Who Will Finance Israel's Heroism?

The war in the south was very expensive. The Israel Defense Forces did not hesitate to drop bombs and fire shells, but now it is demanding a huge budget increase to replenish its stocks and compensate for the call-up of reservists.

There is no reason to envy Roni Bar-On. Today he is facing four weighty problems, each enough to give any finance minister a big headache. The first is the global economic crisis, which is steadily worsening, let alone about to end. The second is the cost of the war in the south, which is heavily burdening the budget. The third is the election campaign, which is back on track and turning every candidate into a competitor for the title King of Populism. The fourth is the fact that there is no state budget.

That problem has ostensibly been forgotten, but it is the result of unbridled political cynicism. All the party leaders who speak about the importance of the citizens and their welfare, from Defense Minister Ehud Barak to Likud chief Benjamin Netanyahu, refused to vote for the 2009 budget, so there is currently no budget, and the treasury cannot allocate even one more agora to ease the effects of the election campaign or give to the Social Affairs Ministry. It's hard to run a country that way.

The war in the south was very expensive. The Israel Defense Forces did not hesitate to drop bombs and fire shells, but now it is demanding a huge budget increase to replenish its stocks and compensate for the call-up of reservists. In the Second Lebanon War the army received an additional NIS 8.2 billion to renew the stocks, and it wants to repeat the precedent. But in the interim the economic situation has worsened, and the IDF received a huge budget increase as recommended by the Brodet Report.

Although the Winograd Committee clearly stated that the failure in the Second Lebanon War did not stem from a budget deficit, but from an unprofessional command and an untrained army, the kindly and beneficent Brodet Committee ruled that the cure is increasing the budget. That was a fundamental administrative mistake, because a body as large and fat as the IDF needs streamlining, not more fat.

In any case, it was decided that the army would receive an additional NIS 70 billion over 10 years (2008-2017), with NIS 46 billion of that to come from the state budget and NIS 24 billion from the Americans. As a result, the defense budget soared to a record high: NIS 50.1 billion in 2009.

But that of course is not enough for the IDF. It is now demanding NIS 4 billion to cover the expenses of the war in Gaza, as though waging war is not the army's main purpose. It's as though the Education Ministry were to announce at the start of the school year that it must receive a budget increase to finance classroom hours.

Therefore, in light of the substantial increases that the IDF has received so far, and considering the serious budgetary situation, Bar-On must tell the army simply: Make do with what there is, I won't give you a single extra agora.

But even if Bar-On is courageous enough to say that, we still have kindly Prime Minister Ehud Olmert, who specializes in bypassing his finance minister and dispersing billions. He is liable to give the army a guarantee, in the name of the next prime minister, because what's important to him now is to win the affection of the army and public.

Even Ehud Barak, who talks loftily about concern for society, must understand that the more he demands for the IDF the less will remain for social welfare, health, the elderly and the unemployed. Even he knows that the budget is limited and the deficit is huge.

And in fact, the deficit in 2009 will not be one percent, as planned last August, but at least five percent because of the steep decline in income. These are deficit levels that we have not seen since the second intifada at the start of the decade, and we still recall the profound economic crisis we found ourselves in at the time.

But business and the Histadrut labor federation - like the army - are not overly concerned. They are demanding increases, funds, subsidies and additional benefits, as though the coffers were full. They are demanding compensation for the war in the south and even for the global crisis. The business sector is trying to extort as much as possible from Olmert - after all, he's leaving soon.

The politicians also continue to celebrate while the ship is sinking. Barak recently demanded that the budget be increased by a full six percent (compared with a planned 1.7 percent), and Labor MK Avishay Braverman also continues to demand large budget increases as though nothing had happened. As though there were no crash in income, no global crisis and no war.

They are not alarmed at the fact that the rating agencies are examining us very carefully. Moody's published a negative forecast for the Israeli banks this week, and the moment the government decides on a massive increase in spending, Israel's credit rating will decline.

That is the atmosphere in the world today. Just this week Spain's credit rating was reduced as result of the government's decision to increase spending and grant guarantees to the banks. Ireland is next.

A reduction of Israel's credit rating will lead to an increase in interest rates and serious damage to investments and growth. Increasing expenditures and the deficit will trigger a decline in confidence in the Israeli economy, inflationary pressure, devaluation, inflation and an exacerbation of the recession and unemployment. We cannot permit ourselves another such crisis.