Netanyahu Boosts Spending Ahead of Vote

After more than two years of tight fiscal control over the Israeli economy, Prime Minister Benjamin Netanyahu has decided that it is time to loosen the economic reins and boost spending on popular social programs.

The decision was not sudden, the prime minister insists. And it has nothing to do with his battle to win reelection May 17, he says.

But Israeli opposition leaders and political commentators said Tuesday that Netanyahu’s recent reversals--supporting legislation to provide free nursery school for 3-year-olds, for instance, and rejecting a proposal to cut benefits for senior citizens--are blatant election-year economics. And they’re crying foul, charging that Netanyahu, who acts as his own finance minister, is trying to buy votes.

“He is changing his policy totally from positions that he took only two or three months ago,” said senior Labor Party legislator Avraham Shohat, who served as finance minister under the previous, Labor Party-led government. “The cost is going to be billions of shekels to the state, only because he wants to be elected again.”

The subject was the topic of the day Tuesday for many Israeli radio talk shows, with callers hotly debating the merits of candidates’ trying to pour money into an election-year economy. But not many appeared to believe that the promised benefits will actually materialize.

“Who can object when the government wants to help the weak parts of society?” asked a caller who gave his name as Yaakov. “But in another six months, the prime minister--whoever he will be--will inevitably cancel all these decisions, and the sweet taste will be replaced by a bitter one.”

The controversy is the latest storm in an election campaign that is shaping up as nasty even by Israeli politics’ rambunctious traditions.

Political newcomer Amnon Lipkin-Shahak, who has announced plans to run for prime minister at the head of a new centrist movement, was met last week with tossed fruit--and a chicken leg--during a maiden campaign outing to a Netanyahu stronghold, a Tel Aviv outdoor market. The day before, the former general had castigated Netanyahu as a “danger to Israel.” Several of the vendors have since apologized.

And almost daily, the major-party candidates, Netanyahu and Labor’s Ehud Barak, or their aides question one another’s integrity and assert that the other party, if elected, will be weaker in dealings with the Palestinians, the central issue of this and other Israeli campaigns.

But Netanyahu’s challengers are also likely to focus sharply on economic and social issues, areas in which the prime minister is considered vulnerable. Israel’s economy is lackluster, with a growth rate in 1998 of less than 2%, inflation running about 9% annually and unemployment relatively high at between 9% and 10%.

Last week, Netanyahu announced that he planned to raise the government’s inflation target, from a tightly restricted figure of 4% to between 5% and 7%. And Tuesday, he insisted that he has long planned to relax spending controls at this point in his term, even though neither the children’s nor the senior citizens’ issue was addressed in his recent 1999 budget proposal. The budget, now several weeks overdue, is expected to come before parliament again next week.

“I said, ‘First the brakes [on spending] and then the growth,’ ” the prime minister told Israel Radio in defense of his policy to relax spending restrictions. And he said that his government, which has managed to cut the budget deficit it inherited from the previous administration, can now do something “good for the country, for investment in infrastructure and for our future.”

Some commentators and columnists suggested that those who would benefit most from the two initiatives are sectors of Israeli society most likely to vote again for Netanyahu’s right-wing Likud Party, including Jewish settlers and residents of the poor “development towns” of the south.

But concern came from inside the government as well, with senior members of Netanyahu’s own coalition warning of potential problems. “When you loosen your belt, you’re in danger of losing your pants,” Avraham Ravitz, chairman of parliament’s finance committee, said.