Defense Minister Amir Peretz said over the weekend that he would reopen discussions concerning the future of Israel Military Industries (IMI).

When he was chairman of the Histadrut labor federation, Peretz opposed the privatization of IMI, and this is his first allusion to the matter as defense minister. The previous government decided to privatize the company.

Peretz said that the Defense Ministry would coordinate with the Finance Ministry over the timetable for the new attempt to reach an agreement over the future of the company. "We need to ensure that the company carries on working, that orders will go out, that materials will be supplied and that wages will be paid, and at the same time to ensure that any solution is acceptable to all sides," he said.

Peretz visited IMI installations in Ramat Hasharon at the weekend. During his tour, he said that the government should "do everything to make sure that IMI recovers, and ensure that the achievements of the past year did not go to waste." He stated that IMI was the country's main defense company. "There is a good infrastructure here, excellent workers, devoted managers, advanced research and stable markets," he added.

The tour took place following disagreements between the Government Companies Authority and the IMI management concerning responsibility for the lack of progress in the privatization plan over the last year. The treasury has spent millions of shekels on six privatization consultants, and this has not produced any progress. The treasury blames the IMI workers for the delay, while IMI blames the treasury.

As a part of these disagreements, it was reported that IMI would not be able to pay July salaries as a result of a lack of cash, and that it would not be able to repay a treasury loan of NIS 250 million. A source close to the privatization process said in response to this that the company would pay wages, even if this came at the expense of purchasing raw materials. However, he said that this would harm production and the company's recovery. According to the source, the reports of difficulties in paying wages were only meant to force workers back to the negotiating table, and moderate their demands concerning expected firings. IMI has at least 600 workers who are likely to be laid off.

The Defense Ministry has supported privatization in recent years, as part of the strategy of reducing the number of defense companies to three - Elbit, Israel Aircraft Industries and the Rafael Armament Development Authority.