 Yitzhak Rabin gave the American group new hope for = their=20 project. Silverstein asked Colette Avital, then = Israel's=20 consul-general in New York, to set up a meeting for = him with=20 Shimon Peres, who succeeded the slain Rabin as prime = minister.=20

"My ties with Silverstein grew closer when I = tried to=20 get Shochat to give the matter second and third = thought, and=20 to give the free-trade zone a chance," Avital=20 recalls.

Peres met with Silverstein, but = remained=20 adamant in his objections. Silverstein was furious.=20

"People barely listened to him, officials = insulted=20 him," Dafna Barak says. "I love the project and what = happened=20 just made me eat my heart."

Close ties with = Netanyahu

The ascension to power of = Benjamin=20 Netanyahu opened a new chapter in the saga. = Silverstein is=20 left-leaning in his political views - he supports the=20 Democratic Party - but after despairing of Rabin and = Peres, he=20 believed that Netanyahu, whom he called a hero of the = free=20 market, would push the project forward.

The = two have=20 been on friendly terms since Netanyahu's stint as = Israel's=20 ambassador to the United Nations. For years they kept = in close=20 touch. Every Sunday afternoon, New York time, = Netanyahu would=20 call Silverstein. It made no difference what the = subject was=20 or where Netanyahu was, he would always call, = Silverstein told=20 an Israeli acquaintance. Their ties continued after = Netanyahu=20 became prime minister. They met several times and = Netanyahu=20 promised to give the project his support.

The = obstacle=20 was now the new finance minister, Dan Meridor. He met = with=20 Silverstein and told him he was against the idea: "I = don't=20 believe in that system," Meridor says. "If a = free-trade zone=20 is such a great idea, why not do it throughout the = country?=20 And then who will pay taxes?"

Netanyahu = succeeded in=20 bypassing the treasury and getting a decision passed = in the=20 Knesset, according to which the free-trade project = would be=20 under the responsibility of the minister of national=20 infrastructure. The official reason was that Yaakov = Ne'eman,=20 who had replaced Meridor as finance minister, had = previously=20 been the project's legal adviser, and could not now = handle the=20 matter.

The debate in the Knesset on this = transfer of=20 authority, which took place in July 1997, was an = embarrassing=20 show of capitulation to the demands of the money-man. = MK Ze'ev=20 Boim (Likud) said he thought it was the intelligent = step to=20 take and the right time to do it. The transfer of = authority is=20 a cardinal national matter, said MK Roman Bronfman = (then a=20 member of Yisrael b'Aliyah). MK Shmuel Halpert (United = Torah=20 Judaism) noted that it was especially important for = the powers=20 in question to be placed in the hands of the national=20 infrastructure minister, Ariel Sharon, who will be = able to=20 contribute enormously to the law's implementation.=20

Sharon did, in fact, contribute substantially. = A few=20 weeks after the debate in the Knesset, he ordered = funds to the=20 tune of NIS 6 million to be transferred to the project = and=20 promised that another nine million would follow. In = April=20 1999, he proposed that the law be revised again to = permit=20 commercial firms to benefit from the full tax = exemption, too,=20 as Silverstein wanted.

However, Sharon's = initiative=20 was stopped dead in its tracks by the elections of May = 1999.=20 Still, the change of government did not look ominous = to=20 Silverstein - on the contrary. He was friends with the = new=20 prime minister, Ehud Barak, too. In 1995, when Barak = left the=20 army, Silverstein offered him the job of acting as his = representative in Israel, hoping that the former chief = of=20 staff, with his ramified connections, would be able to = push=20 the project through. Barak turned down the offer, but=20 continued to stay in touch with Silverstein. They met = at=20 various social events and Barak introduced him to some = of the=20 members of his family.

Silverstein had another = close=20 contact in Barak's bureau in the person of Isaac = Herzog, who=20 handled Silverstein's legal affairs along with Yaakov = Ne'eman.=20 "I didn't touch the subject during my period as = cabinet=20 secretary," Herzog says. None of this stopped Barak, = after his=20 election as prime minister, from trying to help = Silverstein=20 advance the project.

"They came to Barak," = says=20 Shochat, who was then the finance minister again. = "Barak=20 examined the subject with all kinds of confidants and = also=20 talked to me about it. I told him that I was = vehemently=20 against it."

Barak drew on the help of Yaakov = Terner,=20 the mayor of Be'er Sheva, the "capital of the Negev," = who was=20 an ardent supporter of the free-trade zone.=20

"Silverstein gave me speeches from which I = understood=20 that he had better investment potential in other parts = of the=20 world," Terner says. "He presented a Zionist aspect. I = supported the idea because I thought I had to find an = opening=20 anywhere we had an opportunity for thousands of jobs." = They=20 met in New York. "I tried to persuade him not to = despair and=20 to keep the ember burning," Terner recalls.

In = May=20 2000, when his business in New York started to recover = and=20 after he understood that Barak was busy with other = things and=20 wouldn't go the extra mile for him, Silverstein = announced that=20 he was dropping the initiative.

"As a result = of this=20 experience," the tycoon was reported as saying in The=20 Jerusalem Post (May 18, 2000), "We've learned = something: Don't=20 try to do business in Israel, certainly don't do = business with=20 the government because you'll get killed. I'm never = going to=20 do this again. The sad thing is that this has turned = off so=20 many potential American businessmen from doing = business in=20 Israel. And that's a tragedy."n=20

Bookmark to = del.icio.us


Why he=20 must go
Israel's=20 culture of governance can change only after Olmert and = his ilk=20 are gone.


The=20 cello was proud
Breaking=20 the Muses' silence during the thunderous days of = Winograd is=20 truly naive.

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