Rich Nation, Poor Nation
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Rich Nation, Poor Nation

Israel’s proposed $58 billion budget scheduled for government approval Sunday would split the country into two states, one rich and one poor, two prominent Israelis from opposite ends of the political spectrum warned this week.
Amir Peretz, chairman of the Histadrut, Israel’s largest representative trade union, told reporters Monday that the budget proposed a day earlier by Finance Minister Benjamin Netanyahu would promote “economic segregation, the deliberate creating of two states for two nations within Israeli society, one for the rich and one for the poor. …” Since taking over as finance minister, Netanyahu has tried to cut back on government handouts and move ahead with plans to privatize public entities.
Tuesday evening, Deputy Prime Minister Ehud Olmert of the Likud Party held a news conference to criticize the budget proposal and say that Israel was “on the verge of living in two states, with unprecedented polarization of Israeli society.”
Peretz laughed when Olmert’s comment was read to him Wednesday after his arrival here on a 10-day visit arranged by the National Committee for Labor Israel.
“He talks like me,” Peretz quipped.
But Peretz suggested that Olmert was “making noise” about the budget for political purposes only, knowing that the majority of the government will support the budget.
“For me, it is ideology and not a tactic,” he insisted.
Peretz, who is also chairman of the Am Echad Party that is slated to merge with the Labor Party in January, said he was concerned about the impact the proposed budget would have on “workers, pensioners, those on welfare and people who do not have medicine.”
The budget calls for cutting national insurance payments, tightening qualifications for benefits, but also increasing payments to the elderly by more than $200 million while closing certain geriatric and psychiatric care units.
The plan would also cut hundreds of public sector works and state workers who would be asked to take another salary cut. In addition, tax credits would be eliminated for the spouses of working citizens who remain at home, child discounts would be eliminated on public transportation, and there would be a toughening of criteria to receive welfare.
Olmert accused the Treasury of hiding the true budget figures from the public and said the budget failed to address the unemployment problem in the country, which is now 10.8 percent.
The release of the budget comes as a new study commissioned by the Central Bureau of Statistics found that 14 percent of Israelis aged 20 and older — an estimated 550,000 people — have gone without food in the past year because they could not afford it and 500,000 could not afford to buy the medicine they needed. It also found that 46 percent of Israelis are unable to meet their monthly household expenses.
Labor Party leader Shimon Peres said he wants the 2005 budget to include, among other things, larger allocations for pensioners and regional councils, which have been unable to pay their employees for months.
The Labor Party, which is negotiating to join Sharon’s coalition, says it wants a role in formulating the budget and asked for a delay of Sunday’s cabinet vote on the budget until it has had a chance to modify it. Sharon refused, saying that would hurt the country’s economy.
Labor leaders have threatened not only to refrain from joining the new coalition but to vote against the budget when it comes before the Knesset in October. Failure to adopt a budget by the end of next March automatically triggers new elections.
Even as Likud negotiators assured Labor leaders that they would have a chance to amend the budget later in the year if they joined the government, the Likud’s 3,000-member central committee was preparing to meet next Wednesday to vote to require Likud Knesset members and ministers to vote against Labor joining the government. Sharon and his aides reportedly worked behind the scenes to derail the effort, believing that such a vote would then make it very difficult for Labor to join the government — something Sharon is said by some to believe is necessary for him to proceed with his disengagement plan from Gaza and four West Bank settlements.
Zalman Shoval, a banker and adviser to Sharon, insisted that Labor’s insistence on modifying the budget is “purely political because Labor has nothing to offer on security and the foreign affairs front.”
“It has no original ideas of its own and the only thing it believes it can take a position on of their own is on the economy and social things,” he said. “Therefore, it is making a big issue of this … but if Sharon wants them in, they will have to compromise.”
Shoval added that a recent public opinion poll in Israel found that most Israelis do not want Labor in the government and prefer to keep the current government intact.
“Nothing has been set yet and I don’t think Sharon has made up his mind yet,” about Labor being in the new government.
Israeli analyst Joseph Alpher put the chances of early elections at 50-50 and said political parties are “manufacturing crises to improve their bargaining positions.”
Peretz expressed confidence that compromises would be made and a new coalition government formed with the Labor Party, thereby avoiding new elections.
“It looks like Labor wants to be in the government because it thinks that disengagement [from Gaza] is something that is so important,” he said.
Sharon began governing in June with a minority coalition of 59 seats in the 120-member Knesset and needs a majority government to enact the disengagement plan.
Alpher said the jockeying being done by the political parties now is “all a very complex picture of politicking. It ain’t over ‘till it’s over and a great deal of what you hear is posturing.”

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