AnalysisPromises, promises

In neverending budget saga, is Likud about to cannibalize one of its own?

Finance Minister Katz promised to bring a 2020 state budget to Sunday’s cabinet meeting. But paralyzed by the PM’s bid to avoid handing over power next year, he simply couldn’t

Haviv Rettig Gur

Haviv Rettig Gur is The Times of Israel's senior analyst.

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

Finance Minister Israel Katz may grow to regret his term as the head of Israel’s treasury. It was supposed to be the high point of his career thus far, a steppingstone to the prime minister’s chair for the ambitious career politician. Well-liked across political lines, known for his competence and old-school (that is, respectable) politicking, he believed he was up to the job of steering the nation’s finances through the worst economic crisis in memory.

He may be questioning that belief of late.

Katz is caught between a rock and a hard place. To stabilize the economy, avoid a credit rating downgrade and change the narrative of self-absorbed politicians stumbling through the pandemic while the country sinks, he must pass a state budget. But doing so could end up costing his boss, Prime Minister Benjamin Netanyahu, his seat. Katz has tried to thread that needle. It’s hard to find anyone who now argues he has done so successfully.

The frozen budget law has pushed several top treasury staffers to quit in frustration, including his own right hand for the past four years, former Finance Ministry director general Keren Terner Eyal. Political opponents in Likud blame Katz openly for the budget troubles — as though it were for his own political benefit that the budget law keeps being delayed in the long-running fight between Netanyahu and Defense Minister Benny Gantz.

Even Netanyahu, the man for whom he has suffered so much, routinely chastises him in front of other ministers in cabinet meetings, in what Katz cannot help but interpret as a public and deliberate show of no support.

On October 17, Katz called a press conference to make a solemn vow to the nation. The budget law for 2020 would be presented at the weekly cabinet meeting on Sunday, October 25.

Cabinet meeting agendas are public and published by the Prime Minister’s Office the Wednesday night before. But on the night of October 21, no agenda had been published, sparking speculation that no cabinet meeting would be held, as has happened repeatedly in recent months.

To quell those rumors, the PMO put out a statement on Friday morning that insisted the cabinet meeting would be held and included an agenda — with no budget law.

Prime Minister Benjamin Netanyahu, right, speaks with Defense Minister Benny Gantz, both wearing protective mask due to the ongoing COVID-19 pandemic, during a cabinet meeting in Jerusalem, June 7, 2020. (Menahem Kahana/Pool Photo via AP)

Sunday’s cabinet meeting was one of the most substantive and consequential in months. Most meetings in recent months have either been canceled when Netanyahu and Gantz couldn’t agree on the agenda or focused entirely on the pandemic response (with occasional sops to public relations, such as cabinet decisions lauding army reservists or new immigrants). But Sunday’s meeting saw heated debates and difficult decisions. The cabinet approved the country’s renewable energy goals for 2030, a policy matter with critical consequences for Israel’s energy security. It also decided to extend a major investment plan for infrastructure and social programs in the Arab community, the so-called Plan 922.

The very fact that the government was moving forward at long last on sorely needed and substantial policy issues that went beyond the scope of the pandemic response only brought into glaring relief what was missing from Sunday’s meeting — despite the finance minister’s explicit promise just a week earlier.

There is still no state budget for 2020, more than 10 months into the year.

Off-record conversations with Finance Ministry officials reveal widespread confusion. Staffers charged with drafting the budget law say there’s no disagreement about its content between government agencies. There is only one cause for its delay: the political squabbles between Netanyahu and Gantz.

Likud has received most of the criticism for the budget failure, in part because Netanyahu is the one breaking the coalition agreement with his demand to pass a one-year budget — rather than a budget for both 2020 and 2021 — and in part because Likud controls the institution responsible for drafting the budget, which has deliberately failed to do so for months.

Prime Minister Benjamin Netanyahu, left, chairs an emergency meeting of senior ministers to decide on measures to curb the spread of the coronavirus, July 16, 2020. (Chaim Tzach/GPO)

As the political system approaches the December 23 deadline for passing the 2020 budget or dissolving the Knesset and calling early elections, that blame has become a political problem.

Netanyahu isn’t concerned by his recent unpopularity. “I never do well at the polls, but I do well at the ballot box,” he told a reporter last week. Rather, he’s concerned that the very delaying tactic meant to prevent Gantz from replacing him as prime minister may end up being the cause of Gantz’s accession to the premiership.

The coalition agreement states that if a two-year 2020-21 budget fails to pass, elections are called automatically — and the party that has violated the agreement loses the premiership during the months of the interim government heading into an election.

Netanyahu needs the Knesset to dissolve due to its failure to pass a budget — it’s the only way he can go into the interim government without handing Gantz the prime minister’s chair — but without shouldering the blame for the budget’s failure.

Gantz, after all, could take his case to the High Court of Justice if he believes no budget is in the offing.

Defense Minister Benny Gantz addresses the Knesset ahead of a vote on ratifying Israel’s normalization agreement with the United Arab Emirates, October 15, 2020. (Gideon Sharon/Knesset Spokesperson)

And so, as the year comes to an end, as the latest budget deadline looms, Netanyahu’s stratagem has grown more difficult. It’s no longer enough to simply delay the budget law in order to grant him an end-of-year escape from the coalition agreement. He must now ensure the law’s delay while appearing to want a budget. He must do everything he can to deny Gantz the ability to claim that he is the side who prevented the budget’s passage.

In grasping that shift, Katz’s troubles come into focus. Katz is eager to advance a budget law, and Netanyahu is eager to appear to want him to do so, but not, in fact, to allow him to actually do so.

In the end, whether a 2020 budget passes in December depends on two factors: Netanyahu’s polling numbers — if they remain low, he’ll okay the budget and push back the Knesset’s dissolution till the fight over the 2021 budget in March — and Gantz’s willingness to decouple the two budget years.

If Netanyahu finally okays a 2020 budget, Gantz will be hard-pressed to vote against it, a move he cannot explain publicly after insisting for months that a state budget law is vital for stabilizing the economy and battling the pandemic. A vote against would also deliver Netanyahu his escape: Gantz would lose the right to the prime minister’s chair in the interim government.

On Sunday, the right-wing Makor Rishon newspaper published a front-page report that claimed Likud was now working on passing the 2020 budget without Gantz’s help. Netanyahu, the report said, would place the 2020 budget on the cabinet’s agenda without Gantz’s approval, then try to push it through the cabinet and Knesset with the help of opposition parties.

Prime Minister Benjamin Netanyahu, flanked by IDF Deputy Chief of Staff Eyal Zamir, left, and Defense Minister Benny Gantz, right, visits the military’s Coronavirus Command in Ramle on August 4, 2020. (Amos Ben-Gershom/GPO)

The report is almost certainly Likud public relations. Katz himself can testify that Netanyahu is the obstacle, not the victim, in this particular game. More to the point, two elements of that plan — placing an issue on the cabinet agenda that isn’t an emergency and passing a 2020 budget without the 2021 budget attached — are explicit violations of the coalition agreement set into law at the founding of the government.

“The attorney general may prevent it,” the paper warned ominously on the second line of its front page, once again shifting the blame from an apparently helpless and beleaguered prime minister to the ostensibly uncaring Attorney General Avichai Mandelblit, in recent years a favorite bete noire of the right.

Katz’s troubles have a cause. His boss is trying to prevent the budget’s passage —  without giving his opponents cause to blame him for doing so. It is a strategy that must inevitably claim victims along the way, convenient scapegoats whose sole function will be to deflect blame away from Netanyahu, ensuring he remains in the premier’s chair.

It’s no use blaming Gantz. Gantz only opposes a one-year budget law, which is in any case a violation of the coalition agreement. The trial-balloon attempt to blame Mandelblit is hard even for Likud to swallow.

Then-foreign minister Israel Katz at a Likud election campaign stop in Jerusalem, September 16, 2019. (Yonatan Sindel/Flash90)

And that leaves Katz.

Katz has been a loyal Likud man for his entire 22-year parliamentary career, even when his first and most important political patron, Ariel Sharon, left the party to found Kadima in 2005. Now Katz finds himself caught in the vise of Netanyahu’s bid to delay the budget while finding someone else to take the blame. It’s hard to imagine anyone better placed to take that fall for, so to speak, king and country.

Likud officials hope it won’t come to that. Katz is a powerful figure within the party, powerful enough to cause trouble even for a leader as influential in the party ranks as Netanyahu. But Netanyahu has proven he’s willing to go to great lengths to avoid ceding his seat, even for the short span of an interim government. Katz’s vaunted loyalty to Likud could soon be tested once more.

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