Defense and Treasury Budget Dispute Now Seems on Way to Reconciliation

The Treasury and the Defense Ministry seemed to be closing the gap between them Wednesday on the amount of defense spending that will be reduced in the new fiscal year.

If such an agreement is reached, one of the main obstacles to Finance Minister Shimon Peres’ austerity economic program will have been removed when it goes before a special session of the Cabinet Thursday.

Deputy Premier David Levy of Likud said there were “grounds for optimism” that the defense budget will be settled.

Levy, who is also construction and housing minister, spoke after a meeting with Defense Minister Yitzhak Rabin, his top aides and senior Israel Defense Force officers.

The meeting was in the context of inter-ministerial budget discussions in which Peres is also participating.

Unofficial reports Wednesday said the Treasury will be satisfied with a 120 million shekel cut in the defense budget this year.

According to Rabin, it originally planned to slash 450 to 600 million shekels from the defense budget, which he called “dangerous and unacceptable.”

Proposed cuts in the police budget are also under fire from Police Minister Haim Bar-Lev.

“Every citizen will tell you they feel the need for more police on the streets, not less, “Bar-Lev told reporters Wednesday after a meeting with Peres.

The finance minister also has to convince the Histadrut that the well-to-do will share the burdens of economic austerity.

Communications Minister Gad Ya’acobi, a Peres supporter, disclosed that the Treasury is considering a special tax on “relatively new and relatively large cars” to separate the more affluent sectors of society from part of their spending power.

This, hopefully, should meet Histadrut’s demands for economic equity, Ya’acobi said.