The chances of the 2025 state budget being approved by the Knesset have increased, Ministry of Finance sources believe following the meeting in Washington between US President Donald Trump and Israeli Prime Minister Benjamin Netanyahu.
The ambitious plan presented by Trump to turn the Gaza Strip into a US-controlled zone, and his declared support for Israel's positions on regional issues, could dwarf a major political obstacle that has so far stood in the way of the budget's approval: opposition by Religious Zionism led by Minister of Finance Bezalel Smotrich and Otzma Yehudit led by Itamar Ben-Gvir to the end of the war in Gaza as part of the hostage deal.
Ben-Gvir has already resigned from the government and Smotrich has threatened a similar move, but the US vision for the Gaza Strip provides them with an ideological response that could allow the coalition to survive. As evidence, Ben-Gvir responded to Trump's words in an interview with the Galey Israel radio station and admitted, "The chances that Otzma Yehudit will return to the government have increased." Smotrich issued a statement boasting that he was right when, "I decided to remain in the government despite my opposition to the deal."
The threat still hovers
Trump's remarks on normalization with Saudi Arabia, without a demand for a Palestinian state, strengthen Netanyahu's position and make it easier for him to navigate the conflicting demands of his partners. The comprehensive political package that Trump proposed reduces the attractiveness of dissolving the Knesset from Netanyahu's perspective, and reduces coalition pressures from the right. It also provides him with political achievements to present to voters, ahead of the elections scheduled for no later than October 2026.
However, even Trump will have difficulty resolving the other main challenge on the way to approving the budget - the demand of the haredi parties to tie the transfer of the budget to the enactment of a draft bill for yeshiva students. The emerging law has encountered legal opposition, and even Smotrich himself has threatened not to support it. Negotiations on this issue are expected to continue until the last minute, with the threat of dissolving the Knesset looming in the background if the budget is not approved on time. By law, if the budget is not approved by March 31, Israel will go to elections.
Published by Globes, Israel business news - en.globes.co.il - on February 6, 2025.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2025.