A Tel Aviv man votes with his dog 370.
(photo credit: Nir Elias/Reuters)
Not unexpectedly, Finance Minister Yair Lapid is beginning to lose his shine.
The glow of his election triumph is waning under the reality of preparing the
state budget for 2013-2014.
Talks of budgetary flip-flops that surfaced
at the end of last week when Lapid surprisingly pushed for a much larger than
expected NIS 50 billion budget deficit – or 4.9 percent of the gross domestic
product – were further compounded when he then reduced this figure to 4.65% of
GDP following a weekend meeting with the prime minister.
To be fair to
Lapid, the new finance minister has been dealt an awful hand by the previous
government. Back in 2011, when it was clear the country’s deficit was growing
and the economy was entering a tough period, Prime Minister Binyamin Netanyahu
and his then-finance minister Yuval Steinitz failed to take the necessary action
and cut government spending and raise taxes in 2012.
elections were scheduled for 2013 at the latest, Netanyahu did not want to enter
an election cycle as a leader who had hit the voters in their pockets. In fact,
in an act of supreme economic irresponsibility and political cynicism, Netanyahu
approved wide-ranging public- sector wage increases, free education from the age
of three, subsidized day care and all other sorts of benefits for which he knew
the government did not have the money to pay.
And now the time has come
to settle these rashly written checks.
The mistake Lapid made was in
preparing the country, through the traditional Treasury tactic of selected
leaks, for a really tough 2013 budget and then, overnight, suddenly declaring
that it was actually OK to increase the deficit this year, before clawing it
back to 3% in 2014.
Given the reality facing Lapid, it was never likely
that he could have made much a dent in the country’s deficit this
As the cabinet only first discussed/approved the budget outlines on
Sunday, and the Knesset still has to pass the actual Budget Law, it will
probably be around August before the measures laid out in the budget will
actually begin to take effect. By then, of course, 2013 will almost be over and
so it will be too late to significantly address the mounting deficit. The only
chance Lapid had of making an immediate impact was missed when Netanyahu, on
forming his government in March, failed to instruct his finance minister to
implement an emergency economic rescue plan straight away.
WHICH LEADS us
to the second opportunity Lapid is in danger of missing: the Arab League
declaration in Washington last week that a return to the 1967 borders is not
Qatari Prime Minister Hamad bin Jassim al-Thani’s statement
that the Arab world was willing to accept “comparable, mutually agreed, and
minor” land swaps in any final peace agreement between Israel and the
Palestinians is an important diplomatic victory for Israel; the pre-’67 lines as
a starting point, not the endpoint for negotiations.
Until now, the Arab
League has refused to make any changes to the “take it or leave it” peace plan
they first endorsed in 2002, so this shift reflects an important change. It
highlights the understanding of key Arab countries such as Saudi Arabia and the
Gulf states that given the chaos in the Arab world, and the growing Iranian
threat to the region, an Israel-Palestinian peace agreement, with the necessary
concessions both sides will have to make, is preferable to allowing this
conflict to fester.
And it’s not as if the Israeli establishment is also
unaware of the need to reach an agreement with the Palestinians. As Prime
Minister Netanyahu himself said last week while visiting the Foreign Ministry in
his capacity as acting foreign minister, “the purpose of the future agreement
with the Palestinians is to prevent the eventuality of a binational state and to
guarantee stability and security.”
This statement raised a number of
eyebrows within Netanyahu’s Likud party.
Such remarks are the hallmark of
those on the Left, who talk of the danger of Israel’s occupation of the West
Bank turning the country into one state for two peoples, thereby ending the
Zionist dream. For Netanyahu to suddenly adopt such terminology and warn of the
“eventuality of a binational state” marks an interesting departure from his
But disappointingly, this change in the prime minister’s
rhetoric has not been matched by any change in policy. Despite the importance of
the Arab League statement, there has been no official Israeli reaction, with
only Justice Minister Tzipi Livni, the minister in charge of negotiations with
the Palestinians, voicing any enthusiasm.
In his election campaign, Lapid
made clear his support for a two-state solution and the importance, on both
economic and diplomatic grounds, of Israel ending its ultimately futile
investment in isolated West Bank settlements. Even though his focus must be on
balancing the country’s books, Lapid must not make the mistake of not keeping
his eye on opportunities for furthering the peace process and prodding an
unwilling prime minister into action.The writer is a former
editor-in-chief of The Jerusalem Post.