No Government, No Budget Leave Israel With No Financial Governance

And some necessities – such as a summer education program for Israeli students and an aid package for the country’s flagship airline El Al – have fallen through the cracks.

At midnight on Tuesday night, the clock will run out on Prime Minister Binyamin Netanyahu and his attempt to form a government. After a month of maneuvering, pressuring and sweet-talking potential allies, the Israeli premier appears to have run out of options and the mandate to form a government will return to the president. What will happen next is still unclear.

Netanyahu’s failure comes following two years of extreme political instability and four rounds of elections that so far have failed to yield a conclusive result. One result of this prolonged crisis is that Israel’s last budget went into effect for 2019, after it received government approval in 2018, meaning that it reflects the priorities of Israel before the pandemic and the economic crisis that followed it.

Hiddai Negev, an attorney with the Movement for Quality Government in Israel, told The Media Line that the current financial conduct of the state is, first and foremost, an assault on proper governance.

Without a current budget, he says, budgetary considerations have been wrested from the hands of the Israeli parliament. Normally, the country’s Knesset members study the budget in detail, and its segments pass through special committees before the budget is ratified by the lawmakers.

When you do not allow the lawmakers to scrutinize and approve the budget, Negev says, “you are assaulting the country’s governmental system, because you are depriving the Knesset of its power, you are depriving the sovereign – the people – of their power to decide how to divide the budget.”

In the absence of an approved budget, the legal arrangement is that the previous budget is divided by 12, and each twelfth is allocated on a monthly basis to the different government bodies.

In the case of an emergency, when special funding is necessary, “non-budget boxes” or funding packages approved by the government and one of the Knesset committees, are used to give support were needed. This is how Israel has limped along during this latest crisis. Negev notes that this procedure does not include the usual thorough examination and consideration of the impacts of the different uses to which public funds are being put.

Another issue created by this arrangement, Negev says, is that receiving funding through these “boxes” is dependent on the ability to exert pressure on politicians. Things don’t always get approved, he says. And those that do get approved mostly do so because there are lobbyists or a very strong outside group that can reach the lawmakers. There are some issues that may affect a lot of people but does not get a budgetary box because not everyone has the same amount of power.

One example is the Education Ministry’s summer school program, that was supposed to receive government funding in order to supplement the pandemic-impacted school year by extending it into July. Netanyahu promised 2.5 billion shekels to finance the program, but the funds are nowhere in sight with summer break less than two months away.

Merom Shiff, chairman of Israel’s National Parents Union, told The Media Line that “the Ministry of Education has real plans for school programming in July from kindergarten to the tenth grade.” The plans, he says, are intended to cater to children’s social and emotional needs, after a long period of uncertainty and for some, social isolation, in addition to helping them catch up with their school year’s curriculum. However, these plans are stuck, he says, and “the main reason things aren’t moving along is because there’s no budget.”

Shiff says that the children must be brought back to schools “to close the gaps, and the social and emotional gaps first and foremost.”

He also explains because Israel currently is stuck in limbo under a transitional government, “big things get stuck.” He says that “you can’t make long-term plans because no one can make significant decisions.” The pandemic highlighted a series of failings in Israel’s education system, he adds, but without a finalized government and funding, nothing can be done to fix them.

The main reason things aren’t moving along is because there’s no budget

Another victim of the governmental freeze is Israel’s flagship airline, El Al. The company has been in financial trouble for the past couple of years, and COVID-19 dealt it a devastating blow. The Finance Ministry reached an agreement with El Al to help it get back on its feet in March, which includes buying tickets in advance at a cost of $210 million; but transferring the funds requires government approval.

Avigal Soreq, El Al’s CEO, said in a meeting of the Knesset’s Finance Committee on Monday that “El Al is facing its greatest crisis … Israel’s government has also decided to help, we’ve fulfilled all of our obligations according to the deal signed in March and since then we’ve been held hostage by this agreement.” The company is waiting for the funds in order to implement its business plan. Knesset lawmaker Moshe Gafni, the head of the Finance Committee, replied that Finance Minister Israel Katz said the agreement would receive government approval that very day, after a month and a half of delay.