Text size

Just before the Jewish New Year we asked a former finance minister, MK Avraham Shochat, if he too believes the crisis is behind us and we are now on growth tracks, as the prime minister and finance minister have been saying.

Shochat: "It should first be said that they were the ones who created the crisis. They applied massive pressure on the governor of the Bank of Israel to cut the interest rate and pledged they would trim the budget and revoke private-member bills - but did not.

"In any case, the critical decisions are not economic but political ones. Without a peace process the economy will continue to collapse. Our fate is intertwined with that of the Palestinians. A period without terrorism is not enough - we need a political horizon, we need to feel that we are headed toward a political solution, toward a peace agreement, because no investor will even consider putting money down where buses explode, but that alone is not enough. Investors also want to see a political solution that would lead to normalcy, or else they will not invest. This is why we still haven't found any international investors for the desalination projects."

How large will the deficit in 2002 be?

"The planned deficit (after four revisions) is 3.9 percent, but I believe it will eventually be nearer 5 percent than 4 percent."

Asked whether the Labor Party will support the budget or vote against it, Shochat said: "This is a twist of fate. Two years ago things were just the reverse. I was the finance minister at the time, asking the Likud to support the budget for 2001, but got a big `no' for an answer. Still, Labor should exercise responsibility. With the economic crisis on our hands, if the budget is not approved the shock wave and damage might be very serious. Labor should therefore ask the finance minister to introduce several budget amendments that would coincide with its worldview but that would not expand the budget and the deficit. We have our own priorities. For example, why are they cutting rent support for single mothers but not for yeshiva students? By the same token, I fail to understand why grants for industries in remote areas are being slashed while the budget for settlements remains untouched.

"If Silvan Shalom really wants to pass the budget bill, he will have to compromise with the Labor Party. But even if he is unwilling to compromise because of political or other reasons, Labor must not vote against the budget. It should abstain and let the budget be approved."

Do you mean that the Labor party should roll over for the Likud?

"Israel needs a budget. But Labor should quit the government tomorrow morning because Arik Sharon is not preparing a viable political plan."