Assessments are that the defense budget will not exceed NIS 60 billion. The discussions that have taken place in recent weeks between representatives of the Ministry of Finance, headed by director general Shai Babad, and representatives of the Ministry of Defense have also resulted in agreements concerning structural reforms in the IDF along the lines of the Gideon plan presented by Chief of Staff Gadi Eizenkot. In contrast to the past, these discussions took place without slanted leaks, reciprocal mudslinging, and highly publicized crises between the two ministries. Minister of Finance Moshe Kahlon is not hiding his satisfaction with these agreements. In recent days, he said, "We'll soon announce important reforms in the defense establishment for which we have been waiting for many years."
At the same time, other sources involved in the subject, referring to the multi-year Gideon plan, said, "With all due respect to Galei Tzahal (Army Radio) and all sorts of cosmetic changes in the plan, it lacks significant measures in the places where the big money is, such as pensions and the rehabilitation budget - two items that add many billions every year to the defense budget."
The plan presented by the Chief of Staff was devised at the end of a two-day general staff workshop. The proposed plan, on which the IDF is to operate for the next five years, includes a cut of up to 9% in headquarters. The educational systems and the IDF chief rabbinate will be cut 25%. Hundreds of permanent army drivers will be released and replaced by soldiers doing their compulsory army service. Jobs for trackers serving in various IDF units will be significantly cut, the territorial brigade subordinate to the Southern Command will be closed, and all of the Home Front districts will be eliminated. The Chief of Staff's recommendations in the framework of the multi-year Gideon plan include removing relieving the IDF of responsibility for Galei Tzahal, which will probably by transferred to the Ministry of Defense. Galei Tzahal costs NIS 40 million a year (NIS 20 million from the Ministry of Defense budget and NIS 20 million from the sale of sponsorships and advertising). The Chief of Staff's economic advisory unit is also slated for a 25% cut.
In addition to these changes, the Gideon plan is also proposing changes in the IDF permanent army model, including a personnel cut of several thousands to 40,000. The plan presented by the Chief of Staff also includes a new exit gate at age 35 for those serving in the permanent army. The first gate is at age 28, and those who stay in the IDF past that age receive what is called "definitely permanent" status. At the extra gate to be added, the service of those in the permanent army will be assessed, and whether they continue to serve or are released will be determined by their service outlook and how essential it is to the IDF. Those who survive this gate will remain in the IDF until they reach retirement age.
The plan also states that all permanent army soldiers reaching retirement age will receive a pension, regardless of the character of their service, in contrast to the committee headed by Gen. (res.) Yohanan Locker, which recommended that only combat commanders be eligible for a pension. Military sources said, "The new model will make it possible to save on costs and make the IDF younger." At the same time, such a change requires approval from the Ministers of Defense and Finance and the prime minister. The military sources also said that if the plan is approved and put into effect, the cut to 40,000 in the number of those serving in the permanent army will be completed during 2017.
Together with the proposed cuts in the Gideon plan, reinforcement of essential systems, such as the IDF cyber arm, which requires substantial resources, is planned. The same is true of combat systems and significant budget allocation for procurement and building up of the land forces. Commenting on this, the Chief of Staff said the program's goal was an army that would be "sharp, strong, and combative."
The budget is waiting for Netanyahu
Eizenkot presented the Gideon plan main points already last July, a few days before the committee headed by Locker published its recommendations, the most important of which was increasing the defense budget according to cost cutting in the defense establishment. Strong opposition to the recommendations from Minister of Defense Moshe Ya'alon and the IDF leadership led to Locker report being shunted to the sidelines of the discourse on the defense budget for the coming years. Although the Locker committee recommended fixing the defense budget permanently at NIS 59 billion, the 2016 budget proposal to be brought for cabinet approval next week is NIS 56.1 billion, while the 2015 defense budget totaled NIS 57 billion.
A demand by defense companies
In the past, the defense establishment has also demanded a large budget supplement in order to ensure its ability to maintain the training program for the fighting forces and free resources for a buildup. The final decision on the amount of the defense budget will probably be taken in the coming days when Prime Minister Benjamin Netanyahu returns from his visit to the US.
Netanyahu will be presented with the agreements reached in recent weeks by the Ministers of Defense and Finance. He has already said that the final defense budget will be higher than the one presented in the state budget proposal.
As first reported 10 days ago in "Globes," the heads of the defense companies are asking Kahlon and Netanyahu to increase the defense budget for the coming year in order to safeguard their share of IDF procurement. The companies involved are government companies Rafael Advanced Defense Systems Ltd., Israel Aerospace Industries Ltd. (IAI) (TASE: ARSP.B1), and Israel Military Industries Ltd. (IMI) and private company Elbit Systems Ltd. (Nasdaq: ESLT; TASE: ESLT). In a recent letter sent by the CEOs and chairmen of these companies to the Minister of Finance and prime minister, they expressed deep concern that 2015 defense exports would total only $4 billion, due to the crisis in the global security market.
Published by Globes [online], Israel business news - www.globes-online.com - on November 12, 2015
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