In Familiar Ritual, Israel Struggles to Pass Budget by End of the Year

New Year’s cheer probably will elude Benjamin Netanyahu this week, but Israel’s finance minister is thinking well ahead.

His mind is on a 2004 budget that may make or break his political career.

Netanyahu yanked his austerity budget package last week in frustration at last-minute funding demands by his Likud Party’s partners in the government coalition. The pressure in his political home compounded ongoing wrangling with the Histadrut labor federation and cast doubt on whether the $59 billion draft budget, with its $2.3 billion in public-spending cuts, would be approved as required when the year ends Wednesday.

Missed deadlines are nothing new in Israeli fiscal dealings. If a budget isn’t passed by Dec. 31, spending continues at the previous year’s level and the new budget invariably is settled by March 31; otherwise, by law, the government falls.

The speaker of the Knesset, Reuven Rivlin, predicted Monday that the budget would not be approved until mid- January.

But Netanyahu, a former prime minister who hopes to regain the post, has a vested interest in keeping to schedule. Having displayed tough resilience in the face of four months of Histadrut sanctions, he is unlikely to allow members of the government in which he serves to hobble his economic streamlining program.

“There is a lack of restraint on the part of coalition partners,” Netanyahu said, referring to the National Religious Party, National Union bloc and Shinui Party. “The way they want to inflate this budget, I have no intention of presenting it.”

Prime Minister Ariel Sharon was expected to weigh in on Netanyahu’s behalf, trying to convince ministers to back the budget in the Knesset.

The NRP wants to rescind planned cuts to religious authority funding and wants special tax breaks for Jewish towns in the West Bank and Gaza Strip.

The latter demand has the backing of the National Union, which also has called for new immigrants to get greater housing perks.

“I was surprised and disappointed to hear the finance minister’s remarks on what he called unbridled behavior by coalition factions,” said the head of the NRP, Housing Minister Effi Eitam. “All we seek is to preserve the Jewish character of the country and to allow hundreds of thousands of citizens to maintain their traditional way of life.”

Such talk is exactly what raises hackles in Shinui, which is pressuring Netanyahu from the other side of the socioeconomic spectrum. The secularist party has been lobbying for student stipends and cultural spending to be boosted.

“Netanyahu can give yeshivas 65 million shekels, but not to culture?” Justice Minister Yosef “Tommy” Lapid, Shinui’s chairman, told reporters after meeting with the finance minister Dec. 26. “Culture enthusiasts and students are the public we represent, and I believe our chances of reaching an arrangement with the Treasury are good.”

Netanyahu and Lapid met again Monday night.

Yet after agreeing to restore about $230 million in spending on education, welfare and health care, Netanyahu has little money left with which to maneuver.

And precedent indicates it’s worth gambling on intransigence. Defense Minister Shaul Mofaz, who long grumbled that cuts to the defense budget endangered national security, quietly has been making ends meet. The same goes for Education Minister Limor Livnat, who now is hinting at privatizing the teaching profession to save costs and increase quality.

Mofaz and Livnat both are Likud stalwarts looking to compete with Netanyahu one day in a race to succeed Sharon. The NRP and Shinui — both significant coalition members with aspirations to the country’s top office — also have their own interests to satisfy.

“There is no need to worry: None of the ministers will resign because of budget cuts, or because their demands were met or not,” columnist Avraham Tal wrote in Ha’aretz. “Neither socioeconomic policy nor funding are worth losing political influence and the comforts of power over.”