Finance minister denies Netanyahu seeking new elections with budget U-turn push

Finance minister denies Netanyahu seeking new elections with budget U-turn push

Insisting his considerations are only for the good of the economy, Israel Katz says efforts to pass a one-year budget are not a pretext for new elections

Raoul Wootliff is the The Times of Israel's political correspondent.

Then-Foreign Minister Israel Katz speaks during an emergency meeting the at the Foreign Ministry in Jerusalem on February 13, 2020. (Flash90)
Then-Foreign Minister Israel Katz speaks during an emergency meeting the at the Foreign Ministry in Jerusalem on February 13, 2020. (Flash90)

Finance Minister Israel Katz confirmed Wednesday that the Likud party is seeking to pass a one-year state budget rather than the two-year budget agreed upon in its coalition agreement with Blue and White, but denied that the move was a pretext for early elections.

“All senior treasury officials, including the head of the budget department, the accountant general and the director-general, wrote an opinion today supporting a one-year budget for economic reasons,” Katz told Channel 12 news in his first interview since being appointed finance minister last month.

He said that a budget for just 2020 would be able to include measures that “will allow the economy and workers to reintegrate” following the shutdown of the economy due to the coronavirus.

“By contrast,” Katz warned, “a two-year budget including 2021 will require more aggressive measures.”

Prime Minister Benjamin Netanyahu and then-Transportation Minister Israel Katz attend the inauguration ceremony for a new train station in the southern Israeli town of Kiryat Malachi, September 17, 2018. (Flash90)

Budget discussions are the most contentious of any coalition, and with the failure to pass a budget resulting in the automatic calling of new elections, Prime Minister Benjamin Netanyahu has in recent years pushed for a two-year budget to reduce the chances of his governments falling.

With budget negotiations expected to be especially difficult in the current unity government due to the inclusion of parties from both the right and the left, Likud and Blue and White included in their coalition agreement a commitment “to pass, in an orderly manner, a biennial state budget for 2020 and 2021.”

But citing the rise in coronavirus cases and the uncertainty surrounding the economy, lawmakers from Netanyahu’s bloc within the government have in recent days been touting a one-year budget that deals with only the next four months. This, Katz claimed on Wednesday, would allow short-term measures to be put in place without limiting future options.

The push for a one-year budget, however, has led to the suggestion by some that Netanyahu is looking for a way to end his partnership with Benny Gantz’s Blue and White party, prompting another national election that is expected to greatly benefit him.

The coalition deal agreed on by the parties stipulates that if the Knesset is dissolved and elections are called between November 2020 and November 2021 — after a six-month “emergency period” ends but before Gantz becomes prime minister as part of the power-sharing deal — Gantz would automatically become the transitional prime minister instead of Netanyahu.

The clause is meant to serve as a deterrent against Likud ending the partnership before Gantz gets a chance to be premier.

However, if the government were to fall because it failed to pass a budget, no such transition of power would take place. Passing a one-year budget until the end of 2020 would give Netanyahu a possible way to force new elections without having to give up the position of prime minister. A two-year budget would prevent that option until 2022.

But Katz said the Likud had no intention of bringing down the government and that Blue and White would be part of the discussion.

“This is a discussion that will be done through dialogue — there was a meeting between the prime minister and Defense Minister Gantz and me,” he said. “In the end, it’s a matter of trust. I am convinced that there is no intention of using the budget for elections.”

Prime Minister Benjamin Netanyahu (right) and Defense Minister Benny Gantz at the weekly cabinet meeting in Jerusalem on June 7, 2020. (Menahem KAHANA / AFP)

Earlier this week, a senior Likud source was quoted by Channel 12 as saying that “the marriage between us and Blue and White will end at the Rabbinate [with a divorce] much faster than everyone thinks… Netanyahu is trying to find the right timing and pretext to call elections.”

According to recent opinion polls, Likud would easily win a potential Knesset election that would be the fourth since April 2019, with support for Gantz crumbling since he reneged on his core campaign promise and joined Netanyahu’s government.

Katz, speaking later Wednesday evening on Channel 13 news, said his decisions were only driven by the good of the economy, which needs “serious help” following the coronavirus shutdown.

“I took office when the state of the economy and society in Israel is probably the worst in the history of the country, or at least in recent decades,” he said. “By the end of the year we will reach an even bigger deficit. All the decisions that are made are in order to make it easier and to get through this period.”

Stressing the ailing economy, he also said that Israel won’t again impose a country-wide lockdown to stem the resurging virus.

“We won’t close anything across the board. We can deal with it in a pinpoint manner with enforcement and quarantine. We won’t close any industry across the board. Even if we experience what happened here at the beginning [a sharp rise in virus cases], there is no room for a general closure,” he insisted.

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