Israeli Cabinet
Approves Historic Budget Cuts For 2003
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Israeli
cabinet approves the biggest cuts in public spending in the
country’s history |
OCCUPIED
JERUSALEM, July 31 (IslamOnline & News Agencies) - After a
marathon debate, Israel’s cabinet endorsed Tuesday, July 30, the
2003 budget, which entails the biggest cuts in public spending in the
country’s history.
The
cabinet was dogged by revolts against its tough measures designed to
tackle a persistent crisis stemming from the Palestinian uprising
against Israeli occupation and a global downturn in former growth
sectors, news agencies reported.
“The
budget plan to revive (economic) growth was adopted by the
government,” Israeli Finance Minister Silvan Shalom told reporters,
Agence France-Presse (AFP) reported.
Ministers
from left-leaning Labor ministers and the ultra-Orthodox Shaas party
voted against the belt-tightening measures, and the plan still has to
go before the parliament, which has until the end of the year to pass
the plan.
The
budget involves cuts of 1.8 billion dollars, a belt-tightening that
has ensured it a bumpy ride through the broad-based coalition Prime
Minister Ariel Sharon heads, and which saw one of his ministers quit
in protest on Sunday, July 28.
“I
cannot be responsible for the social catastrophe that is coming,”
Gesher Party founder David Levy, a former foreign minister, said after
stepping down. “I will do my duty in the opposition.”
Levy,
a Jew of North African origin whose constituents are among the poorest
sections of Israeli society, said the planned budget cuts would plunge
them into “abject poverty”.
“We
are at war, the economy is turned on its head and these cuts are
indispensable to stabilize the situation,” said Shalom, who wants to
push the jobless back into work by slashing unemployment benefits and
other supplements by 600 million dollars.
A
similar sum is to be lopped off the defense budget, although the cuts
will not affect combat units or arms procurement.
Israeli
Defense Minister Binyamin Ben Eliezer, the leader of the Labor Party,
has complained that the cuts are “unacceptable”.
Shaas,
which has 17 deputies in the 120-seat assembly, has adopted the same
line, stressing the negative impact on the poor, who also make up the
main part of their constituency.
According
to the BBC’s online news service, most of the opposition to the
budget cuts were directed at cuts in social spending which hit the
weakest members of society the hardest - the unemployed and poor,
especially single-parent families. Critics said this was the nail in
the coffin of Israel as a welfare state. They called the austerity
measures one-sided.
For
example, there is no reduction in the considerable allocations for
Jewish settlers living in the occupied territories, a key constituency
for Ariel Sharon and his right-wing Likud Party, it added.
More
than 100,000 poor families will be hit by the planned benefit cuts,
according to the two main Israeli tabloids, Ma’ariv and Yediot
Aharonot.
The
budget cuts can be broken down into thirds: one affecting defense
spending, another targeting the National Insurance Institute (NII),
and a third split across all the other ministries.
Sharon
told reporters Monday, July 30, he was determined to push the budget
through despite the stiff opposition he faces.
As
the plan must now go for three readings before parliament, the most
sensitive issue will be cuts in the allowances doled out by the NII,
whose budget was already downsized this year.
Israel’s
economy is now facing one of the worst crises in its history, laboring
under the weight of the Palestinian intifada which along with
Israel’s aggressive military offensives against the Palestinians,
has chased off investment and tourists, and the global downturn in the
key high-tech sector.
Before
the Palestinian uprising against Israeli occupation started in
September 2000, Israel’s economy was booming, posting a 6.4 growth
rate in 2000, before crashing to 0.6 percent in 2001.
The
shekel has depreciated 20 percent against the dollar since the start
of 2002. The freefall compelled the Bank of Israel to hike interest
rates 2.5 percent over the past two months, or 3.9 percent since the
start of the year.
The
2003 budget proposed by Shalom dovetails with the 2002 budget
austerity package passed in June, after three months of political
wrangling, which was aimed at slashing the state’s surging deficit
by 2.6 billion dollars.
Following
various amendments and a political crisis which saw Shaas sacked from
the government before being quickly reinstated, that plan was
approved.
Meanwhile,
AFP reported that the Palestinians have refused an Israeli payment of
14.7 million dollars in unblocked customs duties and taxes because of
conditions attached to its use, a senior Israeli official said
Wednesday, July 31.
The
official, who asked not to be named, said newly appointed Palestinian
finance minister Salam Fayad refused to take the sum, part of 430
million dollars frozen by Israel for fear it would be used for
anti-Israeli attacks.
Israel
has sought a commitment that the money would not be given to the
Palestinian police or Yasser Arafat’s Palestinian Authority. The
official said they wanted to deposit it in an account managed directly
by Fayad.
On
Thursday, July 25, the BBC reported that Israel has agreed to pay the
PA some of the back taxes it is owed.
The
Israeli freeze on payment of these tax revenues has further crippled
the PA at a time when the curfew and the long-running closure of
Israel to Palestinians from the occupied territories has left their
economy in ruins, reported the BBC.
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