New Panel to Tackle Israel's Defense Budget Feuds

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A new government panel will undertake another attempt at creating a framework for defense spending over the next several years, after the security cabinet deemed the last set of guidelines prepared by the Brodet committee irrelevant, TheMarker has learned.

The new panel marks the latest effort to resolve a perpetual battle between the defense establishment and the Finance Ministry over the defense budget. The idea of forming the committee was approved at a security cabinet meeting at the end of October, but only recently has work begun to form it.

The 2008 Brodet committee’s recommendations were supposed to apply through 2017, but the geopolitical challenges Israel faces have changed, as have economic conditions, so that both sides of the budget dispute have ignored its guidelines in recent years. Already in 2013, the security cabinet formed its own multi-year defense spending budget, which called for net expenditures of 52.5 billion shekels ($15 billion) for the year − 58.4 billion shekels, including spending conditional on additional revenues. That was less than the 61 billion shekels of 2012, but with supplements approved by the Knesset Finance Committee for the 2014 defense budget is due to reach 62.8 billion shekels.

Under the security cabinet guidelines, 2015 will see defense spending of 52 billions shekels, some 57 billion shekels in 2016 and 59 billion shekels in 2018. But the defense establishment is already saying that these figures do not answer the security challenges it faces.

But a senior treasury official, who asked not to be identified, told TheMarker on Tuesday that the defense establishment had failed to keep to its commitments made last year to reduce manpower in the standing army by 4,500, lay off a similar number of civilian employees or make other cutbacks

Prime Minister Benjamin Netanyahu is due to name a chairman for the new committee − which is already being called “Brodet 2” in government circles − sometime soon. The panel will be comprised of experts on fiscal matters, economics and defense, but not from the government sector.

Netanyahu and the relevant ministers hope the panel’s work will be completed during 2014. But officials said they doubt it canfinish its work before the 2015 defense budget is determined, which will be in June or the beginning of July, or perhaps not until the cabinet approves the budget later in the summer.

Among the parameters the panel will use is the size of the defense budget relative to the economy and the total state budget. It will assess what level of spending Israel needs relative to the security threats it faces. It will also examine issues such as salaries, pensions, equipment procurement and U.S. financial aid.

Among the disputes the committee is charged with settling is a dispute over whether military pensions should continue to come out of the defense budget or be transferred to a treasury unit that manages all public-sector pensions. It will also make recommendations over whether disabled army veterans should continue to be cared for by the Defense Ministry or transferred to the National Insurance Institute. The defenses establishment prefers to have these budget items separated from the overall defense budget.

Israeli forces near the Lebanese border this month.Credit: AP

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