Finance Minister Kahlon's Ultimatum to Netanyahu: Change the Coalition, or We Unravel the Present One

Yossi Verter
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An illustration by Amos Biderman depicting Defense Minister Ya'alon and Finance Minister Kahlon passing a shekel over Netanyahu's head.
Illustration by Amos BidermanCredit: Illustration
Yossi Verter

Few of the 120 MKs who took part in the all-night session this week on the exhausting and tiresome annual ritual whose outcome is a foregone conclusion – passage of the state budget and accompanying Economic Arrangements Bill – believe that this show will be repeated again at the end of next year with the same actors playing identical roles. If it’s repeated at all. In other words, either the present coalition – which is lean in flesh and spirit – will collapse during the year ahead, or it will get a lifesaving transplant.

Finance Minister Moshe Kahlon, who just passed his first budget, doubts he will pass a second if the government is not enlarged. “I was a hero, I knew no one wanted an election,” he told an interlocutor. “But next year? That’s far from certain.” Kahlon is convinced the 2017-2018 budget will not survive the slings and arrows of the current coalition. He should know: He witnessed firsthand the tensions, divides and hostility between the parties, and the suppressed resentment that many of their members harbor toward the leader.

Kahlon believes 2016 will see either a new election, toward the end of the year, or a reshuffle and reboot of the government. He will do his best to bring about the latter option. It’s not that he’s enamored of Prime Minister Benjamin Netanyahu. However, he is completely enamored with his job and is not looking for an upgrade. As the treasury is the pinnacle of his ambitions, he has no interest in an electoral adventure with an unpredictable outcome.

Kahlon makes no secret of his desire for a broad coalition, which would ease his lot. His preferred partner is Zionist Union, with its many Knesset seats; and if not, then Avigdor Lieberman’s Yisrael Beiteinu. On Wednesday, Kahlon and Lieberman sat side by side in the Knesset chamber, grins on their faces, and engaged in a lengthy conversation about God knows what. That’s a scene calculated to cause Netanyahu serious heartburn.

What is new is that Kahlon is talking openly about an ultimatum he might present to Netanyahu at the beginning of 2016: Either change the coalition or we unravel the present one. Kahlon will take that step only if he thinks the ground has been prepared and that the bride (Zionist Union’s Isaac Herzog or Lieberman) is ready to step under the canopy under reasonable and practical conditions, including a commitment to back another two-year budget – thus ensuring Netanyahu almost four full years in power and Kahlon the same period in the treasury. “I will not be able to pass another budget with this coalition,” he says, though it’s not clear whether the pistol in his hand is aimed at Netanyahu or himself.

The prevailing mantra in the political ashram has been that, “after the budget passes, the talks for expanding the government will be accelerated.” The obvious candidate is Herzog, who has been withering for years in the opposition and whose horizons are bleak at best. There is no end of talk about a dramatic development in this regard – but little hard evidence. Herzog’s throat is already dry with denials. “There’s nothing!” he shouted again this week. “There’s nothing between me and Netanyahu. No contacts, conversations, no talks. Nothing!”

So, either he’s a terrific actor, a pathological liar or maybe he’s telling the truth (not necessarily in that order).

Two to tango

More than two weeks ago, Kahlon told Defense Minister Moshe Ya’alon, “You should know that I am the defense establishment’s last pillar of support.” He added, more or less in these words, “You can’t count on Netanyahu. He’s against you. There’s no point in our quarreling and in the end he being the one to decide for us the size of your budget. Reach an agreement with me. If not, no problem, I will step aside and what will be will be.”

Ya’alon considered the offer. The trauma of last summer’s Locker Committee report on the defense establishment, written by Netanyahu’s former military secretary, Yohanan Locker, still haunts him (Ya’alon continues to believe that the spirit of the commander-in-chief hovers over the report). He decided to place his trust in Kahlon. They met several times, always in a good spirit – it’s hard to fight with Kahlon – instructed their technical teams to proceed according to the understandings reached and, last Friday, after another meeting in the Defense Ministry, shook hands and called it a done deal.

Their agreement stunned the Prime Minister’s Office. It represented a serious setback to Netanyahu’s divide-and-rule, maneuver-and-manipulate policy, which usually allow him to enter the picture as the mediator and responsible adult. That worked well during the four years when Yuval Steinitz was finance minister and Ehud Barak defense minister – the two couldn’t agree on the time of day, let alone the distribution of billions of shekels. And it worked equally well when Yair Lapid, in the treasury, and Ya’alon in defense flayed each other and Netanyahu stepped between them, to his pleasure. But now, suddenly, Netanyahu – like a greedy divorce lawyer who’s slavering over the big bucks he’ll rake in from the spatting husband and wife, only to discover that they’ve made up and are sharing the same bed again – found himself facing a fait accompli.

He didn’t like the subversion of his authority. His senior aides were also not pleased, to put it mildly. Treasury officials who came to the Prime Minister’s Office encountered scowling faces. Last Saturday night, the security cabinet was convened to decide on the budget and approve the Ya’alon-Kahlon agreements. The meeting was scheduled for 10 P.M., but didn’t get underway until midnight. For two hours, senior Defense Ministry personnel sat with Netanyahu and his people. Informed sources report a decidedly unpleasant atmosphere in the room. Netanyahu didn’t like some of the clauses in the agreement. He got angry, even lost his temper. Voices were raised. Nothing helped. Kahlon and Ya’alon maintained perfect coordination. They’d sealed all the breaches, leaving the prime minister bupkis, as they say in these parts.

Dividing Jerusalem

For a few days, garbage trucks with Moshe Kahlon’s name smeared on them in giant letters have been parked outside the Finance Ministry in Jerusalem. The official reason: the treasury’s refusal to increase the Jerusalem Municipality’s budget in 2016. The increase requested by the city amounts to just small change, no more than 200 million shekels ($51 million) – not exactly an impassable obstacle that justifies a trash-drenched war.

The problem, though, runs deeper. Jerusalem Mayor Nir Barkat alleges that the treasury, meaning Kahlon, and the budget director (Amir Levy) are targeting him deliberately. Barkat himself has no satisfactory explanation for this behavior. Kahlon backed him in the municipal election.

Treasury officials say the time has come to put a stop to Barkat’s endless spending. Every year he demands budgets for specific goals and then spends the money on other things – mostly of a cosmetic, PR, image-building character. Instead of being invested in the city’s neighborhoods and infrastructure, the money goes for a marathon, a Formula 1 event, lobbying and publicity. It’s a bottomless pit.

In November 2012, after Barkat was elected to a second term, MK Rachel Azaria, formerly Barkat’s deputy and now a member of Kahlon’s Kulanu party, suggested to him that he pare down the municipality’s bloated bureaucracy, stop the hidden unemployment (workers drawing salaries, but not doing too much) and fire incompetent city employees, in order to create a moral foundation for his requests from the state. Barkat refused. “I don’t know of any municipal workers who don’t work,” he told Azaria. She, who is very knowledgeable about the municipality’s financial management, apparently shared the information with Kahlon. The latter’s brother, who is also a former Barkat deputy, also had something to contribute. The result was the refusal Barkat heard two weeks ago from the treasury.

Barkat isn’t capable of taking no for an answer. His battle against Kahlon is the third front he’s launched in the past 18 months. The first was against Jerusalem Affairs and Heritage Minister Zeev Elkin; the second against Tel Aviv Mayor Ran Huldai and a forum of mayors he heads. As for Kahlon, he’s not one to look for a fight – but he gives no quarter if one is forced on him, as the cell-phone tycoons learned a few years ago.

It’s no secret that, politically, Barkat is aiming very high: Knesset, government, prime minister. The likelihood is that in the next Knesset, Barkat, if he’s there, will want to be appointed finance minister. His battles against the whole world, particularly Kahlon, are intended to show that he has what it takes to play in the big leagues. The wisdom of this tactic is questionable. It certainly isn’t helping the city, and Kahlon outmaneuvered him by agreeing with Elkin to transfer funds for Jerusalem projects via Elkin’s ministry. Barkat says this bypass route is unacceptable and that he will block it. By doing so, he’s painted himself into a corner, just as Kahlon and Elkin planned: They’ll offer the city funds and the mayor is going to turn them down?

Clear and present threat

For 18 years, some 9,000 people, known as the remnants of the Falashmura, in Ethiopia, have been living in substandard conditions in transit camps in Gondar and Addis Ababa. In 1999, it was found that their Judaism was “in doubt,” and they were left to rot. Last Sunday, the government unanimously approved the motion of Interior Minister Silvan Shalom to bring them all to Israel within five years. Many of their relatives have been in Israel for years, including combat soldiers whose parents and grandparents were refused permission to be reunited with them. Why this week? The answer is simple and has to do with the slender coalition of 61 MKs.

A month ago, a parliamentary delegation consisting of Likud MKs David Amsalem, Avraham Nagosa and David Bitan, and MK Revital Swid (Zionist Union), visited the transit camps in Ethiopia. Shocked by what they saw, they returned determined to take action.

Amsalem, chairman of the Knesset Interior and Environment Committee, didn’t need a calendar to know that the vote on the budget was imminent. Two weeks ago, when Netanyahu was in Washington, Amsalem called his friend Avichai Mendelblit, the cabinet secretary. “If the government doesn’t decide to bring them all to Israel by the November 15 cabinet meeting at the latest, I suggest you look for a new job,” he advised him in a friendly manner.

Mendelblit, a leading candidate to become the next attorney general, tried to calm Amsalem and get him to postpone. Amsalem told him, “If by November 19 [the last legal day for passing the budget, after which the Knesset would have had to be dissolved] there is no binding government decision, you will be looking for a job. I will, too, but so will you, because I will vote against the budget. Don’t believe me? Try me.”

Mendelblit’s impression was that Amsalem was dead serious. He spoke with Netanyahu, who was still in the U.S., busy talking up his “wonderful” meeting with President Barack Obama. Netanyahu checked it out and reached the conclusion that Amsalem, who’s known as a fearless troublemaker, wasn’t kidding. He would topple the budget and the government in one swoop. The authorization was issued that very day.

This story comes not from Amsalem but an external source. I asked Amsalem if that’s what happened. “Absolutely,” he said. “The prime minister knows me well. If I’m not an MK tomorrow, it’s no big deal.” It’s no simple threat to topple a Likud government, I told him. “I never threaten,” he said. “I promise.”

Clear and less present threat

Amsalem is also running for chairman of the Likud Central Committee, against MKs Tzachi Hanegbi and Nava Boker. He has significant support in the Likud Knesset faction, from ministers Yariv Levin, Gilad Erdan and Gila Gamliel, and from a few more MKs, including Jackie Levy and David Bitan. He also has the external backing of former minister Gideon Sa’ar.

Netanyahu is appalled by the idea of Amsalem heading the Central Committee. Amsalem signed a proposal to change Likud’s constitution so that a party leader who wants to run for a third time will be required to gain 60 percent of the vote in the party primary. Amsalem also wants the Central Committee chairman to have the last word in disputes over the panel’s agenda or when it’s convened, both of which are today determined by the party leader.

Netanyahu has been putting tremendous pressure on Erdan and Levin, separately, to run for Central Committee chairman and thereby eliminate the threat of Amsalem. Not only have the two rejected this request, separately, they both also lost no time, separately, in announcing their support for Amsalem.

The election is set for December 29. The heat is already on in the Prime Minister’s Office. There’s time enough for the pressure to mount and turn into panic, and give rise to a new candidate who will throw his hat into the ring at the last minute and perhaps finally realize an old dream of being elected Central Committee chairman. His name: Benjamin Netanyahu.

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