The ruling Likud party led by Prime Minister Benjamin Netanyahu and Yisrael Beytenu headed by Avigdor Liberman have reached a deal that will see the nationalist party join the governing coalition, a senior source in the Likud said overnight Tuesday-Wednesday.
The agreement is expected to be signed on Wednesday, after which it will go for review by Knesset members. According to Israel Radio, Liberman will officially take over the Defense Ministry on Tuesday next week.
The provisional deal, first announced last week, was held up over a disagreement with the Treasury on pension reform for former Soviet Union immigrants, a key demand by Liberman for having his five-seat party enter the coalition.
Netanyahu, Liberman and Finance Minister Moshe Kahlon (Kulanu) met late Tuesday night and into Wednesday along with Likud and Yisrael Beytenu representatives to resolve the sticking point.
A Likud source told Israeli media late Tuesday that Liberman “wanted to close on the deal and showed flexibility toward Kahlon’s demands on the pension reform issue.”
Liberman demanded billions of shekels in state funds to shore up the pensions of tens of thousands of former Soviet Union immigrants.
The Kahlon-led Finance Ministry balked at first, noting the high price tag — some NIS 2.5 billion ($645 million), according to estimates — and the legal and ethical problems that arise when welfare benefits are applied based on place of birth.
Kahlon reportedly told Netanyahu that his 10-seat party would not remain in the coalition if the measure was forced through as is. Opposition lawmakers also threatened to work to torpedo the passage of any immigrants-only (or FSU-immigrants-only) pension benefit.
Kahlon on Tuesday is said to have agreed to expand the proposed benefits to the broader population of elderly poor and allocated NIS 1.4 billion ($360 million) for the measure.
The issue is critical for Yisrael Beytenu, for which elderly Russian-speaking Israelis are a core constituency. Most of the approximately 78,000 elderly immigrant poor in the country hail from the FSU, in part because many of those immigrants arrived in Israel without pensions and were too old to save up for new pensions in Israel.
In the framework of the agreement, Liberman is set to take up the defense portfolio, a move that shook the Israeli political arena when it was announced last week. as the then-incumbent defense minister Moshe Ya’alon from the Likud party was effectively ousted from his post.
Ya’alon promptly resigned from political life, citing a “lack of faith” in the prime minister.
With Liberman’s Yisrael Beytenu, the governing coalition will expand from the razor-thin 61 seats to 66.