As peace talks begin, Israel passes austere budget

JERUSALEM -- As Israeli and Palestinian peace delegates test the waters in Washington, Israeli Prime Minister Benjamin Netanyahu’s government cleared a key hurdle at home Tuesday when it adopted a budget that staves off the possibility of a government collapse.

After months of planning and an 18-hour session, Israel’s parliament finalized legislation of a 2013-14 spending plan designed to tackle the country’s ballooning $10-billion deficit.

The budget tops $100 billion for each year, with defense still the highest single expense at about $13.5 billion a year. To meet budget cuts and restructuring, the army is reportedly to sell tanks, planes and missile boats (and, oddly, more than 1,000 tons of canned meatloaf, but that’s due to an upgrade in army diet).

The voting came hours after Israeli and Palestinian delegates began meeting in Washington with Secretary of State John F. Kerry, who is determined -- in the face of widespread skepticism -- to relaunch the peace process.

Scrambling to boost falling revenue and slash government expenditures, the budget seeks to cut spending in many areas, adding to austerity measures taken last year. However, this was not enough to prevent the need for Israel to recently increase the government deficit target for 2013 from the current 3% of gross domestic product, favored by fiscal conservatives and credit rating agencies, to 4.65% of GDP.

Tax hikes and slashed services across the board, including a cut in child stipends and an income tax increase, will deliver a harsh blow to middle-class Israelis already struggling with the high cost of living and push thousands of families into poverty, critics warn.

Opposition leader Shelly Yachimovich likened the budget to “artillery fire” and called it “a war, an organized attack” on most Israelis.

As the vote began, Finance Minister Yair Lapid said the deep deficit obliged the government to “demonstrate leadership that doesn’t shun responsibility.” In recent weeks, Lapid defended his budget as a short-term necessary evil. “What the weaker population needs is a strong country with a strong economy,” not one with collapsing public services, he said.

A newcomer to Israeli politics, Lapid, a once-popular TV anchor, is less popular as finance minister as a recent poll shows his popularity ratings slipping.

With the budget legislation finalized, the political system can breathe a sigh of relief. According to Israeli law, failure to pass a budget can bring down the government and result in early elections. The deadline was Wednesday.

This repeatedly exposes governments to political pressure and demands. Last year, difficulties securing the budget were among Netanyahu’s reasons for calling early elections.

Ahead of the budget and renewal of Israeli-Palestinian talks, Israeli Economy Minister Naftali Bennet made his conservative party’s support of the budget conditional upon a law anchoring the need for a national referendum to approve a government decision to cede lands under Israeli control as part of a peace deal, or unilaterally.

The last-minute demand forced the government into an expedited legislation process and the bill will come up for a first reading on Wednesday in the last plenary session of the Knesset -- Israel’s 120-seat parliament -- before it breaks for the summer and holidays.

Adding to the deadline crunch was an hours-long filibuster staged by the opposition during the late-night budget vote, which, besides protesting the budget, aimed to take up as much time as possible to keep the referendum and another controversial bill calling for governmental reforms off the agenda.

Opposition stalling tactics gave Netanyahu and other lawmakers the chance to catch up on reading and sleep while another legislator threw chocolate bars around the plenum. Bennet used free time to invite Facebook friends to ask questions. One came from his wife: “When are you coming home?”

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