Netanyahu, Barak resolve defense budget crisis - Israel Business, Ynetnews

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Yuval Steinitz Photo: Gil Yohanan
Yuval Steinitz Photo: Gil Yohanan
Netanyahu with Barak (archive) Photo: Dudu Azoulay
Netanyahu with Barak (archive) Photo: Dudu Azoulay

Netanyahu, Barak resolve defense budget crisis

With cabinet set to vote on biennial budget this afternoon, PM, defense minister defuse key point of conflict in marathon late-night meeting. Not only will defense funding not be slashed, it stands to grow by several billion

Roni Sofer
Latest Update: 05.12.09, 08:39 / Israel Business

Israel's financial captains were cautiously optimistic Monday night, saying that several amendments to Prime Minister Benjamin Netanyahu and Finance Minister Yuval Steinitz's budget bill may lift the threat of a looming political crisis.


Tag War
Netanyahu, Barak at loggerheads over budget / Roni Sofer
Prime minister, defense minister meet for second consecutive evening to bridge remaining gaps regarding defense budget for coming two years – but still fail to see eye to eye. Barak's office says disparities are serious, warns proposed budget insufficient for security challenges Israel faces
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The two met with Defense Minister Ehud Barak in an extended session that lasted well into the night, ending only at 3:00 am. The marathon discussions yielded results however. Not only will no cuts be made to the defense budget, it stands to enjoy an increase of several billion shekels.


The ministers also agreed to maintain the principles recommended by the Brodet Committee, which advocated a perennial increase for the defense budget. Barak's office has rejected claims that more spending on defense would harm the economy.  


Furthermore, Netanyahu and Steinitz also agreed to expand the deficit target to 2.95%.


The cabinet is scheduled to hold a special meeting Tuesday to discuss the budget bill and the cuts proposed of the 2009-2010 budget plan. Netanyahu and Steinitz are likely to introduce less of a lateral cut to the government's budget, in hopes to rally the ministers' support.


The two met Monday with Treasury officials. Sources familiar with the meeting's details told Ynet that should the reservations expressed regarding the bill be settled, the majority of the cuts originally proposed would be rescinded.


Nevertheless, senior Treasury officials said that a main point of contention, Education Minister Gideon Sa'ar's demand not to cut his office's budget, has not yet been resolved; and he may still vote against the budget.


Monday saw hectic deliberations between Treasury, Histadrut Labor Federation and the Manufacturers Association of Israel representatives, which have reportedly resulted in mutual understandings, meant to secure the bill.


The parties have agreed that the Treasury will annul some of its intended edicts, employers will refrain from vast layoffs and the Histadrut would agree to a wage freeze. These measures, combined with the government's willingness to expand the deficit limit to a presumed 2.7% and instate a lateral cut, should fund the NIS 14 billion cut (roughly $3.42 billion) demanded by the Finance Ministry.


First Published: 05.12.09, 00:32


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