After many long weeks of battles and mudslinging between the Finance Ministry and the Defense Ministry, Eyal Gabai, the outgoing director general of the Prime Minister's Office decided Wednesday on a cut in the defense budget.

The cuts will come in three ways: A NIS 1.5 billion cut in the 2012 military budget; giving the Finance Ministry the ability to supervise the defense budget through transparency and control, which will enable savings of another NIS 1 billion in 2012, and additional amounts in later years; and implementing the efficiency plans agreed to in the Brodet committee recommendations from 2007.

Today, the defense budget is not under the supervision of the treasury's budgets division or the accountant general. Treasury officials estimate that once such supervision is implemented, it will be possible to save large amounts in the areas of manpower, salaries, tenders and various violations of agreements.

The Finance Ministry's accountant general, Michal Abadi-Boiangiu, only functions as an automatic paymaster for the Defense Ministry's spending, and not as a comptroller supposed to regulate if the spending is done according to the law and the budget, without exceeding either.

Gabai was asked by Prof. Manuel Trajtenberg, the head of the committee appointed to study socioeconomic change, to rule on the dispute between the treasury and the Defense Ministry. Once a decision was made, the Trajtenberg committee could make use of the funds for the recommendations it plans to present soon to the public.

The Defense Ministry claimed that not only should its budget not be cut, it actually needs another NIS 4 billion in 2012. Senior Defense Ministry officials said they were willing to cut NIS 3 billion, but under their terms that meant only an additional NIS 1 billion for next year. In response, the Finance Ministry said it was necessary to cut NIS 2-3 billion in the defense budget, as well as placing the budget under the treasury's supervision and control.

In the end neither Finance Minister Yuval Steinitz nor Defense Minister Ehud Barak is happy with Gabai's decision.

Be that as it may, Gabai's ruling provides the Trajtenberg committee with an additional NIS 4 billion to direct to social causes. NIS 2.5 billion of that sum will come from the IDF's budget and the rest, NIS 1.5 billion, will come from various budgetary reserves.

Gabai held a number of stormy meetings on the defense budget in his office over the past few days. Budgets division officials claimed that the Defense Ministry budget was much higher than the framework set by the Brodet committee in 2007.

The Brodet committee was established to study the issue of defense spending and to create an agreed upon framework for future spending, including ways to cut future spending. The 2006 defense budget was NIS 46 billion and this year's defense budget is about NIS 55 billion. The military also receives a few billion shekels more during the year, so the real total budget is actually much higher, said treasury officials.

State Comptroller Micha Lindenstrauss warned of the growth in the defense budget, and Knesset sources say that additional defense spending will reach NIS 6 billion this year.

Defense Ministry and IDF officials dispute these numbers. They say the treasury has still not transferred the funds agreed to after the Cast Lead operation in Gaza, in early 2009. Defense officials say the budget has been eroded compared to the Brodet framework, and that the defense establishment actually needs additional funds to meet the increased challenges to Israel's security and the rising threats in light of recent geopolitical changes in the Arab world and Turkey.

Gabai's decision still needs the approval of Prime Minister Benjamin Netanyahu, who will have to decide quickly as the Trajtenberg committee plans to release its recommendations next Thursday. Without the cut in the defense budget, the Trajtenberg committee will be unable to finance any significant social program. Trajtenberg has already stated that he will not exceed the budgetary framework.