More Money for Defense, and Education

Israel's state budget for 2011 amounts to NIS 348.2 billion, an increase of nearly NIS 9 billion from the year before.

Israel's state budget for 2011 amounts to NIS 348.2 billion, an increase of nearly NIS 9 billion from the year before. As the Finance Ministry has built a two-year budget for the second time, it also has 2012 mapped out. The proposed budget for 2012 amounts to NIS 365.9 billion, an increase of about NIS 7 billion from 2011.

Finance Minister Yuval Steinitz presented the budget for the years 2011 and 2012 to the Knesset yesterday. The Knesset has until December 31, 2010 to approve it, lest Israel start next year without a budget in place. That of course has happened before: If parliament fails to pass a budget within three months of the year's start, it must disband and new elections are held.

Emil Salman

This year Steinitz has to contend not only with the usual fractious coalition and opposition members, but with arguments that building budgets for two years is illegal to begin with, based on Israeli law. Be that as it may, Steinitz yesterday told the Knesset that the budget for 2011-2012 is a "responsible" one designed to stimulate economic growth. It also aims to prevent global unemployment from spreading to Israel, the minister intimated.

Calling on Knesset members to support the budget bill and stand strong before any tendency to succumb to populism, he pointed out the dire state of the global economy. "When storms rage around the world, the waves wash over Israel," he observed. "The global economy is trembling, stuttering, and we have to stay alert."

He had faith that the parliamentarians would understand the gravity of the situation and do the right thing, Steinitz summed up.

Narrowing gaps

Steinitz claimed that the biennial budget would help narrow social gaps by reducing unemployment. He also claimed that the defense budget was "significantly reined in" in favor of increasing government spending on education. More money has been set aside for daycare subsidies, he vowed, and for investment in corporate R&D.

Yet, as in previous years, defense is by far the biggest item in the budget, swallowing up NIS 49.4 billion in 2011 and NIS 50.6 billion in 2012.

Those figures are net, by the way. The gross defense budget is much bigger: NIS 54.2 billion in 2011 and NIS 55.8 billion in 2012. What is the difference between the net and gross defense budget? Income from arms sales and other military equipment, which is projected to bring in NIS 5 billion in 2011 and NIS 5.3 billion in 2012.

In practice the net defense budget for 2011 is 1.9% greater than in 2010, and its pace of growth is increasing. In 2012, the net figure is 2.9% greater than the net defense budget for 2011.

Now spell 'elephantine debt', children

Meanwhile, the education budget is the third-biggest at NIS 34.9 billion in 2011. The budget for higher education in 2011 is NIS 7.4 billion. In 2012 the education budget increases to NIS 36.3 billion, while the budget for higher education inches up to NIS 7.5 billion.

Treasury officials may argue that the budgets are much higher than this year, but they aren't. Also, it's a question of where the count starts: Education budgets have been slashed over the last 10 years.

As for the national debt, it is a huge beast. Israel faces repayments, including principal and interest, of NIS 36.8 billion in 2011, and NIS 38.6 billion in 2012. Money for debt repayment is in fact the second-biggest item in the budget, after defense.