Top Treasury Official Resigns, Accusing Minister of 'Crossing Red Lines' on Israel's State Budget

Shaul Meridor, head of Finance Ministry budget division, argues government violates norms, ignores professional staff

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Shaul Meridor speaks at a conference, 2019.
Shaul Meridor speaks at a conference, 2019.Credit: Tomer Appelbaum

The treasury’s budget chief announced his resignation on Sunday, saying his “ability to perform my duties has become impossible,” a week after the government pushed off the deadline to approve a budget for the rest of 2020.

Shaul Meridor, the head of the Finance Ministry’s budget division, told Finance Minister Yisrael Katz in a letter, “You do not enable me or the other public servants in the various divisions of the Finance Ministry and other ministries to do what we know how to do – to formulate, propose, analyze and critique policy measures.”

With the deadline for passing a budget having been moved to late December, spending measures to deal with the coronavirus crisis are to be approved on a piecemeal basis. Katz and Meridor reportedly reached a breaking point after Katz won Knesset approval for an extra 11 billion shekels ($3.2 billion) in spending for 2020 and other measures.

Meridor said “policy is characterized by narrow, irrelevant and short-term decision-making while professional staff are silenced,  blatant disregard is shown toward staff work, policies are rash and normal budgetary tools and norms are ignored.”

“In recent days, after more and more red lines have been crossed and elementary rules of proper economic and budgetary conduct have been crushed, I have decided that I can no longer be part of the system and give legitimacy to the wrong decision-making framework,” Meridor said.

Meridor, 44, joined the treasury in 2002 and served in a variety of t posts before being named head of the budgets division, the ministry’s most powerful unit, in November of 2017. Rony Hizkiyahu, the accountant general, announced in July he was also stepping down by October at the latest.

Meridor has previously clashed with Prime Minister Benjamin Netanyahu, especially over Netanyahu’s plan to give all Israelis a grant of 750 shekels ($223) amid the economic crisis caused by the pandemic. Meridor was quoted as having said during an internal discussion before the grant was decided upon that it was a terrible, populist decision resembling the kind of economic decisions made in Venezuela.

Netanyahu responded with ad hominen attacks on Meridor on social media.

Meridor’s appointment in late 2017 was conditioned on him agreeing to pass the 2019 budget in early 2018. And in fact, that budget was passed unprecedentedly early. The cabinet approved it in January of 2018, and the Knesset did so in March.

But the political paralysis that emerged later that year, which ultimately led the Knesset to vote in December 2018 to call an early election, didn’t allow Meridor to advance any major plans that would be associated with him the way a cabinet decision on major investments in the Arab community was associated with his predecessor, Amir Levy.

Throughout 2019, government spending was based on a budget approved eight months before the year began. But the three successive elections that took place in 2019 and early 2020 made it impossible to pass a 2020 budget before the start of the year.

As a result, spending in 2020 should also have been based on the 2019 budget. Instead, Katz and Netanyahu have repeatedly violated that budget’s provisions with decisions that both Meridor and the Finance Ministry’s legal advisor considered improper.

The coming year, 2021 may also begin without an approved budget. If so, government spending would again be based on the 2019 budget, which was drafted almost three years ago.

Before the coronavirus crisis erupted, Israel’s main budget problem was a high structural deficit. Since then, many countries have increased their deficits to deal with the crisis. But Israel still faces serious budgetary woes.

The start of the school year on Tuesday presents an especially important problem. Because a 2020 budget hasn’t been passed, many school programs have no funding earmarked for them and may be canceled. Many endangered programs are critical for students from the so-called periphery, at-risk students, Ethiopian Israelis, immigrants, special needs students, the ultra-Orthodox and Arab students.

Legislation postponing the deadline for passing a budget was approved last week following a disagreement between coalition partners Netanyahu and Defense Minister Benny Gantz. Netanyahu wanted to pass a budget just for the remainder of 2020, while Gantz demanded a budget for 2021 as well, as outlined in their coalition agreement. Netanyahu was forced to withdraw his demand for a one-year budget, and in exchange, a budgetary increase was approved for the new school year and urgent health and welfare matters. The updated budget stands at about 411 billion shekels.

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