Israel Is Heading Down Lebanon's Failed State Trajectory

Looking at finance, health, employment and defense, Israel is on a concerning path

Meirav Arlosoroff
Meirav Arlosoroff
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Tel Aviv's Hakarmel Market shuttered during a coronavirus lockdown, May 5, 2020.
Tel Aviv's Hakarmel Market shuttered during a coronavirus lockdown, May 5, 2020.Credit: Moti Milrod
Meirav Arlosoroff
Meirav Arlosoroff

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Many a tear was shed over Lebanon last month. It has turned from the Middle East’s Switzerland in the 1970s to a disintegrating country, with a collapsing economy, massive protests and exploding warehouses that destroyed much of Beirut.

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Lebanon’s 50 years of decline stemmed from internal ethnic divisions, with each sector looking out only for its own interests. The political leadership worsened the divisions by catering to the narrow interests of its own sector instead of advancing state interests.

This is how advanced nations collapse, and the comparison to Israel is unavoidable. Israel, too, is divided – each of its four tribes looks out for its own interests at the expense of the rest, and the leadership rides the divisions in the name of its own political survival at the expense of good governance and the country’s future.

You don’t need to go too far down our current crash trajectory in order to understand what awaits Israel in the future. They promised to turn us into one of the 15 top countries in the world, but in practice we’re going in the opposite direction – we’re becoming the Jewish Lebanon of the Middle East.

Alternate Prime Minister Benny Gantz, left and Prime Minister Benjamin Netanyahu attend the weekly cabinet meeting, at the foreign ministry, in Jerusalem, July 5, 2020.Credit: Gali Tibbon/AP

Look around: We’re in the middle of social unrest, at the height of the country’s worst crisis since 1985, and maybe even since 1973. Instead of the existential crisis making us close ranks and bringing out the good, we’re collapsing under hatred, a lack of cooperation and disregard for the rules.

The coronavirus exposed all our weak spots. We are a divided nation where people don’t look out for each other: the ultra-Orthodox who behave like they have a country within a country, rebellious Arab citizens who refuse to follow the rules, poor education that results in entire communities endangering themselves and their environment without understanding the consequences, a government that doesn’t function and a pathetic, atrophied leadership.

All of the troubles that have plagued Israel for decades, issues that were irresponsibly neglected by all governments but particularly by the ones led by Prime Minister Benjamin Netanyahu, are now exploding in our faces. The chaos is so great that even the last tool at our disposal – a country-wide lockdown – is not even necessarily implementable anymore.

There’s no question about who is responsible for this: Netanyahu is going to go down in the history books as one of the worst prime ministers in Israel’s history. For 11 years, Netanyahu did everything to bow to every destructive dictate from the ultra-Orthodox community, to undermine Arab trust, to turn government bureaucrats into enemies, and to undermine the public’s faith in state institutions, including the courts system, the police and the gatekeepers.

Netanyahu will end his historic role in shaping Israel in shame, and one can only hope that it’s not too late. The country’s loss of control over the coronavirus is a wake-up call as Israel takes massive steps toward the Lebanese model.

Fast track downward

So far, Israel has not managed to carry out localized lockdowns, and it’s not clear if it would be able to carry out a national lockdown, either. The government ministries are standing by helplessly, and our lack of obedience is putting us on one of the world’s worst sickness trajectories. The only thing playing in our favor is the relatively young population. Otherwise, we apparently would have outdone Italy in terms of body count.

After Netanyahu finally goes, we can finally try to repair Israel’s divisions. The first step will be rebuilding the government’s technocratic backbone in order to at the least repair the basic trust in decision-makers to know what they’re doing.

Finance: No tools and no targets

Israel’s draft economic arrangements bill – a law typically passed alongside the budget that details the country’s economic plans – contains some 40 reforms. They include a plan to increase competition and reduce the price of consumable goods, boosting the public health system, a shift to direct agricultural subsidies instead of the current tariff model on imports, short-term improvements to public transport, increased oversight for toddler day cares given the raft of abuse scandals, and much more. But all these reforms are stuck because of the disagreement between Netanyahu and Kahol Lavan’s Benny Gantz over whether to pass a one-year budget for the remainder of 2020 or a two-year budget for 2020-2021.

Instead, the Finance Ministry is worrying about how to use the extra 11 billion shekel budget allocation, which is allocated under the law mandating that for lack of a current budget, Israel must work off of its last approved budget, which dates to 2019. The year 2020 is likely to end without any actual budget, but 2021 is four months away, and no budget is being drafted yet for that year, either.

The result is that the Finance Ministry has found its hands tied in terms of its options for handling the current crisis. Without a state budget, it has no tools at its disposal, and it doesn’t even know which way it’s supposed to lead the economy.

The government has no deficit target or national debt-to-GDP target. It still hasn’t stated what budget reserves will be set aside. Without these figures, the Finance Ministry is working in the dark, without knowing what targets it’s working toward. For instance, it cannot take steps to help prevent Israel from being given a sovereign credit rating downgrade.

Likewise, the Finance Ministry doesn’t have the tools or the political backing to address the defense establishment’s refusal to take efficiency measures to scale back its pension obligations, or its push to make the public sector more efficient in the face of the coronavirus crisis. Accountant General Rony Hizkiyahu has stepped down, as did Budgets Department Head Shaul Meridor. The rest of the bureaucrats have been left feeling that their hands are tied in facing the one of the country’s worst financial crises ever. (Hagai Amit)

Health: No money for hospitals, senior posts left unoccupied

The Health Ministry has become one of Israel’s most central, best-funded ministries since the coronavirus crisis began, but aside from the coronavirus and a few other issues that made their way onto the agenda by virtue of not being dependent on a government coalition, critical aspects of Israel’s public health system have been entirely frozen.

The most critical is how Israel’s hospitals are reimbursed by the health maintenance organization for the health services they offer Israelis – or in other words, the hospitals’ budgets, and the decline in revenues despite steep outlays in 2020. Some of the hospitals are at the brink of collapse, at which point they won’t be able to pay salaries or providers. Several months ago, the Finance Ministry drafted a new payment regulation plan, but it hasn’t been implemented.

The plan was supposed to be approved by the Ministerial Committee for Legislation earlier this week, but it was halted by a political dispute between Kahol Lavan and Likud. It was supposed to pass as part of a political give-and-take, in exchange for approval of another law ensuring elderly citizens weren’t left impoverished. But in a cynical, unexpected move, Minister David Amsalem (Likud) announced – apparently at Netanyahu’s direct instruction – that the coalition didn’t support the bill for the elderly, drafted by Kahol Lavan’s Meirav Cohen and Labor’s Amir Peretz, and thus neither bill was advanced.

This isn’t the only issue that’s stuck due to either political failures or a blind eye to anything that isn’t the coronavirus. Israel also hasn’t yet set a 2021 budget for which medications will receive funding for HMO members – referred to as the “medicine basket” – and senior Health Ministry posts such as directors of regulation, digital health services, and strategy and planning have been unoccupied for extended periods. Likewise the HMOs haven’t received additional funding to account for population growth and an aging population. (Ronny Linder)

Employment: 500,000 unemployed, and the ministers are fighting

Over the past several weeks, since Yisrael Katz became finance minister, the partnership between the Finance Ministry and the Economy Ministry has ended. When Kulanu held both portfolios, the two ministers worked together and coordinated policy.

But now things are entirely different: Economy Minister Amir Peretz and Welfare Minister Itzik Shmuli, both of Labor, found that not only are their ministries not being heard, it’s very unlikely that the proposals they seek to carry out are going to happen.

The blame doesn’t lie only with Katz. Peretz and Shmuli have repeatedly behaved like lawmakers making press statements and not like ministers working with the government on clear policy. For instance, Shmuli presented his plan for professional training while an inter-ministerial committee was concurrently drafting its own plan, and Peretz called to advance the “German model” of flexible unpaid leave without coordinating with the Finance Ministry first. But they may not have had a choice. They repeatedly found themselves being told at meetings with finance officials that their opinions didn’t matter. They were repeatedly forced to threaten that the Kahol Lavan bloc wouldn’t approve Katz’s plans.

In everything that has to do with employment, the ministries’ actions seem like an arm-wrestling match. The ministers and their bureaucrats sit at two ends of the table and try to improve their own position while wearing out their opponent.

The results are that the inter-ministerial draft employment report disappeared somewhere inside the Finance Ministry, a budget for career training hasn’t been passed, and no reforms are advancing. A law enabling employment grants did indeed pass, but it’s so confusing that very few people are exercising their rights under it. And finally, the dispute over the “German model” pushed the Finance Ministry to lock itself into Israel’s current system of unpaid leave, ultimately extending employment pay for unpaid leave through June 2021 or until unemployment falls under 10%, which means out-of-work Israelis have no real motivation to find jobs.

Israel currently has some 500,000 people out of work, according to Central Bureau of Statistics data, but it’s failed in creating tools to help them out of the crisis. It offers no alternative to letting people stay on unpaid leave and receiving unemployment pay. Instead, the ministers are digging in their heels and are handing out money as if the supply were endless. (Sivan Klingbail)

Defense: What five-year plan?

Shortly after being appointed Israel Defense Forces Chief of Staff in January 2019, Aviv Kochavi declared that he wanted to present a new five-year defense plan as soon as possible. The previous plan, which took force in 2016, was scheduled to finish by the end of 2020, but Kochavi pushed the Finance Ministry to let a new plan take effect at the beginning of 2020, on the premise that in order to advance his plans for the IDF, he needed a new blueprint approved as soon as possible.

Clearly he never imagined that he’d be finishing his second year without such a plan. With the entire government frozen, and even without a budget, there’s no talking about planning five years ahead. Kochavi isn’t waiting, though, and ultimately released his own plan on his own at the beginning of the year. While Kochavi’s plan includes strategic goals for the IDF, the lack of budgetary backing will make implementation very difficult.

Whether it’s a matter of expanding Israel’s air defense capabilities or defense against Iran, the defense establishment needs a long-term budgetary framework in order to know what it can buy. For lack of a multi-year plan, Netanyahu is no longer talking about his defense vision for the next 30 years, a vision revealed only two years ago.

Likewise, the defense establishment has been slow in preparing for the shift in how American aid money will be allocated – soon only in dollars, not in shekels, which means a shrinking portion will be available to make acquisitions from local defense industries.

The frozen government also isn’t pushing on the IDF to explain how it will address its ballooning pension commitments, including the 1.1 billion shekels a year committed to paying career army officers for the years when they’re no longer in the career army, even if they’re decades away from retirement age. For years, the IDF’s massive pension commitments have put the army in deficit, even taking funding from equipment and training.

Even the government’s lack of decision on a bill doing away with the ultra-Orthodox draft exemption leaves the IDF with uncertainty. If the current situation remains, the army will have to address the long-term implications of half of all high school graduates being automatically exempt from the draft, while the government itself has no strategy for handling this trend. (Hagai Amit)

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