Defense Minister Ehud Barak _311.
(photo credit: Reuters/Blaire Gable)
Defense Minister Ehud Barak slammed Finance Minister Yuval Steinitz’s economic
policies following the latter’s call to cut the defense budget in Monday’s
Knesset Foreign Affairs and Defense Committee meeting.
Ministry is mistaken and apparently does not understand the economic reality and
the steps it requires,” Barak said. “[Calling for] cuts at present, and facing
today’s challenges, borders on a lack of intelligence in macroeconomic
In the meeting, intended to focus on defense spending, the
defense minister discussed his general economic philosophy, suggesting the state
deficit be increased by 0.9 percent.
He added that whoever thinks such a
move is impossible is likely to find himself in a “dangerous situation,” being
unable to see the challenges that lie ahead.
Barak also quoted Nobel
Prize-winning economists such as Joseph Stiglitz and Paul Krugman to back up his
arguments for increasing the deficit during a recession, comparing the budget to
“a bear that eats salmon in the summer so he’ll have reserves for the
“We must store resources and reduce the national deficit during times of growth,” he said. “Conversely,
we must strengthen the market infrastructure and the human element in times of
difficulty in order to allow them to overcome the crisis and return to
Barak: Cutting defense budget will hurt
The defense minister repeated his assertion that “the Finance
Ministry doesn’t understand macroeconomics. Instead of throwing [the
economy] a life preserver, it’s throwing weights.”
Barak explained to the
committee that Israel faces three major issues requiring an increase in the
state deficit and defense budget: instability in the Middle East, social
protests and the global recession.
According to Barak, the defense budget
is constantly shrinking, regardless of its amount in shekels, because its
proportion to the state budget decreased from 24% in 1986 to 13% in 2012, the
lowest percentage since the establishment of the state. At the same time, he
said, other ministries’ budgets had grown more than his.
that the defense budget poses on the market is clearly getting smaller,” he
pointed out, adding that Israel’s defense is “an investment, not a
“If we could ask for only one thing, it would be to decrease the
defense budget only in proportion to the state budget and the gross national
In reference to the 2007 Brodet Commission report, which looked
into defense spending, Barak said long-term planning is the best way to ensure
that the Defense Ministry can address future challenges. At the same time, he
said, there is a gap of billions of shekels between Brodet’s estimations and
reality due to a rise in prices and taxes.
The Bank of Israel said
following Barak’s statements that according to its assessment, the original
defense ministry budget for 2011 was NIS 1 billion lower than that coordinated
by the Brodet Commission, but that when including additions expected to be
approved by the end of the year, it will be around NIS 2 billion
The original budget for 2012 is also NIS 1 billion lower than
that set by Brodet, but with the planned addition it will end up NIS 1.6 billion
Between the years 2008-2012, defense expenditure was on average
NIS 400 million higher each year than the figure coordinated with Brodet, the
central bank said.
The Finance Ministry said it backed the Bank of
Israel’s statement, adding that there was a need to restrain budget
irregularities starting from 2012, beginning mainly with implementing
transparency and control of the defense budget.
MKs at the meeting
expressed frustration over Barak’s comments, saying he focused on politics and
not on the meeting’s scheduled topic.
Labor MK Eitan Cabel said the
defense minister failed to answer “the most important questions” regarding the
“It’s embarrassing,” he said. “No one really knows what
goes into the budget.”
MK Arye Eldad from the National Union said it was
“He missed his opportunity and did not succeed in getting
support from the committee,” he said. “This was just a PR move against the
Finance Ministry, with no explanation as to why the Defense Ministry is
requesting an enlargement [of its budget]. It was a waste of a meeting.”