Defense budget fight reaches decisive battle

Prime Minister Benjamin Netanyahu is due to decide on the defense budget before tomorrow's cabinet meeting.

Senior IDF officers and top Ministry of Finance officials arrived prepared for today's crucial security cabinet meeting on the proposed NIS 4 billion cut in the NIS 60 billion defense budget as part of the effort to cover the huge deficit.

Minister of Defense Moshe Ya'alon devoted the entire security cabinet agenda to the budget. Defense sources said that he insisted on holding the cabinet meeting, so that if the budget cut materializes, all the ministers will bear responsibility for the consequences. Prime Minister Benjamin Netanyahu is due to decide on the defense budget before tomorrow's cabinet meeting.

IDF Chief-of-Staff Lt.-Gen. Benny Ganz and other staff officers outlined before the security cabinet the IDF's needs for the coming years, including procurements, training and the building of forces, the threats map in view of regional changes in the Middle East, the consequences of large budget cuts for the readiness for future scenarios, programs that could become stuck for lack of funding, and the effect on defense contractors.

"It is clear to us that the defense budget will be cut," Deputy Minister of Defense Danny Danon told "Globes". "The big question is the size of the cut over how long, in view of the real fear for defense contractors, which will be the first to get hurt.

"Assuming that we will not immediately reduce training and reserve days, the big worry is that we'll have to reduce defense procurements and orders from defense industries. If the cut is not gradual over 3-4 years so that defense industries can prepare for it, they will collapse, causing great damage to the economy."

Minister of te Economy Naftali Bennett said, "The threats facing Israel are real, but Israel has been threatened for the past 65 years, and it will always be threatened. Today's debate is not about economics, but values. The time has come for the Defense Ministry to lie on the stretcher of the socioeconomic burden with the rest of the Israeli public.

It appears that the IDF's general staff has realized that budget cuts are necessary, at least to some degree. In view of attempts to revive the social protest, it is doubtful if the generals will be able to avoid the axe. Outwardly at least, in contrast to previous years, the Ministry of Defense has taken a compromising position, and agrees to reductions in the budget. A defense source said today, "We're aware of the situation. We understand the need to help. The condition is that the cuts are made as part of the multiyear plan, which will ensure certainty in the coming years, an ability to plan, and an understanding of the new and challenging needs facing the army."

That said, the Ministry of Defense declines to offer a figure of how big a budget cut it will accept. One of the demands is that Ministry of Finance subsequently restore funds cut now. Until then, the Ministry of Defense will reschedule payments in contracts with defense companies for continuing deliveries of products and components, for example, by extending payments from three years to five.

In response to the generals' list of threats, the Ministry of Finance officials told the security cabinet that the security threats facing Israel have diminished. Despite uncertainties about the security situations that the IDF will have to respond to in the coming years, as a result of the collapse of Arab regimes and Iran's arming of Hezbollah and Hamas, and Iran's continuing effort to develop nuclear weapons.

The Ministry of Finance believes that in preparing against these threats, the IDF has already invested sufficiently in recent years, allocating large resources to frustrate Iran's nuclear program, build the fence along the Egyptian border and allocate the forces needed to patrol it, place orders for new weapons systems, including the latest combat jets, which are already in the pipeline. It is also in the midst of the multibillion shekel move of bases to the Negev.

In the 2013 Economic Arrangements bill, the Ministry of Finance has included thorough reform of cars for Ministry of Defense officials to put the cars under the control of the Government Vehicles Administration, and bring the officials' eligibility for cars and chauffeurs in line with the conditions at other ministries. The Ministry of Finance may also demand that the recommendations of the committee chaired by Judge Uri Goren to tighten the criteria for recognizing wounded veterans and their benefits.

Published by Globes [online], Israel business news - www.globes-online.com - on May 12, 2013

© Copyright of Globes Publisher Itonut (1983) Ltd. 2013

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