Israeli Finance Minister Expects Defense Cuts

Yuval Steinitz Says Budget Will Be Tight

By Reuters

Published January 28, 2013.
  • Print
  • Share Share
  • Multi Page

Israeli Finance Minister Yuval Steinitz, fresh from a record-setting sale of Israeli bonds to investors in Florida, said on Monday that balancing the government budget will require “moderate but still significant” cuts to the defense sector.

In an exclusive interview with Reuters, Steinitz, a leading member of the weakened Likud party of hawkish Prime Minister Benjamin Netanyahu, also said there are no plans to further raise taxes in order to hit a deficit target of 3 percent of economic output.

Parliamentary elections last week returned Likud to the top spot in the 120-member assembly, albeit with 11 fewer seats.

One area “that we will have to make some moderate but still significant cuts is the defense budget, I assume. It is not easy but we did it in the past,” Steinitz said during a stopover in New York before flying home.

Israel spends roughly 20 percent of its budget on defense. It has to find a way to close a 14-billion-shekel deficit.

Steinitz stuck with the 3.5 percent gross domestic product growth target this year, rising from 3.3 percent in 2012. He added that it would not be a surprise if economic growth touches 4 percent in 2014.

The debt-to-GDP ratio is expected to decline to somewhere in the 73-percent range, down from 74.1 percent in 2011, he said.

One main reason for expecting an economic rebound is the return of cheaper natural gas to power Israel’s industry as the Tamar natural gas field off the Mediterranean coast comes online in April. Egypt stopped supplying cheap gas in early 2012.

Steinitz took the positive economic message to Boca Raton, Florida, on Sunday where he spoke at a fundraising dinner for Israel Bonds. The event pulled in a single-evening record $230 million in sales to retail investors and Israel supporters, he said.

Separately, Israel’s government sold $2 billion worth of 10-year and 30-year U.S. dollar-denominated debt on Monday, albeit at moderate discounts.

ELECTION COALITION CALCULUS

Steinitz, a former philosophy professor, was upbeat about attracting potential coalition partners and said he expects to play a role in the next government.

“It is quite probable that I will maintain the current position. But it is also possible that I will have another capacity,” he said.

Netanyahu’s alliance with ultra-nationalists led by former Foreign Minister Avigdor Lieberman won 31 seats in the elections.

However Yair Lapid, a former talk show host who is left-of-center, led the Yesh Atid (There is a Future) party to second place with 19 seats.

Lapid’s appeal reflects frustration among secular middle-class taxpayers resentful of shouldering what they see as the burden of welfare-dependent ultra-Orthodox, or Haredi, Jews exempt from military conscription.

Asked if helping trim the budget deficit will include cuts to Haredi welfare, Steinitz said: “We will consider this as well but as I said, I don’t want to get into details.”

He added that the Haredi recognize they can no longer avoid sharing in the defense and security burden that is a right-of-passage for every other Israeli who serve in the military before heading off to higher education.

Steinitz, who has been finance minister since April 2009, said Lapid and Naftali Bennett, leader of the far-right Jewish Home Party, have similar views on the economy.

These parties, Steinitz said, hold rational positions on how to deal with the economy and promote economic growth. “They understand you have to bake the cake before you can eat it,” he said.

It is not clear if these parties would become members of a coalition government as Netanyahu, an obvious choice for prime minister, has not yet been asked to form a government by Israeli President Shimon Peres.

“It is difficult to say,” Steinitz said of the Lapid and Bennett parties’ participation. “It depends on their ability to compromise.”

A new government is possible by late February or early March.

As for any Haredi participation, whose long-standing role as kingmakers in coalition negotiations has been downgraded, Steinitz said he did not know if they would participate.

“It depends mainly on their ability to compromise on things that are very dear to them. I assume that if they are ready to compromise they will be in. If not they will stay out.”


The Jewish Daily Forward welcomes reader comments in order to promote thoughtful discussion on issues of importance to the Jewish community. In the interest of maintaining a civil forum, The Jewish Daily Forwardrequires that all commenters be appropriately respectful toward our writers, other commenters and the subjects of the articles. Vigorous debate and reasoned critique are welcome; name-calling and personal invective are not. While we generally do not seek to edit or actively moderate comments, our spam filter prevents most links and certain key words from being posted and The Jewish Daily Forward reserves the right to remove comments for any reason.





Find us on Facebook!
  • Can you relate?
  • The Forverts' "Bintel Brief" advice column ran for more than 65 years. Now it's getting a second life — as a cartoon.
  • Half of this Hillel's members believe Jesus was the Messiah.
  • Vinyl isn't just for hipsters and hippies. Israeli photographer Eilan Paz documents the most astonishing record collections from around the world:http://jd.fo/g3IyM
  • Could Spider-Man be Jewish? Andrew Garfield thinks so.
  • Most tasteless video ever? A new video shows Jesus Christ dying at Auschwitz.
  • "It’s the smell that hits me first — musty, almost sweet, emanating from the green felt that cradles each piece of silver cutlery in its own place." Only one week left to submit! Tell us the story of your family's Jewish heirloom.
  • Mazel tov to Chelsea Clinton and Marc Mezvinsky!
  • If it's true, it's pretty terrifying news.
  • “My mom went to cook at the White House and all I got was this tiny piece of leftover raspberry ganache."
  • Planning on catching "Fading Gigolo" this weekend? Read our review.
  • A new initiative will spend $300 million a year towards strengthening Israel's relationship with the Diaspora. http://jd.fo/q3Iaj Is this money spent wisely?
  • Lusia Horowitz left pre-state Israel to fight fascism in Spain — and wound up being captured by the Nazis and sent to die at Auschwitz. Share her remarkable story — told in her letters.
  • Vered Guttman doesn't usually get nervous about cooking for 20 people, even for Passover. But last night was a bit different. She was cooking for the Obamas at the White House Seder.
  • from-cache

Would you like to receive updates about new stories?




















We will not share your e-mail address or other personal information.

Already subscribed? Manage your subscription.