National vote triggered if no budget passed by August 25

Elections loom as Gantz insists on 2-year budget, Likud to present 1-year plan

Top economists said to back Blue and White’s position in face-off between parties; finance minister accuses Gantz of playing politics

Alternate Prime Minister and Defense Minister Benny Gantz at the weekly cabinet meeting in Jerusalem on June 28, 2020. (Olivier Fitoussi/Flash90)
Alternate Prime Minister and Defense Minister Benny Gantz at the weekly cabinet meeting in Jerusalem on June 28, 2020. (Olivier Fitoussi/Flash90)

The fight between Likud and Blue and White over the national budget heated up Wednesday, as both sides stuck to their guns, heading toward a face-off that could send the country careening to new elections.

Amid deep distrust between the two parties, Blue and White chief Benny Gantz vowed not to back down from his demand for a two-year budget, as stipulated by the coalition agreement, while Finance Minister Israel Katz of Likud said he would move to present a proposal for 2020 only.

Prime Minister Benjamin Netanyahu is seeking to renege on his coalition deal with Gantz and to pass only a budget for the remainder of the current year, citing the uncertainty created by the coronavirus crisis, while Gantz is insisting on sticking to the two-year model.

“A single-year budget spits in the face of a million unemployed,” Gantz told Channel 13. “We need a stable plan until the end of 2021.”

He added: “I will not back down from this position because we need a budget with long-term components. That is the right thing to do… Any move away from that is by those who want to lead to elections.”

Katz told Channel 12 he was waiting for Netanyahu’s okay to present the cabinet with a single-year budget proposal on Sunday.

Finance Minister Israel Katz holds a press conference at the Finance Ministry in Jerusalem on July 1, 2020 (Olivier Fitoussi/Flash90)

Katz, who met with Gantz earlier Wednesday, claimed the Blue and White leader and defense minister “is thinking only in political terms.”

“I took of my political hat [off] and tried to convince him, let’s move forward and bring growth,” he said.

Netyanyahu is widely believed to be doubling down on the single-year option as a way of leaving himself the option of dissolving the government next year by failing to pass the 2021 budget — the only option that, according to his complex and convoluted deal with Gantz, will allow him to send the country to a new election without Gantz automatically becoming prime minister in the interim.

In pushing his plan for a short-term budget, Netanyahu has been relying heavily on the initial support for his plan by top economists in the Finance Ministry. But the winds may be shifting, with reports on the two major television networks indicating more and more finance officials are siding with Gantz in the dispute.

Channel 13 reported earlier this week that all top Treasury brass were backing a budget till the end of 2021, citing the ineffectiveness of a budget for a period of three-four months.

Prime Minister Benjamin Netanyahu during a press conference at the Health Ministry, on July 23, 2020. (Kobi Gideon / GPO)

On Wednesday evening Channel 12 reported that a group of senior economists in Israeli academia, including former Bank of Israel Governor Jacob Frenkel, wrote a letter to government officials in which they warned that a budget for so few months would rile the markets, increase economic uncertainty and indicate “a loss of direction” by the government.

The current cliff-edge is August 25. Failure to pass a budget by then will trigger automatic elections in November.

Gantz said Wednesday that despite his party’s best efforts to hold Netanyahu to his word in the coalition deal, “there is a limit to the legal engineering [that is possible]. It cannot overcome a desire not to live up to political agreements.”

He added: “I hope we do not come to elections. I will fight for political and economic stability.”

He said he expected “the ultra-Orthodox parties to stand| by the guarantees they gave.” Gantz’s decision to join Netanyahu’s government is said to have been clinched by a promise from Shas party leader Aryeh Deri to hold Netanyahu to the deal, which would see Gantz become prime minister in November 2021.

Shas party chairman and Minister of the Interior Aryeh Deri (center), Prime Minister Benjamin Netanyahu (right), and Blue and White leader Benny Gantz, at the Knesset on November 4, 2019. (Hadas Parush/Flash90)

But Gantz recently enraged Haredi lawmakers by backing a bill to ban gay conversion therapy by psychotherapists against the coalition’s position, leading to statements from the ultra-Orthodox parties that they viewed themselves as absolved of any obligations toward Blue and White.

According to Channel 13, Blue and White officials believe Netanyahu is genuine in his intention to force new elections, and want to prevent that because they believe elections during the winter amid the coronavirus crisis would be inadvisable. Therefore, they are seeking to rob him of the budget pretext, meaning Netanyahu would be seen as responsible for any such move, not Gantz.

Gantz said Saturday in an interview with Channel 12 that he opposed another round of premature elections and that should he emerge from the current coalition government as a “political sucker, so be it.”

According to a Haaretz report last Wednesday, Netanyahu has decided to seek another round of elections because of the Jerusalem District Court’s ruling that witnesses will begin testifying in his criminal trial in January, with hearings to take place three times a week.

The report said Netanyahu fears that petitions to the High Court of Justice will demand he be barred from continuing to serve as prime minister while he is on trial and that Attorney General Avichai Mandelblit will back this stance, making it easier for the justices to rule in favor of the petitioners.

Unnamed associates of Netanyahu were quoted as saying that the premier’s main aim in going back to the polls is to regain control over the Justice Ministry and that he would campaign heavily against the judicial system ahead of the elections. The current justice minister, Blue and White’s Avi Nissenkorn, has defended the legal system in the face of unsubstantiated claims by Netanyahu and his allies that he is the victim of an “attempted political coup.”

Netanyahu has dismissed that report and others as “absurd,” but has warned that a return to the polls would indeed result if his coalition does not pass a state budget in the next month.

Two new TV surveys were published last week, showing Netanyahu’s Likud losing ground if elections were held now — not to Gantz, but to right-wing party Yamina, headed by Naftali Bennett, which is currently sitting in the opposition.

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