Identifier
Created
Classification
Origin
06TELAVIV2107
2006-06-01 11:39:00
CONFIDENTIAL
Embassy Tel Aviv
Cable title:  

COALITION TURBULENCE UNLIKELY TO DERAIL 2006 BUDGET

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C O N F I D E N T I A L TEL AVIV 002107 

SIPDIS

E.O. 12958: DECL: 06/01/2016
TAGS: PGOV ECON IS GOI INTERNAL ECONOMY AND FINANCE
SUBJECT: COALITION TURBULENCE UNLIKELY TO DERAIL 2006 BUDGET


Classified By: Political Counselor Norman Olsen for reasons 1.4 (b,d).

C O N F I D E N T I A L TEL AVIV 002107

SIPDIS

E.O. 12958: DECL: 06/01/2016
TAGS: PGOV ECON IS GOI INTERNAL ECONOMY AND FINANCE
SUBJECT: COALITION TURBULENCE UNLIKELY TO DERAIL 2006 BUDGET


Classified By: Political Counselor Norman Olsen for reasons 1.4 (b,d).


1. (C) Despite disagreement between PM Olmert and DefMin
Peretz over cuts to the defense budget, the Knesset will
likely pass the 2006 budget by June 18, the end of the
legally mandated 45-day period within which a newly installed
government must pass a budget in order to avoid elections.
United Torah Judaism (UTJ) Finance Committee Chair Ya'akov
Litzman told poloff emphatically May 31 that "the budget will
pass and there will not be early elections." He said that he
expects a June 4 or 5 Finance Committee vote on the budget,
followed by second and third votes in the Knesset by the end
of that week. As Minister for Culture and Sports Ophir Pines
(Labor) told the media May 30, "I do not see Labor leaving
the coalition over the (2006) budget.... (Labor's) real
sights are now set on the 2007 budget. The fight for this
budget is over and done with." (Note: Consideration of the
2007 budget will only begin after the Knesset's summer
recess, ending in October. End note.)


2. (C) The latest budget melodrama erupted over Peretz's
dissatisfaction with PM Olmert's proposed NIS 500 million
(about USD 100 million) cut in the defense budget, which
prompted the seven Labor Party ministers to abstain in a May
30 Cabinet vote approving the budget. Olmert's proposed cuts
to defense placed DefMin Peretz in the awkward position of
having to oppose what he himself had advocated during the
recent election campaign: cuts to the defense budget to
enable more social spending. Olmert and Peretz reportedly
met privately after the rocky Cabinet session to smooth
things over, but Peretz will have to handle the
dissatisfaction of Chief of Staff Dan Halutz, who publicly
criticized these cuts. Labor MK Colette Avital told poloffs
May 30 that the media had overblown the Olmert-Peretz
disagreement, but that the Labor Party feels "disrespected"
by its senior coalition partner, Kadima.


3. (C) Likud Party Whip Gideon Sa'ar, whose party leads the
opposition, also predicted to poloffs March 30 that the 2006
budget would pass, but claimed that coalition cohesion,
particularly between Kadima and Labor, would continue to
erode. He also speculated that UTJ would not join the 67-MK
coalition for now, citing that party's internal divisions
over how much of an increase in child allowances to demand.
Sa'ar indicated that having UTJ in the opposition deprives
Olmert of the added coalition-padding he seeks to lessen
Olmert's dependency on the Labor Party. UTJ's Litzman
confirmed to poloff May 31 that UTJ is, for now, remaining
outside the coalition. He downplayed, however, any divisions
within the party or a possible split between the two parties
that comprise UTJ. Meretz MK Avshalom Vilan also downplayed
any threat to passage of the 2006 budget, but he predicted
that the early cracks that have appeared within the coalition
could eventually lead to a realignment between Kadima and the
right.

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