Changing the State's Priorities

Just another few negative developments in the economy, and that dreadful hawk Benjamin Netanyahu may be signed up as a member of Peace Now. This week, he said: "We have an opportunity here. You have to embrace it and use the time to build the fence, thereby gaining more security and more economy - it's an extraordinary opportunity."

The opportunity to which he was referring is Arafat's proposal to renew the hudna. Netanyahu's words ring close to those of Yossi Sarid: "Who authorized the government not to accept a cease-fire? If we got a year of relative quiet, how bad could that be?"

Is this the same Netanyahu that opened the Western Wall tunnel in Jerusalem in 1996 in so doing inflamed the West Bank and shattered relations with Arafat? Is this the same Netanyahu who impelled the Likud central committee to oppose a Palestinian state when Sharon accepted it? Is this the same Netanyahu who argued against the road map and eventually abstained in the vote only after numerous qualifications were inserted in the decision?

Yes, it's one and the same. But now he has a unique task - pumping up the economy in the year to come to a 2.5 percent rate of growth and continuing to catalyze growth in ensuing years, thereby reducing unemployment and completing his term of office as the man who led the Israeli economy from free fall to growth, from an economy under heavy government control to an open and more competitive economy.

To accomplish this, Netanyahu has adopted the strategy of Ronald Reagan - supply side economics. This is why the 2004 budget he pushed through the Knesset this week had to include tax breaks and far-ranging reforms in several sectors - dismantling the sea ports monopoly; dealing with the giant food conglomerate Tnuva; dismantling Israel Oil Refineries and the Israel Electric Corporation; sweeping reforms at Mekorot and the Israel Lands Authority; privatizing Bank Leumi, Bank Discount, El Al and Bezeq.

These are the two constituent elements of supply side economics. Reagan adopted the exact same course twenty years ago, and generated growth in the United States. But Netanyahu knows he has one big limitation that Reagan did not have - a security situation.

He knows that without an end to terror attacks and a restoration of quiet, the tourists will not come back, investments will not rise, and the public will not return to the shopping malls. Still, he is not prepared to make painful concessions - not in removing settlements, not accepting Palestinian statehood - and he therefore understands that he has no chance of reaching agreement with the other side.

All of this explains how Benjamin Netanyahu came to be the big supporter of the separation fence. He believes that with the help of this man-made barrier, the hoped-for quiet will come and the economy will move to uninterrupted growth. This explains why at every opportunity he repeats that he is willing to allocate all of the money needed for the fence, without limit.

And now Netanyahu is even willing to accept the new cease-fire offer, even though all his colleagues in the Likud oppose it. It's an example of what the desire to succeed can do to a person's world view. The new budget for 2004 reveals a few other changes in the Israeli order of priorities:

* More for defense, less for citizens. The Treasury wanted to cut NIS 3 billion from the defense budget, but in the end only NIS 1 billion was cut. The defense lobby didn't have to try too hard since Ariel Sharon is an integral part of it. The unkind result is that now another NIS 2 billion will have to be cut from the civilian ministries - in other words, from education, culture, health and welfare. The priorities are clear. Fat in the military isn't being cut, but study hours in the schools will be.

* More for religion, less for secular. In spite of an agreement between Shinui and the treasury, Sharon decided against dismantling the Ministry of Religious Affairs and abolishing the religious councils. These two sections would have saved the Treasury about NIS 500 million annually. But Shinui celebrated prematurely, and the National Religious Party went to war and put pressure on Sharon, who capitulated, leaving the ministry and the councils in place. It was also decided not to reduce the wages of top officials in the religious councils. Conversely, all of the government edicts affecting Shinui's constituency remained in place - university tuition has been raised, and the demobilization grant awarded to soldiers has been cut. Given all this, Shinui cannot remain in the government, for how can it be that Shinui with 15 Members of Knesset has less to show for its efforts than the NRP, with only 6 MK's?

* More for farmers, less for industry. The proposal to reduce the number of foreign workers in agriculture was struck down, as was the proposal to raise the tax rate on foreign workers in agriculture to 20 percent. The Galilee Law, which offers numerous benefits to farmers, was not abolished and it was decided not to raise the price of water for farmers. Conversely, all of the edicts that affect foreign workers employed in construction and industry will remain in force, and the cost of water supplied to residential households and industry was raised by 15 agorot per cubic meter. Of course, agriculture lobby is headed by Ariel Sharon, and he cares about only two things - security and farming.