Lapid Won’t Quit Coalition Over Budget Dispute

PM Netanyahu defends increasing security spend, questions where Israel would be without Iron Dome, secure borders.

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Prime Minister Benjamin Netanyahu and Finance Minister Yair Lapid. Still unable to agree on the 2015 budget.Credit: Archive

Likud and Yesh Atid will succeed in overcoming the disputes between Prime Minister Benjamin Netanyahu and Finance Minister Yair Lapid, sources in both parties said Sunday, as the two men met for more talks on the 2015 budget.

“We’re not going to go to elections over economic issues,” a source in Yesh Atid said. “The attempt to portray us as if we oppose a significant increase to the defense budget is simply wrong.”

Netanyahu reiterated publicly on Sunday that the upcoming budget will require significant additional defense funding. Addressing the 4th Annual International Cybersecurity Conference at Tel Aviv University, he said he sees higher defense spending as a fillip for the economy, citing the Iron Dome anti-missile system and the barrier erected on Israel’s border with Egypt.

“I remember there was much criticism [when spending was allocated to the two projects] about the excessive amounts we’re investing in security. I don’t want to imagine what would have happened to the Israeli economy and the State of Israel if we hadn’t made those investments,” Netanyahu said.

“Now, facing growing threats in our region, we need to significantly expand the defense budget by billions more,” he added.

At the same time, Netanyahu said, Israel needs a responsible budget. “Because of the responsible way Israel acted in recent years, [we] didn’t go downhill like the economies of other countries did. We need a responsible budget to deal with the security threats facing us. We need economic security to invest in Iron Dome and to confront the Hamas threats in the south, the Islamic State in the east, and other threats. Because we saved and invested in security, the fences were built in the east and the south. I don’t want to think where we would be without them.”

Education Minister Shay Piron (Yesh Atid), who spoke with Lapid immediately after his meeting with the prime minister, said Israel couldn’t get bogged down in internal bickering. “Nobody doubts our need to strengthen defense and allocate more resources to it,” Piron said. “That’s not up for discussion. And I assume that no one thinks it has to come at the expense of education or welfare.”

Sources in Yesh Atid said that Lapid will find a formula on which he and the prime minister can agree, noting that they planned to meet a few more times in the coming days.

“You can’t forget that we got an economy that was a mess, and we succeeded in stabilizing it by raising taxes. But that’s not why we came to politics, and Lapid made that clear to Netanyahu today,” said a Yesh Atid source.

Speaking to Channel 2 News last night, Lapid agreed that more money was needed for defense, but not at the risk of financial collapse. “It turned out during Operation Protective Edge that we have security needs. But we can’t get to a situation that puts Israel’s economy back 20 years,” he said.

Lapid also continued to defend his controversial proposal to eliminate VAT on new apartments for some first-time buyers, up to a limit of 1.6 million shekels ($440,000).

“I can’t figure Lapid out,” said a senior Likud figure, considered close to Netanyahu. “His stubbornness about zero VAT, alongside the demand not to substantially increase the defense budget and not raise taxes, is impossible – and he knows it.

“It’s clear to us that Lapid doesn’t want elections now, because he would shrink from 19 to 9 seats,” added the Likud source. “It’s clear to us that Lapid fears going into opposition without any meaningful achievements. That’s why we can assume that he will fold in the end.”

Another senior Likud figure echoed this sentiment. “No one other than [Economic Minister] Naftali Bennett has an interest in going to elections now,” he said. “Netanyahu hasn’t succeeded in shoring up his position since Protective Edge. Tzipi Livni is liable to find herself below the electoral threshold and [Foreign Minister Avigdor] Lieberman is in the midst of a reform in his party aimed at returning those voters that wandered off to Habayit Hayehudi. Going to elections would be a prize for Bennett, and that’s something that both Lapid and Netanyahu very much want to avoid.”

As Likud and Yesh Atid MKs continued to take potshots at each other’s leaders, opposition head Isaac Herzog lashed out at both. “This conflict is typical of the national paralysis government currently in power,” the Labor leader said. “Israel is paralyzed diplomatically, economically and in terms of defense.”

Herzog called Netanyahu and Lapid “Siamese twins in their economic perspective, which is why this crisis will end with a budget that will harm the middle class and the weaker strata.”