Minister of Finance Bezalel Smotrich has written a letter to Budgets Commissioner Yogev Gradus, saying, "As long as you do not identify with my economic policy and you believe that you have difficulty implementing it, you are welcome to step down. As long as you continue in your position, you are subordinate to me and will follow my policies and instructions."
This clash follows Smotrich's demand that Gradus organize an "extra-budgetary item" to finance compensation for evacuees from the North, while Gradus insists that the 2024 budget has already been set, and to make retrospective changes, other budgetary items must be cut. What happens in the corridors of the ministry when such disputes arise between the minister and the person in charge of budgets, and how do they affect work? Former senior officials say that the minister makes the decisions but not in this way.
The public clash between Smotrich and Gradus is highly unusual, although in recent times we have seen similar power struggles. The most recent was between Budgets Commissioner Shaul Meridor and Minister of Finance Israel Katz, which ended in Meridor's resignation. How will it end this time?
Ori Yogev, who was Budgets Commissioner between 2002 and 2004 when Benjamin Netanyahu was Minister of Finance and who also served in other senior positions in the public sector and is today a businessman says, "Disputes between the minister and the commissioner are something that has happened many times in the past. And basically there is really no problem here. The one who decides in the end is the minister, and the one whose job it is to reflect the professional truth and bring professional alternatives, to the cabinet and the public, is the official. This is the delicate balance here."
Prof. Udi Nisan, who was Budget Commissioner between 2009 and 2011 under Minister of Finance Yuval Steinitz, and today is a lecturer in economics at the Hebrew University of Jerusalem, says, "There are internal procedures to manage disagreements. It happens that the minister thinks one way, the commissioner thinks another, and there are organized procedures to manage the differences of opinion. But it is more legitimate to carry out the policy dictated by the minister, and if the Commissioner thinks it is a big mistake, he can always quit."
However, both Yogev and Nisan agree that while disputes are legitimate and the minister is the one who should decide, the story here is different. According to Nisan, "We are in a completely different situation. The minister is not undertaking the required procedures. The last discussions on the 2025 budget were in June. The law dictates a legal, orderly process, which allows a budget to be passed by the end of the year. But for two months he has avoided it and disappeared and has not performed his legal duty. There have been no procedures and no data on the 2025 budget, that's the background."
Arguments over the limits of the measures
Yogev says that the problem is not just the delays by the Minister of Finance in preparing the budget but also the type of his requests from the ministry's officials: "When you read the public letters, you can see that the head of the budget division mostly stands at the gate and warns. What Smotrich wants is for the officials to do as the minister says, including appeasing the public. After all, if the minister decides that he wants to increase the state budget for 2024 at the expense of the deficit - let the budget department prepare it, and it will go to the Knesset for three readings. But it is illegal and unethical to demand that the budget department do things, while hiding it from the public."
On the other hand, says Shmuel Slavin, who has served as director general of the Ministry of Finance and the Ministry of Welfare says, "Most of the leadership of the Ministry of Finance today is in opposition to the minister. The entire ministry is not functioning that well, and it is very difficult to work like that. If there is a minister that the officials do not like, they do not consider his opinion. The current minister although not a professional is a smart man."
Slavin adds, "The budget department has a bag of recommendations that it pulls out of the drawer, and as soon as Smotrich is not ready for it, it takes away from the department a large degree of freedom of action. Even in the Prime Minister's Office, Prof. Simhon sees unprofessional people in the budget department. There is a problematic combination of Smotrich and the Prime Minister's Office against the Ministry of Finance leadership, and it is a complex story." In his opinion, in a case of such fundamental lack of agreement, "the most natural thing is to resign" but nevertheless, he says "You needn't worry, he will not resign".
"His right to oppose them all
In Nisan's opinion, "It is clear that the minister's decision needs to be implemented. But he cannot just send a letter out of the blue asking, 'Prepare a bill for an extra budget item,' instead of having an orderly discussion with the ministry's senior officials and hearing the Bank of Israel Governor. But when it doesn't happen within a day, he comes out with a letter designed to discredit the professional ranks. And that's the story of the letter."
The main point in Yogev's opinion, is transparency vis-a-vis the public and the bureaucracy, and not necessarily the professional dispute: "If Smotrich wants to do it off the cuff, let him do it. But he wants a 'budget item.' It will be difficult. We are in an open world, and there are ratings agencies and there is a global market. The price will be further inflation, an increase in the interest paid by the state and economic instability."
Regarding the possibility of resigning, Yogev insists that "the position of the budget commissioner is also, according to law, the position of a gatekeeper, who protects the public from political pressures. His role, among other things, is to be able to withstand such pressures and not resign. The alternative, many times, is weaker people, and this not good either for the country or for this specific government."
Published by Globes, Israel business news - en.globes.co.il - on August 22, 2024.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2024.