The Ministry of Finance is trying to prevent the establishment of a multi-year defense budget framework, sources inform "Globes." During the current Locker Committee discussions on the defense budget, Finance Ministry representatives expressed total opposition to establishing a multi-year budget for the Ministry of Defense. This opposition is expected to arouse a harsh response from the Defense Ministry, which is liable to threaten to abandon the accepted rules governing the issue.
The Ministry of Finance is presenting two main reasons for its opposition; it says that setting a multi-year budget is both unjustified and impractical. This year's net NIS 57 billion defense budget accounts for 25% of the state budget, excluding debt repayments and interest payments. The first argument holds that it is not right to hamper the government in setting priorities for a quarter of its entire budget. The Finance Ministry is also arguing that such a commitment discriminates against the budgets of the other government ministries, especially the social ministries. Finance Ministry officials are asking why the Defense Ministry should receive such a guarantee, when the Education, Health, and Transportation Ministries do not, and what the difference is in planning by the Defense Ministry and by the other ministries.
The second argument used by Finance Ministry representatives is that even if a multi-year budget is set, defense or fiscal constraints will make it impossible to adhere to it. In Israel, such constraints occur almost every year. In the case of war or a different fateful security event, the Defense Ministry will demand a deviation from the established budget framework. In the event of a financial crisis threatening economic stability in Israel, the Finance Ministry will demand deviation from the budget.
In this framework, it is impossible to omit the precedent created by the Brodet Committee, which recommended a multi-year budget - a recommendation that failed completely at the implementation stage. The Finance Ministry, led by then-budget director Kobi Haber, also opposed a multi-year budget during the Brodet Committee discussions. The Brodet Committee recommendations became a regular bone of contention and source of friction between the Finance and Defense Ministries, with the Defense Ministry claiming that it was not receiving the promised budget, and the Finance Ministry accusing the Defense Ministry of not doing its part by meeting the cost cutting targets set for it. The appointment of the Bank of Israel as a mediator did not solve the dispute between the parties.
The Defense Ministry expressed surprise at the Finance Ministry's opposition to setting a multi-year budget framework. Ever since the establishment of the committee chaired by IDF Major General (res.) Yohanan Locker for assessing the defense budget framework, senior defense sources have insisted on an inelastic framework in order to facilitate procurement programs lasting a number of years, while also financing development of weapons and technologies. Even without this, the Defense Ministry and the IDF have been very frustrated over the past two years at the absence of a multi-year plan to make long-term planning possible. "It's absolute lunacy," a defense source told "Globes" today, referring to the Finance Ministry's opposition to the multi-year framework. "You can't manage the Defense Ministry without a multi-year plan; you can't fulfill long-term commitments when you're talking about weapons procurement or development. This situation, in which there has been no clear framework for two years already, has led to a situation in which the Defense Ministry owes over NIS 2 billion to various defense companies in Israel."
Published by Globes [online], Israel business news - www.globes-online.com - on November 12, 2014
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