Anyone having to make dozens of difficult decisions, as do Israel Defense Forces commanders in Gaza, is allowed to make mistakes. The decision to enter the neighborhood of Shujaiyeh in an antiquated M113 armored personnel carrier (APC), instead of the upgraded Namer (Leopard) model, was a tragic error.
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However, turning this tragedy into a chance for spin, rather than considering it an error, is no mistake – it’s the height of cynicism. Using the tragic deaths of six Golani Brigade fighters – with another soldier missing, presumed dead – as pawns in a battle over budgets is an unconscionable move by senior Defense Ministry officials. They owe an apology to the bereaved families and the entire country.
The Defense Ministry stated that “harsh and continuous cuts to the defense budget in recent years led to a scaling down of the Namer project, which prevented further deliveries of these armored carriers.”
In other words, those responsible for the death of the Golani soldiers are the people in the budget division at the treasury who slashed the defense budget.
What cheek! It’s true that replacing the old APCs with the newer models is proceeding at a slower pace than the IDF would like. The blanket is always too small. However, the total budget for defense was increased, not cut. It grew from 47 billion shekels ($13.8 billion) in 2006 to 62 billion shekels in 2013, with the army doing what it pleases with the additional funds.
Another fact is that the army currently has a sufficient supply of Namer APCs and does not need to use the older ones. This is evident from the fact that, immediately after the tragic incident, an order from General Staff headquarters to replace all the older carriers with Namer vehicles was fully implemented.
Instead of admitting to a mistake made in the heat of battle, Defense Ministry officials decided to blame the budget. That’s the easiest route to take, the populist one. It obviates the need to investigate the incident. It’s also good as the opening salvo in the battle over future budgets.
One thing should be made clear. Any additional funds that the IDF receives in order to cover the expenses of the current operation should be defined as a one-time expense. They should not affect the budget for 2015.
All other damages caused by the current hostilities are singular and do not reflect a financial crisis or long-term damage. The problem relates only to 2014. It has been shown before that, during a war, economic activity and tax revenues decline, but immediately afterward the economy returns to the same growth rate, with tax revenues growing accordingly.
If Finance Minister Yair Lapid could learn how to manage a budget from former Finance Minister Roni Bar-On, there would be no problem. Bar-On strictly controlled expenses, leading Israel into the 2008 Gaza crisis with no deficits. Then, when the hurricane struck, there was a sufficient margin that caused the inevitable deficit to be much smaller than it would have otherwise been.
In contrast to Bar-On, Lapid has left no safety cushion. The planned deficit is very high, standing at 3 percent of GDP, before the additional expenses incurred by Operation Protective Edge. In addition, throughout the year Lapid increased expenses in his desire to be the “good” benefactor. He distributed funds to the health sector, to Holocaust survivors, to Israel’s outlying districts, zero VAT for certain housing buyers, and to many other beneficiaries. He also raised the planned deficit for 2015 to 2.9 percent of GDP, before the current outbreak of hostilities.
He now has nowhere from which to draw the billions the army will need. This means the deficit will grow to dangerous levels, which could reduce Israel’s credit rating. It could lead to a rise in interest rates and a major crisis developing.
Lapid says he is “building an Iron Dome for the south” – meaning he intends to distribute hundreds of millions of shekels to local authorities and people affected by the conflict. This is not how one constructs an economic Iron Dome, being merely a distribution of funds that one does not really have.
The economy needs leaders who will pursue responsible policies throughout the year, including slashing expenses, reducing deficits and enacting reforms. Otherwise, instead of an Iron Dome, we’ll have a Red Riding Hood fairy tale.