Government in Crisis Over Budget

The perennial battle over the budget, usually fought out in the Knesset plenum, went on behind closed doors on Sunday, as Finance Minister Yair Lapid refused to give Israeli Prime Minister Binyamin Netanyahu and Defense Minister Moshe Yaalon what they want: more money for defense.

The Defense Ministry is seeking an 11 billion shekel budgetary supplement for a military buildup following Operation Protective Edge. But after a meeting on Sunday afternoon — which had already been postponed due to irreconcilable positions — Lapid would concede only NIS 2.5 billion more for salary and pension costs.

Lapid’s budget for 2015 projects a 3.18 percent deficit and no tax increase.

This frustrates Netanyahu’s stated desire for a bigger defense allocation while holding the deficit to less than three percent, and runs counter to Governor of the Bank of Israel Karnit Flug’s position that taxes have to be raised to foot the bill.

A source within the Defense Ministry charged on Sunday night that “the Finance Ministry’s proposed budget is completely unrealistic.”

The source told Ynet, “No supplement is involved; the total budget is less than the 2014 defense budget excluding the cost of Operation Protective Edge. The Finance Ministry is gambling with the security of Israelis, and thinks it’s a game. This is the highest degree of irresponsibility.”

“In order to cope with the changing and complex threats and attack the terrorist and their sponsors, investments must be made in high-quality intelligence and precise weaponry, and that costs money.”

However, Finance officials responded that the defense establishment’s request for additional funds must be answered while maintaining the established spending framework.”

Netanyahu will have to decide soon on the final budget to present to the Knesset in the winter session.

This article appeared in print on page 11 of the September 15th, 2014 edition of Hamodia.