What Can Be Learned from Israel’s Failed Budget Negotiations?

Feb. 28 2023

Amid public protests in Jerusalem, the intense debate over judicial reform, and terror and riots in the West Bank, one might be forgiven for overlooking another significant event in Israeli politics: the cabinet’s budget deliberations on February 23 and 24, which ended in an unusual stalemate. Haviv Rettig Gur describes how this 21-hour marathon cabinet session, which happens every few years, normally proceeds, and what made this year different:

It’s called “Government Night,” and it always begins the same way—at 11 a.m. on a Thursday with a presentation by Treasury economists on the big-picture state of the Israeli economy. After the presentation, the Treasury’s budget teams choose different corners in the wood-paneled cabinet conference room and huddle there with their respective minister and senior aides: the healthcare team with the health minister, the education team with the education minister, and so on. Hours of ferocious bargaining ensue in each huddle, and over the next few hours the teams slowly piece together a state budget for the next two years.

Meanwhile, in an office down the hall sits the treasury’s “Macro Team,” a kind of internal budgets department for the budgets department. As each issue team negotiates with its respective minister, any concessions are then taken for approval to the Macro Team, whose job is to ensure overall spending doesn’t balloon out of control. Any funds added to one ministry must be pulled from another. It’s a complex and tense give-and-take that lasts through the night.

It is almost impossible to exaggerate the importance of Government Night in the proper management of Israel’s fiscal affairs; it is where the rubber hits the road, where ministers’ campaign promises and legacy aspirations run head-first into fiscal realities, where a government’s priorities are clarified in hard shekel terms. And at last week’s Government Night, the Netanyahu government couldn’t get the job done.

At around 10:30 a.m., long after the budget bill was supposed to have been approved in the traditional, festive cabinet vote, a worried Netanyahu concluded that the spectacle was causing real harm to the Israeli economy. Ordinary Israelis don’t know about Government Night, but investors follow it closely for signs of any slips in the government’s commitment to fiscal restraint.

In Gur’s view, the collapse of ordinary budget negotiations, together with the disappearance of key ministers during Sunday’s outbreak of violence, speaks to a cabinet that does not have a firm hand on the rudder of the ship of state.

Read more at Times of Israel

More about: Benjamin Netanyahu, Israeli economy, Israeli politics

How Israel Can Break the Cycle of Wars in Gaza

Last month saw yet another round of fighting between the Jewish state and Gaza-based terrorist groups. This time, it was Palestinian Islamic Jihad (PIJ) that began the conflict; in other cases, it was Hamas, which rules the territory. Such outbreaks have been numerous in the years since 2009, and although the details have varied somewhat, Israel has not yet found a way to stop them, or to save the residents of the southwestern part of the country from the constant threat of rocket fire. Yossi Kuperwasser argues that a combination of military, economic, and diplomatic pressure might present an alternative solution:

In Gaza, Jerusalem plays a key role in developing the rules that determine what the parties can and cannot do. Such rules are designed to give the Israelis the ability to deter attacks, defend territory, maintain intelligence dominance, and win decisively. These rules assure Hamas that its rule over Gaza will not be challenged and that, in between the rounds of escalation, it will be allowed to continue its military buildup, as the Israelis seldom strike first, and the government’s responses to Hamas’s limited attacks are always measured and proportionate.

The flaws in such an approach are clear: it grants Hamas the ability to develop its offensive capabilities, increase its political power, and condemn Israelis—especially those living within range of the Gaza Strip—to persistent threats from Hamas terrorists.

A far more effective [goal] would be to rid Israel of Hamas’s threat by disarming it, prohibiting its rearmament, and demonstrating conclusively that threatening Israel is indisputably against its interests. Achieving this goal will not be easy, but with proper preparation, it may be feasible at the appropriate time.

Revisiting the rule according to which Jerusalem remains tacitly committed to not ending Hamas rule in Gaza is key for changing the dynamics of this conflict. So long as Hamas knows that the Israelis will not attempt to uproot it from Gaza, it can continue arming itself and conducting periodic attacks knowing the price it will pay may be heavy—especially if Jerusalem changes the other rules mentioned—but not existential.

Read more at Middle East Quarterly

More about: Gaza Strip, Hamas, Israeli Security, Palestinian Islamic Jihad