The news that Jeremy Levin, Teva Pharmaceutical Industries's CEO, was leaving his position with the company Wednesday, provided a convenient smoke screen for former Israel Defense Forces Chief of Staff Gabi Ashkenazi to quietly set out the back door. On that very same day, Ashkenazi announced he was resigning as CEO of Shemen Oil, two weeks after the company declared that its Yam 3 well, off the coast of Ashdod, was dry. A few weeks ago, he himself signed an official statement claiming Shemen had found “significant” indications that oil would be found; a statement that led many investors to build up false hopes. In the end, Shemen lost investors half a billion shekels ($140 million), while Ashenazi managed to line his pockets with several million shekels.
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Of course, no one is blaming the failure on Ashkenazi, who received a monthly salary of NIS100,000 ($28,350) from Shemen. After all, people have been searching for oil and natural gas in Israel and off its coast for decades, yet only a few lucky people, like Yitzhak Tshuva, owner of the Delek Group conglomerate, have ever found it. Nonetheless, one can identify in Ashkenazi's conduct a pattern of behavior common in senior IDF officers who, on leaving the military, parachute into comfortable executive office positions where they enjoy bloated salaries and lots of pampering – even if they have no special no-how or experience. Like many of his colleagues, one can see in Ashkenazi a nonchalant attitude toward investors’ money and toward an astronomical salary that has nothing to do with performance.
But what right does any of us have to complain about Ashkenazi’s know-how or experience in the private market, when the Finance Minister, elected by more than half a million Israeli citizens, has come to this post with no knowledge or experience? On Thursday, immediately after the security cabinet unanimously approved a NIS2.75 billion ($779.7 million) addition to the Defense Ministry budget, Finance Minister Yair Lapid issued a press release that tried to distance him from that very decision and to place the full responsibility on Prime Minister Benjamin Netanyahu. “After a difficult confrontation, the discussions in the security cabinet culminated in a compromise cut in the defense budget,” he wrote. “The Prime Minister decided to add to the defense budget despite my opposition to such a move. We still insist that the defense establishment must conduct itself in a fiscally responsible manner and streamline its operations. We cannot accept the fact that the middle class is shouldering its burden while the defense establishment isn’t. I am glad that we were able to prevent the transfer of the full sum requested by the defense establishment. We need the NIS1.75 billion ($496 million) for daycare centers, healthcare, education and for various measures that could lower the cost of living in Israel.”
Actually, it is pointless to blame Lapid for the failure. (In the end, he also voted in favor of the compromise cut in the defense budget.) He missed the opportunity of bringing about a substantial cut, once the budget discussions following the formation of the government ended. At the time, a cut in IDF pensions could have been imposed. Even the IDF Chief of Staff Lieutenant General Benny Gantz and Defense Minister Moshe Ya’alon were prepared to discuss a budget cut, though not willing to be the only ones whose budget was being slashed. Afraid of a confrontation with Histadrut labor federation chairman Ofer Eini, Lapid backed off.
At least as far as his pension is concerned, former Chief of Staff Ashkenazi has nothing to worry about. The large defined-benefit pension payments he receives from us will continue to flow forever. How much does he receive each month? Sorry, that data is unavailable. Just as there is no data on the size of the pension received by Major General (res.) Uzi Dayan, chairman of the national lottery - who had some very harsh words for young Israelis who, after trying to deal with the high cost of living in Israel, are trying their luck abroad – in addition to the monthly salary of NIS50,000 (nearly $14,200) he earns at the national lottery. The size of pensions paid to IDF generals is a military secret. Thus, the exposé that Chaim Levinson filed this week in Haaretz about the scandalously high pensions paid to civil and rabbinical court judges did not include any figures on the IDF. What we do know is that, on the average, the pension of a retired IDF commissioned or non-commissioned officer is 2.5 times that of a civil servant and that the state’s total financial commitment to the IDF’s defined-benefit pensions totals approximately NIS250 billion ($70.9 billion) – ten times what it was a decade ago.
This past week, as was the case during the budget discussions, Chief of Staff Gantz again played the part of trade union leader of IDF’s career officers and stated that he would not agree “to have the basic rights of career soldiers trampled on. Impairing your rights is akin to impairing Israel’s security.” Really? Would even a small downsizing of the dental care that the children of career officers receive free of charge impair national security? And what about the 50 percent discount on health insurance premiums? Or the 90 percent discount on accommodations in Israeli luxury hotels? The Chief of Staff went beyond mere talk: He granted retired IDF personnel an additional six percent increase to their pensions for the seniority they have accumulated during their three years of inducted service. This is a benefit that civilian Israeli workers do not receive, although many of them have also completed their three years of inducted service in the IDF. Apparently, in the IDF, the slogan “Desperate times call for desperate measures” is just lip service.
Finance Minister Lapid is justified to some degree in placing the blame on the Prime Minister. Netanyahu’s rhetoric, which is based on security threats, apparently obligated him to respond to the IDF’s talk of grim impending scenarios. Lapid has a point, after all, if the state budget has a surplus, why should that money be used to increase the defense budget? Why not make a small downward adjustment to the cut in child allowances or what about the increases in income tax and value added tax? But Israelis have learned to accept this situation. In this war, the defense establishment always emerges the victor. Time after time, a budget cut is planned, and, time after time, the budget cut is canceled.
For example, the government-appointed Trajtenberg Committee on socioeconomic reform recommended a three billion shekel ($900 million) cut, but that never happened. Similarly, the Brodet committee, which was set up to study defense spending, spoke about a streamlining process that could save NIS30 billion ($8.5 billion) over a period of ten years, but the plan never went into effect. Precisely because of this state of affairs, it is somewhat saddening to see Netanyahu accept the explanations of the defense establishment, which chooses to show the descending graph of the defense budget as a percentage of the gross national product. This is true and is also commendable, but, if one looks at the budget from another perspective, one soon discovers that Israel’s defense budget has never been greater. According to the defense establishment’s position, whenever the GNP increases and the economy grows, the IDF should automatically be rewarded.
Everyone in the IDF speaks about a defense budget that is four to five percent of the GNP. That result really sounds nice and is almost identical with what it is in European countries, which have far fewer security threats to contend with. However, according to the Bank of Israel’s calculation, Israel’s defense costs are much higher, if one takes into account American military aid, the budgets of the IDF’s Home Front Command, as well as the Fund for the Integration of Discharged Soldiers and the alternative expense of inducted and reserve soldiers. According to those calculations, the defense budget totals nearly NIS70 billion ($19.8 billion), or seven percent of the GNP. Netanyahu and his circle accept the defense establishment’s slogan, “The threats didn't shrink, they merely changed,” although most security experts have very different thoughts.
The support that Netanyahu is providing begs the question: Why, under the current situation, did the public relations experts of the IDF have to send a forlorn NCO to the media so that he could declare that he was ‘being thrown to the dogs’? Similarly, his support begs another question: Why were children residing in communities along the Israel-Gaza border sent off to demonstrations to declare that they were now vulnerable and to protest the defense establishment’s decision to stop posting soldiers at these communities? Yes, the cynical top brass have turned the well-known trick of former Tel Aviv Mayor Shlomo Lahat into a fear-inspiring expertise. On Thursday, in order to throw a bone to the middle class – beyond the pillars of smoke created by the reports about mysterious explosions in the Syrian city of Latakia and in Damascus – the security cabinet announced the “creation of a public committee to examine the defense budget in all its aspects and the establishment of a team to be headed by the Prime Minister’s Office Director General, Harel Locker, and to be in charge of accelerating the evacuation of IDF bases in central Israel in order to free land for construction activity.” The members of the security cabinet did not disclose that the apartments built on the vacated land would probably go to defense establishment pensioners at a discount that will be arranged for them by the Defense Ministry’s housing authority, whose budget is paid from the defense budget.
Whenever the IDF is called upon to cut its budget, it invariably goes to the most painful places: training, the reserve units and the closing of combat units. Budget cuts in these places truly impair national security. The IDF has no other alternatives because, for years, there has been no strategic change – in personnel, in the age of retirement, in pensions, in the rehabilitation division and in acquisition missions. Neither Gantz nor Ashkenazi has made any strategic changes. In contrast with the promises made to the Brodet Committee, the number of career officers has increased by 12 percent in the past six years – an additional annual expenditure of between half a billion ($140 million) and a billion shekels ($300 million).
Does Netanyahu not know all this? Of course he does. After all, he formulated the theory of the fat man and the thin man – the thin private sector that has to carry the fat public sector on its back. He knows and is simply trying to delay the inevitable. It is to be hoped that Lapid and Netanyahu, together with Ya’alon and Gantz, will launch the revolution before the feeding of the fat defense establishment requires a highly unpleasant, even violent, budget-slashing of all public services in Israel; before taxes are raised on the salaries and pensions of workers in the private, productive sectors, including workers who must struggle each morning to make ends meet. After all, those who will pay for all this will be the members of the weaker classes and non-unionized workers. Netanyahu realizes that, in economics, there are no free lunches and that there will be social justice only when the privileges of the strongest group in the economy are ended. But, in the meantime, he is delaying the inevitable.