The Illusion of Israel's $3.8-billion Arab Development Plan

So the cabinet passed a resolution: Around half of all cabinet resolutions are implemented only in part, if at all.

A street in the Arab Israeli city of Taibeh.
AP Photo/Ariel Schalit

Some years ago, I chaired an interministerial committee on the Education Ministry budget. I found a general consensus at the various ministries, and in the committee itself, in favor of differential allocation of funds based on socioeconomic criteria.

But when the figures were examined, it became clear that increasing spending on state schools in the Arab and ultra-Orthodox communities would necessitate significant funding cuts to the state nonreligious and national-religious school systems. The upshot was that any reforms actually carried out were partial.

The same thing will happen with the much-vaunted cabinet resolution to allocate 15 billion shekels ($3.85 billion) to an ambitious five-year development plan for Arab communities in Israel. As soon as it transpires that the Jewish majority will have to “forgo” that 15 billion shekels in order to make it available to the Arab minority, the reform will evaporate, for the most part, particularly in light of the state’s anticipated high budget deficits in the next two years.

It is in Israel’s economic interest to reduce economic and social inequality. Without substantive improvement in the Arab community’s physical and intellectual infrastructure, the country cannot fully realize its growth potential, to the benefit of everyone. Arab employment is on the rise: Between 2003 and 2011, for example, there was a 62% rise in the number of working people in the Arab population (double the rate of growth of the rest of the population).

But politically, the reform’s chances are terrible, and this is why.

1. The moment the various ministers realize that increased spending on education, welfare and infrastructure for the Arab population will ostensibly come at the expense of the Jewish majority, some will buck. Extra budgets will depend on the sector-specific priorities of specific ministers. Some ministers are demanding, for instance, that mixed Arab-Jewish cities also receive additional funding, or preferential treatment for specific groups within the Arab minority, which would render the program less effective.

2. The political and security-related tensions between the Jewish majority and the Arab minority have increased and are now at a very high level, with the “individuals’ intifada” and the paralysis in negotiations with the Palestinians. Moreover, Israel’s continued rule of the West Bank is gradually leading the Arab minority within Israel proper to become increasingly similar, emotionally and intellectually, to the Arabs in the territories.

In any case, it is doubtful whether the Jewish majority would agree to “forgo” 15 billion shekels in favor of the Arab minority. That much was evident at the cabinet meeting, where not a few ministers conditioned the injection of funding on the behavior of the Arab community, effectively rendering the subsidy contingent on “pro-Israeli” behavior by the Arab minority, which is a vague criterion that will be hard to prove.

Under these conditions, matters have to be handled otherwise: budgets for the Arab minority, graded by cost-benefit analysis. Meanwhile, defined, specific, limited assistance, amounting to 2 billion to 3 billion shekels, can be provided for specific budget items, approved by the cabinet as a whole, without having to consider specific ministers or ministries.

The presently proposed reform overreaches, and is unformed and amorphous from a budgetary point of view; then there is that history of more than 50% of government resolutions coming to nothing, or being executed partially and inefficiently only when the ministers involved support the decisions.

The gradation and true priorities, and budgets for them, should focus on spending on infrastructure, where the Arab community’s lag is especially extreme. This immediate budgeting should also encompass investment in education (including infrastructure for schools). The system of priorities based on cost-benefit has to be set by experts in government, who may have priorities of their own.

Yoram Gabbay is a former head of the Finance Ministry’s state revenues division.