The government approved the 2006 State Budget Tuesday afternoon, with 13 ministers voting in favor and seven abstaining. The budget was approved despite the fact that the seven Labor ministers abstained in the vote in protest of a NIS 500-million (about NIS 110-million) cut to the defense budget. During the meeting, Defense Minister Amir Peretz told the finance minister and prime minister: "I cannot work under the budget cut pressures."
The Kadima ministers in response presented Peretz with the trap they claimed he created with his own hands: "What do you want? A month ago you signed an agreement determining that the budget ceiling would not be increased," Finance Minister Abraham Hirchson said. "You know that with any day there is no budget, the weak are hurt." However, Minister Ophir Pines-Paz said: “I believe Labor will not resign from the government over the cut in the defense budget."
"The big struggle for the budget will be in 2007, when the 2006 budget will already be over. It is natural that relations between Peretz and Olmert are tense because the two competed between them for the role of prime minister, but relations of trust are embroidered over time,” he said. Peretz aides said the cut in the Defense Ministry’s budget must be made gradually so as not to negatively affect the army and the security establishment as a whole.
Sources in the Defense Ministry said that if the cut is approved, it would be a slap to the face to the most important system in Israel: "We tightened the belt, and made cuts wherever it was possible. We burned a lot of 'fat' in the IDF. There is nothing left to cut. This will be a real blow to the security issue," a source said. Chief of Staff Dan Halutz said during closed meetings that "the IDF will be forced to harm the reserves and compulsory systems, as well as our arms in the sea, air, and land. Our defense industry will also be harmed as it will have to fire workers."
Sources in the Prime Minister's Office said that Olmert took the decision after a prolonged session held on Monday in the Knesset with Peretz and Finance Minister Abraham Hirchson. "The government will absorb the cut of NIS 1.15 billion (USD 253 million), an amount that was expected to be received from the Americans after the disengagement and which did not arrive in the end," a source in Olmert's office.
The government will also vote on a number of social reforms, the most high profile of which is the medicines basket which currently stands at NIS 710 million (USD 156 million). The Labor and pensioner's party said that during the next budget, they would not ask for an addition to the basket.
Attila Somfalvi and Hanan Greenberg contributed to the report