Netanyahu May Speed Up Sale of Army Land to Fill Holes in Budget

The plan might prove a way to provide an extra $580 million that the military says it needs.

Alon Ron

Prime Minister Benjamin Netanyahu will consider accelerating the sale of land in the center of the country now being used by army bases, in order to resolve a dispute over the defense budget.

The Israel Defense Forces is demanding an extra 2 billion shekels ($579 million) beyond its approved budget for this year and has threatened to curtail training for the reserves if this demand isn’t met. But the Finance Ministry objects, saying this would require steep cuts in education, health and welfare.

Netanyahu is expected to decide on the issue next week after returning from Japan. He hopes that accelerated sales of land occupied by bases the army plans to vacate could provide the extra funds without requiring cuts in other programs.

Last week, Defense Minister Moshe Ya’alon told the Knesset Foreign Affairs and Defense Committee that the defense budget had reached “the breaking point,” and without extra funds, training for reservists would have to be slashed in the second half of the year. Next week he will detail the planned training cuts, beyond the already announced cancellation of June’s home front defense exercise.

Several MKs voiced astonishment at Ya’alon’s statement, noting that in October, when the budget was approved, he told the cabinet the army was short only 750 million shekels, not 2 billion. Moreover, the cabinet’s decision at the time explicitly stated that the defense budget would not be augmented midyear.

But Ya’alon told the Knesset Labor, Welfare and Health Committee Monday that he had oral understandings with Netanyahu under which defense would still receive extra money during the year, just as it has in previous years.

According to Ya’alon, Netanyahu also agreed that the director general of the Prime Minister’s Office, Harel Locker, would examine the army’s claim that it pays unjustified taxes such as value-added tax on U.S. military aid, excise tax on fuel used in planes, tanks and ships, and municipal tax on army bases. Yet this never happened.

Moreover, though the cabinet agreed to appoint a special committee to examine the size of the defense budget, this committee has not yet met. Thus its recommendations seem unlikely to be relevant even to next year’s budget, much less this year’s.

In January, the IDF told the cabinet it would run out of funds for its full schedule of reservist training by the end of April. Since then, new complaints have arisen.

Among them, it accuses Finance Minister Yair Lapid of deliberately concealing the size last year’s budget surplus from the cabinet. Ya’alon also accused the treasury of giving extra funds to other programs – including various ministries controlled by Lapid’s Yesh Atid party – while denying them to the Defense Ministry.

Also, defense officials say the treasury has reneged on promises such as funding the relocation of IDF bases from central Israel to the Negev and funding pension shortfalls. These broken promises are why the IDF’s budget shortfall has ballooned to almost 2 billion shekels in just a few months, they say.

While the defense establishment easily obtained midyear budget additions in the past, public opinion has increasingly turned against higher defense spending since the social justice protests of 2011. Moreover, as head of the second largest coalition party, Lapid has considerable independence and is thus less likely to bow to Netanyahu’s dictates than his predecessors from Netanyahu’s Likud party.

Hence the importance of the base issue. Last year the Defense Ministry drafted plans to relocate several IDF bases from Haifa to Ashdod, including the giant bases at Tzrifin and Tel Hashomer. It says this would free up land on which thousands of apartments could be built, and it values the land at 80 billion shekels. Thus Netanyahu hopes accelerated marketing of this land could easily fund the IDF’s budget shortfall.

But further down the line, it seems the defense establishment won’t be able to avoid cutting its generous pensions, expected to cost 7.9 billion shekels next year. Ya’alon told the Knesset Labor Committee he has already prepared draft legislation on structural reforms of the army.

The Finance Ministry said Ya’alon’s attacks on treasury professionals were unacceptable. “The equation is simple,” he added. “Any extra funding for defense would come at the public’s expense.”