Two weeks after it emerged that Finance Minister Moshe Kahlon had started the process of compiling the 2019 budget, and ahead of the expected decision in the coming weeks on using excess tax revenues in 2018, the Defense Ministry is the first out of the gate to create facts on the grounds and claim a larger share of state coffers.
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The Defense Ministry and the Finance Ministry for months have discussed funding over and above the amounts set two years ago by the deal between Kahlon and then-Defense Minister Moshe Ya’alon. Moreover, Ya’alon’s successor, Avigdor Lieberman, went straight to Prime Minister Benjamin Netanyahu, discussing the need for an additional 4.5 billion shekels ($1.3 billion).
Defense sources asserted on Wednesday that the new strategic reality in the region – a stronger Russia, a revived Assad and a bigger Iranian threat – mandated the extra funds. Still, the demands in question are based on contingency plans that are nothing new and do not stem from a war or emergency military operation.
Lieberman’s behavior is liable to turn the Kahlon-Ya’alon deal, which purported to set a five-year-budget of 60 billion shekels for the military, into a joke. The whole premise of the deal was that Israeli citizens would pay the bill, but in exchange they could know that the defense budget was final and the public would not have to open its wallet year after year.
The defense establishment’s demands also make light of the deal given that it is hard to say it stayed within its confines in 2016. The defense establishment received several billion shekels at the end of 2017 as an advance on 2017.
Kahlon has yet to respond to these demands, but sources familiar with similar negotiations said on Wednesday that in light of Lieberman’s political power relative to Netanyahu, he is likely to secure some 2-3 billion shekels. “It is neither surprising nor the end of the world,” said the source. “Such demands are to be expected in a year of a surplus budget.”
The defense establishment’s demands also rely on the understanding that it will be harder to obtain additional funding next year. The treasury expects a higher defense debt in 2018.
Increasing the defense budget mid-year requires legislation. The way to circumvent that is to take an advance on 2018 payments, as happened in 2016. Whether it be a payment for supplies or retirement payments, the defense establishment is highly flexible. At the same time, the treasury has the option of relying on the surpluses in other ministerial budgets to fund extra activity at the defense ministry.
Defense Ministry officials are also keeping close watch on Kahlon’s plans to move up the date of preparing the 2019 budget. Accordingly, ministry officials have been working on a plan to shore up settlement security at an estimated cost of 3 billion shekels. Udi Adam, the ministry’s director general, is in charge of the plan. It has to first get Adam’s approval and then Lieberman’s before being brought into discussions about the 2019 budget. If Kahlon’s desire to move up the preparation of the budget comes to fruition, these discussions will open in early 2018.
The plan includes investment in West Bank roads and protecting cellular antennae and communications lines. Defense Ministry officials hope the budget for this plan will be taken from the Housing and Construction Ministry and the Communication Ministry. They are expected to demand that some of the money come from additional budgeting for the ministry.
The Defense Ministry commented that it managed the 2016 budget and continues to manage the current year’s budget according to the army’s multi-year plan, known as Gideon, based on the budgetary agreement signed with the treasury. The ministry asserted that it is obeying all rules of the Budget Law in managing the budget as well as the rules of the budgetary agreement, in cooperation with the Finance Ministry.