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At the end of last week Prime Minister Ariel Sharon faced a difficult test of leadership, a challenge in the domestic, economic sphere. Sharon created the impression that he has a well-formulated economic recovery plan in hand, and that he is determined to pass the state budget in the Knesset in one stroke, without surrendering to pressures exerted by coalition partners.

Getting the state budget through the Knesset is a nerve-wracking process. The most elementary test facing any government involves its ability to attain the Knesset majority needed for the budget, which is essentially its game plan for the year. With sound logic, the legislative branch has maintained that no government can remain in power in the absence of budgetary approval (if it misses the January 1 deadline, a government receives a three-month extension, during which it runs state affairs on a temporary budget based on allocations from the first quarter of the previous year).

This time around, it appeared that the indefatigable labors of Finance Minister Silvan Shalom to fulfil his basic ministerial duty were shipwrecked. Up to now, a week before the final deadline for obtaining Knesset approval, Shalom has failed to wrest the required level of consent for budget cuts which the government wants to implement. Knesset members from coalition parties failed to supply the parliamentary cushion Shalom needs; the chairman of the Knesset Finance Committee, which is theoretically an arm of the government, has rejected the finance minister's requests; due to differences of opinion between ministers, Shalom failed to propose a clear antidote for the country's economic ailments. Far from orderly measures enacted by a stable government, steps taken in the budget approval process in past weeks have resembled a raucous television talk show.

Sharon stood up last Thursday and grabbed the reins. Aides from the Prime Minister's Office emphasized that Sharon decided to take matters into his own hands. Sharon did so on Thursday when he saw that Shalom could not gain control of the situation.

Sharon's moves conjured a clear, unequivocal impression: the head of state decided to adopt a series of decisive steps whose thrust is to rescue the state and the government from the economic crisis. Sharon forged an agreement with Governor of the Bank of Israel David Klein to lower interest rates; he adopted recommendations favoring reductions of the state budget by some NIS 6 billion.

Sharon will force all the ministries to tighten their belts - this budget slashing will apply to the finance minister (repeal of benefits for the Negev region), the defense minister (a NIS one billion reduction), and to the Haredi parties (cancelation of the proposed large family benefits starting with the fifth child). Sharon decided not to put a freeze on government subsidies for low-income population groups, and not to impose new taxes.

It is to be hoped that Sharon follows through on these moves. Tomorrow will tell whether or not he set the stage politically, cultivating support necessary for the proposed budget cuts in the Knesset and Cabinet. First and foremost he needs to secure Shas and United Torah Judaism support for his decisions to revoke increased subsidies for the fifth child (and more) and to suspend legislation of other populist proposed bills.

Should he obtain the backing of these religious parties, finalizing approval for the budget will be clear sailing.

Should he not obtain support from Shas and United Torah Judaism, he has the option of building a parliamentary bloc comprised of secular parties in a manner which will pressure Shas to give a nod of approval to the budget, or face the risk of Sharon courting the Shinui party.

Experience teaches that 11th-hour compromises are forged to see budgets through the Knesset. This year, concessions (particularly to the Haredi parties) will contradict the image which Sharon has adopted in recent days, the guise of a determined leader who has decided to put the government's affairs in order and put an end to coalition extortion.

Should it become clear tomorrow, or later in the week, that the government's economic plan is diluted substantially in the approval process, Sharon will face a major image problem. He will be reminded that he often adopted tough-sounding stances during his term as prime minister, bold positions which presaged major policy revolutions - yet in the end these proclamations turned out to lack teeth.

This dynamic occurred, for instance, when Sharon announced after Minister Rehavam Ze'evi's assassination that "what has been will no longer continue." And the same process happened when Sharon declared that "Arafat is no longer relevant."