Israel Passes Its First State Budget in 3.5 Years
Israeli Defense Minister Benny Gantz, from left, Foreign Minister Yair Lapid, Prime Minister Naftali Bennett, Justice Minister Gideon Saar, and Transportation Minister Merav Michaeli attend the plenum session and vote on the state budget in the Knesset in Jerusalem on November 3, 2021. (Ahmad Gharabli/AFP via Getty Images)

Israel Passes Its First State Budget in 3.5 Years

But whether it will buy Naftali Bennett’s government political stability remains to be seen

“The budget of 2021 just passed, the budget of 2022 is coming! The last time the budget passed in Israel was when France won the World Cup, Spotify had just reached Israel, Netta Barzilai won the Eurovision, COVID-19 wasn’t born yet, and Harry and Megan had just married. 2018 is long gone. Now it’s time to bring the country back on track and pass a social and responsible budget for the sake of the future,” Avigdor Liberman, Israel’s finance minister, tweeted shortly after marathon voting on the 2021 state budget was over at 5 a.m. on Thursday.

In early June, when the government of Naftali Bennett and Yair Lapid was sworn in to office, passing the budget seemed more like a “Mission impossible.” Lawmakers from the Yamina party, a small political faction headed by Bennett, were crossing political lines, and some observers said they would not support the budget over ideological disputes with the most eclectic coalition Israel had ever seen, while political analysts were questioning the new government’s liability. Israel desperately needed a new budget and reforms after three long years of political crisis and an endless elections cycle, yet no one could tell whether this vision would materialize when the budget was due to be passed in November. The opposition, led by Binyamin Netanyahu, threatened to surprise the coalition and to pull various rabbits out of a hat and, as time passed, tensions in the coalition continued to rise.

However, after 33 consecutive hours of voting on aspects of the $194 billion budget bill, which saw members of the opposition and, specifically, Netanyahu make several voting errors, the 2021 budget – and later the Economic Arrangements Bill needed to put it into effect – had passed, to the full satisfaction of tired but triumphant members of the coalition.

Passage of the state budget before the November 14 deadline prevented the automatic dissolution of the government and early elections in three months.

“Today, after three-and-a-half years without a budget and a political stalemate that has left the State of Israel behind, we are approving a biennial budget. Government ministries are back to work. Approval of the state budget will allow government ministries to return to their day-to-day operations and reimplement plans that have been waiting for a budget for more than two years,” Knesset lawmaker Michal Rozin, chairwoman of the Meretz faction at the Knesset, told The Media Line.

“This budget, along with the Economic Arrangements Bill, is designed to help the weaker sectors, address the cost of living and sow growth engines that will move Israel’s economy forward. After two years of stagnation and enslavement of the Israeli economy to personal, political and cynical interests, we are here to put an end to it,” she said.

After two years of stagnation and enslavement of the Israeli economy to personal, political and cynical interests, we are here to put an end to it

“In recent years, we have witnessed a dramatic price increase in almost all consumer products. It is clear that this rise in prices is also due to the wave of rising prices in the world, but to a large extent also to the long-standing neglect of those who have been at the helm until recently. But in a few months, we will go into the supermarket and we will not have to spend a fortune to buy basic products, we will see a real drop in prices and we will feel an increase in the disposable income of every citizen,” Knesset lawmaker Alex Kushnir, Knesset Finance Committee chairman and a member of Liberman’s Israel Beitenu Party, told The Media Line.

The new budget aims to assist Israel’s weaker sectors, to bring down the cost of living and to reform the Israeli economy, according to Kushnir. The social welfare ministries received over 20 billion shekels (about $6.43 billion), an increase of almost 13%; the long-awaited reform of kashrut certification was included, despite the rage of the Haredi, or ultra-Orthodox parties; and the socioeconomic reform plan for the Arab sector was adopted, along with a bunch of significant reforms in the banking sector designed to simplify procedures, cut the bureaucracy and make the economics more transparent.

Many of the reforms voted on during the last two days, such as reforms in the sphere of the struggle against shadow economics, are a long-term project. It will take years to make the Israeli economy more transparent and efficient, experts say. At the same time, customers will feel the burden of extra taxes – such as the new tax on disposable plasticware – immediately.

“No tax is designed solely to increase the state revenues. It’s meant to change our behavior for our own sake. Everyone sees the enormous amounts of garbage in our parks, beaches and streets. It pollutes nature, kills animals and kills us too! Therefore, taxing disposable plastic utensils is necessary, just as the carbon tax that is designed to reduce the greenhouse gas emission that pollute our air. We need this to allow our children to live in a cleaner and healthier country,” said Kushnir.

As expected, the opposition slammed the budget and labeled it as “the most anti-social budget ever.” During the marathon debates at the Knesset, lawmaker Yaakov Litzman of the Haredi Orthodox United Torah Judaism party sharply attacked the budget and said, in a reference to the distribution of approximately 12 million shekels of coalition funds for the spaying and neutering of stray cats: “I do not understand about cats, but it’s the first time in history that the dogs gave something to the cats. The person who bites is a dog.” Likud party lawmaker Miri Regev tweeted that while the budget includes creating new cities for the Bedouin in the Negev, it lacks a set of arrangements for new settlements in the West Bank. “That’s because Mansour Abbas is ruling over this dangerous government,” Regev tweeted, referring to the head of coalition member party Raam-United Arab List.

The most intriguing question, however, does not concern the nature of the newly passed reforms and their potential for success but, rather, the political stability of the coalition and its ability to draw defectors from the other side. Some elements in the coalition express hope that, now that the budget has passed, the ministers will be able to concentrate on achieving results. In addition, as long as Netanyahu remains in the position of opposition leader, the “Netanyahu glue” will continue holding all parts of the coalition together.

It is also safe to assume that, with the safety net of the budget achieved, some ideological rifts will get worse and deepen. The coalition will have to decide soon on the bill introduced by New Hope party head Gideon Saar that would forbid anyone charged with a crime punishable by more than 3 years in prison from becoming premier. Negotiations on a prisoner swap with Hamas in Gaza are said to be nearing a resolution. And the situation in the West Bank and in Gaza is dire.

It seems that the government coalition will continue to walk on a tight rope even though the budget has passed, and its quest for defectors from the Likud is likely to continue.


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