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The Real Winners of Israel's Election: Ultra-orthodox Parties Amass Great Economic Power

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Ultra-orthodox leaders Arye Deri and Yaakov Litzman.
Ultra-orthodox leaders Arye Deri and Yaakov Litzman. Credit: Emil Salman

The competition for cabinet seats and jobs over the last several days has concealed the fact that the real winners in the coalition negotiations last week were the ultra-Orthodox parties.

Prime Minister Benjamin Netanyahu rewarded Shas and United Torah Judaism for their loyalty over the course of the last three elections by giving them concessions above and beyond what they received following the 2015 election.

The Haredi – ultra-Orthodox – parties did not demand much in the way of ministries, but wanted to ensure that they were awarded positions with far more power and influence than the newly minted ministries, such as Water Resources, that were given to Likud politicians. As a result, the power of Shas and UTJ on economic issues will almost match that of the much larger Likud and Kahol Lavan parties.

Arye Dery and Yaakov Litzman, the Shas and UTJ leaders, respectively, will have almost complete control over the housing market – Dery as interior minister, who is responsible for planning, and Litzman as housing and construction minister.

But it goes further than that. Litzman demanded that as housing minister, he would also chair the ministerial land and housing committee and serve as chairman of the Israel Land Authority, the agency that manages state-owned land. Dery ensured that he would have the power to appoint the chairperson of the National Planning and Building Council as well as the head of the committee for planning and building of infrastructure and the committee on priority home construction. And that’s in addition to regional committees.

UTJ negotiated to have Knesset member Uri Maklev named deputy transportation minister with special responsibility for the Haredi sector. UTJ’s Meir Porush was named deputy education minister. Yitzhak Cohen of Shas will resume his post as deputy finance minister, and his party will have two other deputy ministers, at the interior and labor ministries.

The two parties will also wield immense power on economic issues in the Knesset. UTJ’s Moshe Gafni will remain chairman of the powerful Knesset Finance Committee, giving him a critical say in the next budget, which must be approved by parliament within 90 days. For the first time, a Shas lawmaker will chair the Economic Affairs Committee. Yaakov Margi is likely to get the job.

Fiscal policy will be especially challenging in the coming years as the treasury copes with the ballooning deficit created by the coronavirus crisis. UTJ made sure that the coalition agreements with Likud include a national plan for developing the ultra-Orthodox sector.

Meanwhile, Dery ensured that he retained control of two government funds with big budgets – one for reducing the impact of revenue disparities among local authorities, which has 500 million shekels ($141 million) to spend annually, and a second that distributes municipal tax payments paid by Ben-Gurion International Airport to adjacent communities. Last year it had about 200 million shekels to allocate.

Additionally, the two parties took care to ensure that all the government funding of ultra-Orthodox educational institutions is now incorporated into the annual state budget. In the past, about a quarter of their 1.2 billion shekel budgets depended on coalition agreements.

Rafi Peretz, the renegade Yamina Knesset member who joined the Netanyahu government, got the same commitment for religious-Zionist educational and cultural institutions, which will also enjoy budgets entirely enshrined in the state budget from now on.

In addition, Peretz, who will serve as Jerusalem affairs minister in the new government, won an agreement in principle that his Habayit Hayehudi party would be merged into Likud. If the deal goes through, Likud will assume the debts that his religious-Zionist party ran up during the 2019-2020 election cycle.

Campaign debt could emerge as a critical issue for many of the parties if the Netanyahu government only serves three years, as is for now slated. If so, they will only get government subsidies for three years, rather than the four they expected to have to repay their loans.

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