Yair Lapid, Bypass Netanyahu and Cut the Defense Budget

If he is really serious about reining in Israel's swollen defense budget, Lapid needs to go where no Finance Minister has gone before - around Benjamin Netanyahu and the defense establishment.

If Finance Minister Yair Lapid really wants to follow the advice of all the experts inside and outside the treasury to cut the defense budget, he'd better not take the path of all his predecessors who tried and failed. He needs to find a way around Prime Minister Benjamin Netanyahu and the defense establishment because they'll foil him – just as they foiled Roni Bar-On, Yuval Steinitz, and all those who came before.

In the election campaign the parties now making up the coalition recommended cutting the defense budget. If they believed in what they were saying then now is the time to do something.

Defense eats up one-sixth of the government's entire budget. That's one out of every six shekels spent by the government on everything, including salaries and paying down its debt.

Cutting the enormous budget allocated to the defense establishment – NIS 60.5 billion in 2012 – has been a top priority of the Finance Ministry in recent years. Such cutbacks would be necessary if Israel was in sound fiscal shape, and they are all the more pressing now with the unprecedented gaping hole in its budget this year and next.

Eyal Gabbai, director-general of the Prime Minister's Office until a year and a half ago, and a top-ranking treasury official beforehand, recommended that Netanyahu cut the defense budget. Prof. Manuel Trajtenberg and Dr. Karnit Flug, both of whom sat on the Trajtenberg Committee and previously on the Brodet Commission looking into military spending, also recommended Netanyahu slice the defense budget by NIS 3 billion. Netanyahu didn't tell them no, but he made sure it grew even larger.

The treasury has tried, and failed, to rein in defense spending over the years. And it has always done so along the same path. It is this mode of action that Lapid must carefully avoid if he really intends to shrink the defense budget.

Here's how it always goes: The treasury always prepares its budget with the recommended defense cuts, obtains the finance minister's approval, and submits it to the prime minister – not the cabinet.

They explain to the prime minister that the budget won't balance without cutting defense spending, or alternatively cutting to the bone would be needed in the budgets for healthcare, education, welfare, and other such areas. The prime minister is won over.

Meanwhile the defense establishment listens, steels itself, and responds. The defense minister meets with the prime minister and explains that any cut in military spending would hinder the Israel Defense Force's ability to provide security for Israel's citizens, and it would also strike a blow to long-term planning, including weapons development. The defense minister doesn’t stop there but demands a massive budget increase so that Israel will be prepared for the Iranian threat, or any other threat.

The prime minister sends the defense minister to meet with the treasury. The cabinet remains outside the picture: In recent years it hasn’t discussed the defense budget or its needs in any detail. It merely rubber-stamps the prime minister's decision. In the end the defense budget just gets larger, regardless of whether the government decided to make cuts or not. This is true even in years without any wars or scuffles.

Why? Because that's what the prime minister decides and cabinet members haven't any say. That's how it was when Ariel Sharon was prime minister, and that's how it is now.

Managing the nation's security is fraught with risk taking. Israel's security couldn't be 100 percent guaranteed even if the entire government budget was dedicated to it. It is the Israeli government which must assume these risks intelligently, through the help of the defense minister and the IDF.

Only the government can change a government decision

So what must Lapid do if he believes the defense budget need to cut? He must hand over responsibility, and the final decision for his proposed cuts, to the full cabinet. He must do this even before kicking off discussion over the new budget, and make it the basis on which to conduct the talks. The cabinet now has ministers who understand security matters and economics – like Naftali Bennett, Tzipi Livni, Yuval Steinitz, and Silvan Shalom – and they need to participate in the discussion.

Unlike his predecessors, Lapid heads a strong political faction that is indispensable to the current coalition framework. He has the political power that previous finance ministers lacked. The current government needs to conduct talks as thoroughly as needed on the defense budget, listen to everyone involved, including the IDF and the treasury, and make its decision. With this decision it can proceed to discussing the overall budget: Putting together a new state budget is impossible without knowing what defense budget Israel needs.

Such a process, which must also serve as the basis for budget talks in upcoming years, will mean that the bar at which defense spending sits won't be determined face-to-face by two people – the prime minister and defense minister – or by three people – including the finance minister; and won't be a decision accompanied by winks and nods – as has occurred too frequently in recent years – but rather a decision by the sovereign power: the government. And only the government can change a government decision.

Reuters
Olivier Fitoussi