There is an apt Israeli term being used to describe the effect of the cuts proposed in this year’s austerity budget: “cutting into live flesh.”
Financial wizards and kiosk vendors alike know that the government intends to slice so much fat from the budget that almost every segment of Israeli society will suffer.
But the issue of budget cuts for immigration and absorption has become so acrimonious that the Jewish Agency for Israel, the quasi-governmental authority that handles immigration, took an unprecedented step last week by suing the government for cuts it says will cause the state strategic harm.
The controversial budget proposal, which aims to slice 10 percent from each ministry, lay off thousands of workers and slash public sector wages, is to be debated in the Knesset on April 30.
“The cuts send a bad message,” said Mike Rosenberg, director general of immigration and absorption foe the Jewish Agency. “The government is shooting itself in the foot” by possibly harming immigration, Israel’s lifeline.
At issue is the effective revocation of several key absorption benefits for immigrants. Foremost is a $27 million fund that allocates full scholarships to university students, which the Finance Ministry had intended to cut by more than 90 percent — before ultimately agreeing to cut it by less than 5 percent.
Next came measures to minimize mortgages and terminate housing grants, which most experts consider a primary anchor for new immigrants.
In addition, the Finance Ministry has pledged to terminate many incentives for immigrants, such as tax exemptions on new cars, appliances and other items brought from abroad.
If passed, legislator and former Absorption Minister Yuli Edelstein said, the measures could seriously hamper the absorption of poorer immigrants, especially Ethiopians.
“Without the grants in housing, the Ethiopians would especially be harmed, and stuck perpetually in government- funded absorption centers,” he told JTA.
According to Rosenberg, Ethiopians and immigrants from other economic trouble spots such as Argentina depend on the housing grants. For many Ethiopians, the grants amount to about 90 percent of the price of their homes.
Argentines receive approximately 40 percent, “but since they come for economic reasons they also depend on it,” Rosenberg said.
In the grant’s stead, the government has suggested a $35,000 mortgage payable over 25 years, something The Jewish Agency consistently has argued against.
On April 14, a day before the housing cuts were to go into effect, The Jewish Agency petitioned the High Court of Justice against the government, the prime minister, the finance minister and the Housing Ministry.
It was one of the only times The Jewish Agency has filed a legal challenge to the government since the State of Israel was founded more than half a century ago.
The petition earned The Jewish Agency and the immigrant community a temporary reprieve, even though other parts of the austerity package already have taken effect. Justice Mishael Cheshin ordered the government to explain the reasoning behind the cuts, and scheduled a follow-up hearing for May 8.
Immigrant organizations and individual immigrants also have appealed to the court.
Instead of rehabilitating the economy, Rosenberg believes the cuts could debilitate it by reducing the number of homes built and burdening welfare agencies by leaving immigrants languishing in absorption centers.
“Everyone understands that drastic steps have to be taken,” Edelstein said, “but it’s not a very clever move here on the government’s part. The government has to remember that immigration is an investment that eventually pays off.”
At the beleaguered Finance Ministry, officials are exasperated.
“There is nothing that is 100 percent effective for all parties, that’s obvious,” spokesman Eli Yosef said. “There’s simply no money in the bank. We sliced from the defense budget; we sliced from housing and infrastructure. All of this hurts, but it’s necessary.”
Experts consider the austerity plan a last-ditch effort to avert economic implosion. The Jewish Agency is not alone in criticizing the Finance Ministry, with Benjamin Netanyahu at its helm; the Histadrut labor federation and pensioners groups, among others, have done likewise.
The groups fear that the plan will drop some Israelis out of poverty and into outright destitution.
“But out of all, aliyah and absorption are the least harmed, so I don’t really understand the complaints,” Yosef said.
He also noted that The Jewish Agency and the Absorption Ministry managed a small victory in staving off planned cuts to student grants.
The Jewish Agency, with an annual budget of more than $300 million, has pledged to double its current funding to the student program by pumping in an additional $3.3 million a year.
Following intense negotiations, the government promised it would cut student grants — which are provided through the Education Ministry — by only about $1 million this year.
The Jewish Agency and the Absorption Ministry consider the immigrant scholarships an elemental incentive in attracting young immigrants and helping them break through glass ceilings once in Israel.
They also are somewhat relieved that the primary basket of immigrant benefits — which amounts to about $10,000 per family for the first year in Israel — remains untouched.
Inside the Finance Ministry, it’s feared that the Histadrut or other groups might try to use the compromise agreement on student stipends against the government, even calling for a national strike should the Finance Ministry not yield to other groups’ demands.
The Jewish Agency dismisses the arguments of the austerity plan’s supporters, who say the original cuts were fair considering that immigration likely will fall below the 35,000 mark this year, down from 77,000 in 1999.
According to Rosenberg, the funds are allocated per individual, and any money left goes back to the government, not the Absorption Ministry.
Netanyahu and his plan might yet be spared the wrath of the public and the Supreme Court.
During a month of intense negotiations, Netanyahu has stuck to his guns. But in recent days he has shown that he might be amenable to changes in the program.
Following the unexpectedly quick U.S. victory in Iraq, Prime Minister Ariel Sharon has ordered Netanyahu “to reinvestigate the needs of the defense budget,” the daily Yediot Achronot reported.
If the defense budget is lowered because of the reduced threat from the east, it could free up billions of shekels.
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