IMI privatization bloats defense budget

Stella Korin-Lieber

The IMI privatization deal includes mountains of latkes and jelly donuts that will further fatten the defense budget.

From today call the Ministry of Defense the Ministry of Defense and Real Estate, and call Minister of Defense Moshe Ya'alon the minister of development and the national protector. It turns out that the privatization plan for Israel Military Industries Ltd. (IMI), which the ministerial committee for privatization approved on Wednesday, includes mountains of latkes and jelly donuts that will further fatten the defense budget, and will once and for all bury the government's dependence on the performance of the civilian ministries.

"Only the Ministry of Defense can." This is the slogan. If we're talking about a mega-project, there is no one who can stand against the ministry's juggernaut of steel. The Pope will visit Israel; US President Barack Obama has landed; German Chancellor is coming over; we urgently need a fence here or a runway there - only the Ministry of Defense can carry out the mission.

Therefore, if we want to move IMI to Ramat Beka in the Negev, only defense officials can defeat and subjugate the bureaucracy, withstand the objections by environmental groups, and obtain the statutory permits within a reasonable time, and build IMI's new factories. In other words, the Ministry of Defense has the best and strongest wheeler-dealers.

If we want to vacate IDF bases in central Israel, located on land owned by the Israel Land Authority, and build towers of concrete and steel on them - only the Ministry of Defense can vacate and plan the lots, and market most of them for the construction of tens of thousands of apartments that have been approved or which will be.

Note: despite the Ministry of Defense's legendary performance capabilities, and to the extent that they are connected to the transfer of IMI's plants to the Negev, this is something that will only happen in 12-15 years, in the best and most expedited case.

The is how it happened that the celebrations over the especially complicated privatization plan of IMI, which will ensure its survival, have appended previous cabinet decisions from long ago to vacate three IDF bases at the Kirya in Tel Aviv, Zerifin outside the city, and in Haifa, as well as the administrative and financial matters related to moving Intelligence Corp's units to the Negev.

What has one thing got to do with the other. Absolutely nothing. But if we are able to get Ya'alon and Minister of Finance Yair Lapid to sit down together, and if we see chemistry between them, and they periodically leave the room for one-on-one meetings, and if it has already been decided that the Ministry of Finance should be "compensated" for its commitment to procure munitions from IMI for five years (because otherwise there is no chance of privatizing the company), then we might as well expand the celebrations and turn them into a Hannukah ball.

Is creating interdependency between unrelated matters good for executing the necessary privatization of IMI, or not? That is not clear at the moment. It is possible that IMI's privatization will drive a land-financing collaboration between the Ministry of Finance and the Ministry of Defense, but it is also possible that IMI's interests will be crushed beneath the billions, the projects, and the endless wrangling between the two ministries' top officials, and the company's rehabilitation will be marginalized to the point of its liquidation.

The biggest problem is that, besides rescuing IMI, the move to the Negev, and the release of land for housing in central Israel, is that there is no government or public body with executives who care enough about their work, and there are no organized workers capable of carrying out a new and big project, without shutting it down for weeks before securing perpetual profligate pay hikes and crawling forward with the job.

The Ministry of Defense has positioned itself as the only organization able to do the job, and this is, of course, subject to obtaining a substantial budget supplement without anything in exchange. There can be no argument over the price because there is no other price. We will then ask why the defense budget is so bloated.

The only good thing to come out of Wednesday's agreement is that the payment of hundreds of millions of shekels that the Ministry of Defense will receive is linked to predetermined performance milestones. First perform, then get paid. Will this hold up? Maybe.

One more public question remains relevant: are the Ministry of Defense and the IDF are the only bodies worthy of receiving the civil planning of urban residential projects? The IDF is used to planning its facilities under a blanket of secrecy at the Defense Facilities Commission. It has no disruptions, no objections, no environmental groups, and no tree-huggers. Moreover, the Ministry of Defense and the IDF want to maximize the revenue from the land, which is liable to result in poof planning of unbearably overcrowded projects.

By the way, the Israel Land Authority reform law explicitly states that it is responsible for planning large projects, such as IDF bases. But the Israel Land Authority, in past and present, has never shown the ability to execute anything, which is why yesterday's decision basically says that it cannot be relied on.

There is a reason for this. The Israel Land Authority has not met the government's targets, and for years has been unable to greatly increase the supply of land to meet the housing demand. It is a fact that, in the 20 years since the kibbutzim handed over 5,000 acres of land to the Israel Land Authority in exchange for erasing their debts, not a single home has been built on it. The price we are paying for this is the turning of the Ministry of Defense into the Ministry of Construction, which may come at the price of bad planning.

Published by Globes [online], Israel business news - - on November 28, 2013

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

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