Daily Israel Report

Talks on Defense Cuts End, No Agreement Yet

Israel's security cabinet ends marathon talks on cuts in defense spending. Final decision expected Monday morning.
By Elad Benari
First Publish: 5/13/2013, 2:12 AM

Finance Minister Yair Lapid
Finance Minister Yair Lapid
Flash 90

Israel's security cabinet ended marathon talks on proposed cuts in defense spending late on Sunday night.

The final decision in the matter is expected Monday morning, before the budget is presented to the government for approval.

Finance Minister Yair Lapid wants a cut of four billion shekels ($1.12 billion) 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, reported AFP.

Defense Minister Moshe Yaalon and IDF Chief of Staff Benny Gantz, however, are opposed to the cut and explained to the cabinet ministers on Sunday that implementing the full amount of the proposed cuts will bring about security-related dangers.

The final decision on the cuts will be reached at a meeting between Prime Minister Binyamin Netanyahu, Lapid and Yaalon, reported Channel 2 News.

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 an attempt to cushion the opposition to other unpopular measures he introduced in this year’s budget.

These include 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 the past the defense establishment and the military industries have blocked plans to cut the defense budget and, in fact, won supplements to spending.

On Saturday, Israelis marched in protest against the austerity budget, focusing their ire mainly on Lapid, who promised not to hurt the middle class during his election campaign.

Lapid has warned that if the defense establishment does not accept cuts he will be forced to make even more painful cuts on health, education and social spending.