Political Paralysis Could Leave Israel at the Mercy of Economic Crisis https://mosaicmagazine.com/picks/israel-zionism/2020/07/political-paralysis-could-leave-israel-at-the-mercy-of-economic-crisis/

July 15, 2020 | Haviv Rettig Gur
About the author: Haviv Rettig Gur is the senior analyst for the Times of Israel.

With unemployment skyrocketing and the government contemplating renewed lockdowns in the face of a second wave of the coronavirus, Israeli Treasury officials have been working to craft a fiscal plan to pave the way to economic recovery. But the budget has been stalled by the rivalry between the current prime minister, Benjamin Netanyahu, and his primary coalition partner Benny Gantz, who is scheduled to replace him in November 2021. Haviv Rettig Gur explains the impasse, and why it matters:

A $29 billion emergency recovery and stimulus package pieced together by panicked politicians is set to begin disbursement this coming week, [but] the recovery spending . . . won’t deal effectively with the fallout from the virus or replace the careful rebalancing of national priorities that the country needs and that only a full-fledged budget law allows. A government signing checks isn’t a sustainable model for stemming the bleeding and managing an economic rehabilitation.

The trouble [is that] Prime Minister Netanyahu and Defense Minister Gantz don’t trust one another enough to bring an agreed-upon bill to a cabinet vote. Netanyahu is demanding a one-year budget to cover the immediate problems presented by 2020, with a separate budget law for 2021 to be passed by February. Gantz is insisting on a two-year budget, as stipulated by the coalition agreement between Likud and Blue and White signed in April.

Netanyahu has a point. . . . The future is too clouded to see past the second wave of the virus into the fall of 2020—never mind the fall of 2021. Without a better picture of the virus’s spread, of the likelihood of a third or fourth wave, of the timetable for a vaccine, of the global economic situation writ large, and of the economy’s broader resilience in the face of social-distancing measures, preparing a 2021 budget in the middle of 2020 is an exercise in frustration that will only delay the work required to turn around a more appropriate 2021 bill in six months’ time.

But, as Gur goes on to explain, the intricacies of the fragile coalition agreement mean that Gantz, by agreeing to the one-year budget, risks a collapse of the government and the end of his political career. “Meanwhile” Gur writes, “the Bank of Israel last week updated its forecast for 2020 to negative 6-percent growth, the steepest shrinking of Israel’s economy in the country’s history.”

Read more on Times of Israel: https://www.timesofisrael.com/as-economy-dangles-over-a-precipice-netanyahu-and-gantz-bicker-and-delay/

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