1. Any resemblance between Prime Minister Benjamin Netanyahu (2010) and Minister of Finance Benjamin Netanyahu (2003) is pure coincidence. The reformer and revolutionary has disappeared. Since taking office, Netanyahu has been busy with survival, and when it comes to reforms and other vital measures, he only blocks them. There is no rise in the minimum wage, no curb on executive compensation, no reduction in pension fund management fees, no structural reforms, and no solution to rocketing housing prices. On Friday, it seemed as though the Bibi of old had returned, at least for a few minutes. He decided the critical issue of the 2011-2012 budget: the defense budget will grow by NIS 2.7 billion less than originally planned, and the retirement age of career servicemen and women will rise to 50 on average. Everyone thought that the embarrassing capitulation over VAT on fresh produce would be repeated. After eighteen comatose months in power doing nothing, Netanyahu did something important and original: he did not capitulate.
2. Minister of Defense Ehud Barak again served up a mini Greek tragedy. He could have been the conquering hero, but at the last minute he turned into the ultimate loser. Barak adamantly opposed even the slightest cut in the defense budget. He did not understand which way the wind was blowing. He did not understand that the folds of fat in the defense budget had become so bloated that they could no longer be concealed. He did not understand that, in his terminal political condition, he needed to pull off something radical in order to stay alive.
Instead of taking over the reins and declaring that he would lead a revolution in defense, Barak decided to go head-to-head with Steinitz. Barak, as leader of the social-democratic wing of Israeli politics, should have declared that Israel's best weapon was education and welfare. A combination of circumstances again furnished him a golden opportunity to spring back to life. But, as is his wont, he thought he could win out against everyone. It seems that the minister of defense only learns the hard way.
3. Let there be no misunderstanding: the party at the IDF and the defense establishment goes on. The defense budget has not been cut; it will grow substantially. The average retirement age is rising to 50, but let's not forget that everyone else retires at 67. The Israeli public will still have to work 68% more than career soldiers to become entitled to a pension.
4. The victory celebrations of Minister of Finance Yuval Steinitz were quickly over. The chances of him getting the budget past the Knesset the same as it passed the government are near zero. Now the real fight begins. The Knesset Finance Committee, including chairman Moshe Gafni, have already demonstrated that they know how to make Steinitz sweat. The legions of lobbyists will also join in the merriment. It appears that Steinitz will have to loosen the purse strings to give his budget a chance of surviving. Approval of the budget in the Knesset will take place during a very sensitive period politically. Yisrael Beiteinu head Avigdor Lieberman is angry at Netanyahu and at the budget, and voted against in the cabinet; Barak is liable to demand restoration of what was taken from the increase in defense spending; the quiet of the Shas ministers despite the harsh measures over child benefits can only be disquieting they are saving all their fighting strength for the real thing: the Knesset.
Steinitz wants a balanced and responsible budget, but Netanyahu wants a government and the premiership for a few years more, and it’s Netanyahu's call. Our current prime minister has already shown that he is prepared to pay well over the odds in order to survive, and his coalition partners know this.
Published by Globes [online], Israel business news - www.globes-online.com - on July 19, 2010
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