Prime Minister Ariel Sharon fired four out of five cabinet
ministers as well as five deputy ministers from Shas and the
two deputy ministers from United Torah Judaism after both
parties voted Monday night against the government's budget
plan in the Knesset, which lost 47-44. The firings go into
effect in 48 hours leaving time for negotiations which will
probably not be concluded until close to the deadline if at
Firing the ministers is not the same as throwing them out of
the government. Officially both Shas and UTJ are still part
of the government.
The financial markets did not show signs of distress early
Tuesday, indicating that they expected some resolution of the
difficulties and not a government crisis.
Sharon also sent a strongly-worded reprimand to Likud
minister Limor Livnat, who absented herself from the Knesset
at the time of the vote.
The one Shas minister who is not a Knesset member, the
Minister of Religious Affairs, handed in his resignation on
hearing that his colleagues had been dismissed.
The budget plan was scheduled to go before the Knesset for a
revote on Wednesday. The legislation is the main vehicle of
NIS 13 billion in budget changes.
Without the two parties, Sharon's coalition has only 60
members of the 120 member Knesset. It is possible for it to
continue, dependent on outside support. It may also bring in
National Union-Yisroel Beiteinu or Shinui. In any case the
power of Labor is much increased and it can now determine
when to hold elections.
Several Labor Party MKs also failed to support the economic
plan and simply did not show for the vote. Altogether, only
14 of the 24 members of Labor voted with the government.
Labor's defection was particularly devastating because Sharon
and Finance Minister Silvan Shalom had made a calculated
decision to forfeit the votes of the chareidi parties in
exchange for Labor's support.
Moments before the vote, Sharon had threatened to fire the
Shas ministers should they vote against the plan, as he is
legally entitled to do with any minister who votes against a
The defeat of the economic program sparked widespread talk of
the imminent dissolution of the coalition and early elections
among both coalition and opposition MKs.
The government was dealt a severe blow when it failed to get
its emergency economic plan for 2002 and 2003 approved in its
first reading by the Knesset, despite an agreement between
the Likud and Labor to cooperate in pushing the legislation
through the Knesset.
The chareidi parties in the government, Shas and United Torah
Judaism, opposed the plan because of its proposed cuts to
support payments for children whose parents didn't serve in
Meretz, the Arab factions, Shinui, and Am Ehad also opposed
the plan. The National Union-Yisroel Beiteinu faction decided
to support the package after announcing that it had reached
an agreement with Shalom on its reservations about the
Labor wants changes made to the plan before its second and
third readings, and is not likely to support a reduction in
tax breaks for the North and the Negev.
Labor MKs who did not attend the vote Monday include Avraham
Burg, Yael Dayan, Avi Yehezkel, Sallah Tarif, Shlomo Ben-
Ami, and Chaim Ramon.
Other measures include a freeze in other NII payments,
canceling the cap on NII taxes, and a cut in housing aid for
the needy. But there will be no cut in the support payments
for handicapped, terror victims, widows, and Holocaust
survivors, Shalom announced. Water rates are also being
increased for farmers.
The legislation also would reduce by 50 percent tax breaks to
residents of the North, the territories, and the Negev for a
savings of NIS 850 million a year.
Additional measures, including a rise in gasoline and
cigarette taxes, have already been approved. The government
is to also cut 4 percent from ministerial budgets in the
Knesset Finance Committee and raise sales tax (VAT) from 17
to 18 percent via a cabinet decision.