Until a short time ago, Benjamin Netanyahu had a government that was perfect from an economic perspective, because all of its components shared the same worldview: market economics. Avigdor Lieberman of the National Union party competed with Yosef Lapid of Shinui who competed with Netanyahu over who will most reduce the number of civil service employees, who will make bigger cuts in the state budget, who will fight harder against the port workers' committees and Israel Electric Corporation, and who will be quickest to sell El Al and Discount Bank.
The necessary economic recovery program, which got under way 16 months ago, is showing some budding signs of success today. The most important factor in combating poverty is employment, and indeed 70,000 people reentered the work force in the past 12 months, 11,000 in construction and 6,000 in house cleaning. All 70,000 were absorbed into the private sector, not state or local government. The reason? The moment the welfare benefits were cut and taxation on salaries reduced, it became less worthwhile to stay home and more financially viable to go to work.
Now that situation is about to be turned around. National Union is out, Sharon is trying to set up a coalition with Shas and Labor, and if he succeeds Shinui will resign. Then we will see how all of the economic-social achievements will go up in smoke. Welfare subsidies will again increase, and whoever decided to go to work will leap back into the warm embrace of government support. The reforms will be stopped in their tracks, the government will expand once more, taxes will go up - and that will be the end of market growth.
The tragic part of the story is that it is Netanyahu, of all people, the main player on the economic-social field and the man behind the important reforms, who contributed in a central way to the current political crisis. By opposing the disengagement plan, he bolstered the rebels in Likud.
A coalition with Labor and the ultra-Orthodox, without Shinui, would be the worst possible coalition not only from an economic-social point of view, but also politically. At the crucial moment - in March 2005 - Shas will vote against evacuating the settlements in Gaza, because Shas is a nationalist party, and Rabbi Ovadia Yosef has already declared he opposes the disengagement plan.
Shinui's departure from the government would deliver a life-threatening blow to all of the important changes it has succeeded in promoting over the past 16 months. Without it, the Religious Affairs Ministry would not have been abolished, there would not have been cuts of hundreds of millions of shekels that enabled yeshiva students to live without working, child subsidies would not have been placed on an equal footing, and we wouldn't be witnessing the blessed spectacle of a return to work.
The moment Eli Yishai returns to the Interior Ministry, the difficult recovery process Avraham Poraz is imposing on local authorities will be suspended immediately. It will be replaced, once again, by the method of allocating funds in which the guiding criterion is the construction of a ritual bathhouse or synagogue.
Political appointments, too, will return to the limelight and religious councils will flourish, and all of the programs for streamlining and shrinking them will be canceled. The process of combining municipalities will cease. Until now, 11 unifications have taken place among small local authorities, and the number of salaried deputies has been cut by 150. The ignorant policy of xenophobia will no doubt also return, and minority groups that received citizenship or residency status under Poraz will again suffer discrimination.
Netanyahu, who received Shinui's backing for all of his economic measures, will be forced to back down in the face of Shas' narrow interests; and Sharon, who only garnered a majority vote on the road map and disengagement plan thanks to Shinui, will be forced to yield.
Therefore, from the standpoint of the majority, which is secular, it is better if Shas remains outside the government. Better to have a government of Likud, Labor, and Shinui. That is possible only if Sharon demonstrates leadership and deploys the weapons of judgment day against the Likud rebel group. He needs to make clear to the extreme-right-wing group headed by Uzi Landau that if it fails to support bringing Labor in and leaving Shas and United Torah Judaism out, he will bring forward the elections. After all, most of them know that they haven't a chance of getting elected to the Knesset in the next elections, and that will be enough to make them fold.
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