Even yesterday, the day before a general strike, there were no talks between the prime minister, the finance minister, treasury heads and the Histadrut labor federation boss, despite them all knowing the last thing the Israeli economy or the population needs is a strike.
Apparently both sides are eager for battle, just to get the other to capitulate. And neither cares about who gets hurt.
The economic situation is dire for four reasons: the diplomatic-security crisis with the Palestinians, the general global economic slowdown, the international and high-tech crash and the failed maneuvering of the economy in recent years. Interestingly, on the last point, the prime minister, the political establishment, the public and the media have all been happy to cast blame on former finance minister Silvan Shalom - rightly so - but have failed to extend the finger of accusation to either the prime minister or treasury heads.
The economy cannot carry on with the government budget 2003 as is, passed by the Knesset at the end of last year. According to the data accumulated in the first three months of 2003, this line of spending will bring the government budget deficit to an unsupportable NIS 30 billion or 6 percent of GDP. In addition, the prime minister recently, and astoundingly, approved an increase of NIS 2 billion to the defense budget, backed up by the finance minister.
In putting its economic plan to the Knesset today, the government aims to cut the budget deficit to nearer 4 percent of GDP, while satisfying defense needs, and proposing a string of essential changes in the economy (principally slashing the size of the public sector) and bringing the country from a further year of contraction to one of positive growth of 1 percent, eventually pushing Israel back onto the fast-growth track by 2004. Mistakes may have been made, but the gist of the plan is right. Even Histadrut boss Amir Peretz knows it, but what a calamity it will be if the unions' strike wins, and the economic plan is dropped.
Because then salaries in the public sector won't be cut, which they ought to be, just as the private sector has seen in the past year. And there wouldn't be greater management flexibility in the public sector, which there should be, including dismissals in extreme circumstances. And then we won't have solved the problem of actuarial deficits in the veteran Histadrut-run pension funds, which ought to be cleared up once and for all (though it should really be done at a later date.)
Finance Minister Benjamin Netanyahu made a grave tactical error when he attached the legislative sticker to his economic proposals. Both he and Prime Minister Ariel Sharon erred when they let the defense establishment get away with an extra NIS 2 billion of public money, and the treasury has got it wrong when it suggests raising taxes (municipal property taxes and pension contributions).
But, despite it all, the gaps between the two sides are not so great, and are quite surmountable if one steps over the egos of Peretz and Netanyahu.
Sitting down and talking, with an attitude of genuine give-and-take, could bring an end to this fiasco within a few short hours. We are all the worse off that this chat won't be taking place for the next few days (or weeks), after the already troubled economy has had to take a heavy drumming, possibly all for nothing
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