Israeli defence, finance chiefs wage battle over budget

Israel's security cabinet was to discuss on Sunday proposed cuts in defense spending of over a billion dollars, as public opposition mounts to Finance Minister Yair Lapid's austerity plans which include tax hikes and cuts to public services. Lapid wants a cut of four billion shekels ($1.12 billion, 860 million euros) to help plug a budget deficit expected to be capped at 4.65 percent of gross domestic product this year and three percent in 2014. To meet his targets he has proposed an increase of 1.5 percentage points in personal income tax, one point in corporate tax and a one-point rise in VAT, together with a cut in family allowances. In an attempt to cushion opposition to such unpopular measures Lapid is seeking to slash the defense budget which, including salaries and pensions, currently makes up eight percent of GDP, according to central bank data. In the past the defense establishment and the military industries have blocked such plans and, in fact, won supplements to spending. In 2012 for example the budget passed by parliament was 55.5 billion shekels, ($ 15.5 billion, 11.9 billion euros) including annual US military aid of some three billion shekels final spending for the year hit 60.5 billion shekels ($16.9 billion, 13 billion euros). For 2013 and 2014, defense bosses have decided to again seek to foil the treasury's plans. According to media reports they want several hundred million dollars extra for their five-year equipment purchase programme. "In the event of war, politicians who cut defense spending will bare the responsibility," army radio quoted unnamed military officials as saying. Among risks from neighbouring countries Israeli officials mention are rising tensions with war-torn Syria and the Damascus regime's Lebanese Hezbollah ally, as well as Islamic militants in Egypt's Sinai peninsula who have fired rockets into the Jewish state. Prime Minister Benjamin Netanyahu continually speaks of the threat from Iran's nuclear programme and does not rule out the use of military force to stop Iran from building a nuclear weapon. According to Netanyahu confidant Tzahi Hanegbi, an MP in his Likud party, a final decision on whether to hit the Islamic republic is likely by the end of this year. Lapid tapped into middle class grievances over the cost of living and social injustice to take his newly-minted centrist Yesh Atid party to striking success in its first ever election campaign in January, becoming the second-largest party in parliament and a partner in Netanyahu's coalition government. He is warning that if the defense establishment does not accept cost-cutting he will be forced to perform painful surgery on health, education and social spending.