Dei'ah veDibur - Information & Insight

A Window into the Chareidi World

6 Ellul 5766 - August 30, 2006 | Mordecai Plaut, director Published Weekly










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Shema Yisrael Torah Network

Opinion & Comment
Who Will Pay the Bill for the Fighting?

Three times the Knesset Finance Committee postponed a vote on a NIS 2 billion budget cut requested by the current government to finance the war in Lebanon. Even though the government supposedly controls this vital Knesset committee, it would have been defeated had the vote been taken since two of the government's representatives on the Committee — Labor MKs Yachimovitch and Braverman — announced that they would vote against the cuts despite the position of their party.

The Finance Ministry announced that budget cuts are necessary to finance the war, and they want to make an across-the-board cut that will in fact harm the weaker sectors — the sick, the elderly and of course the chareidim — the most.

The Finance Ministry announcement, made by supposedly policy- neutral, pencil-pushing bureaucrats, is in fact an attempt to continue the social engineering that those faceless bureaucrats have carried on for the past half-a-decade.

In fact, as the Labor MKs have noted, the government is bursting with money all over in various reserve accounts, and it could easily pay for the war without making any further cuts.

Moreover, no one has really noted that there was a cut to the VAT on July 1, only 12 days before the fighting started, which reduced the yearly amount collected through VAT by almost NIS 3 billion a year. All or part of this cut could be postponed, thus avoiding further cuts in the social welfare budget.

Financially speaking, the direct impact of the war on the budget and on the economy as a whole need not be that great, and a lot ultimately depends on how the government chooses to finance it. Bank of Israel Governor Stanley Fischer estimated that the ultimate cost could be as much as one percent of the GDP, but that it may be considerably less. It was clear that the international community saw that the fighting need not cause a severe hit to the economy, since the shekel and Israeli financial markets were reasonably steady throughout the fighting. In the first half of the secular year, the Israeli economy grew at a rate of six percent, a very high rate of growth.

In fact, within a few days of the cease-fire, financial markets had recovered or exceeded their prewar levels. Foreign investors put money into Israel even during July, at the height of the fighting. (For the year so far, investment is running 40 percent higher than in 2000, the previous record year.) Deals continued, including major purchases of Israeli companies, and Israel's credit rating was actually raised by one agency just after the cease-fire.

The most serious cost of the war was the human suffering on all sides. About a million people were forced from their homes on both sides of the border. Hundreds were killed and thousands were wounded. For those who were hit and their families, the suffering is not ended with the cease-fire.

Even if Hizbullah claimed victory, they certainly did not defeat Israel. The scale of human and financial losses in Lebanon are large enough that they will not seek further "victories" of this kind in the near future. The Hizbullah leader made this clear in an interview over the weekend, in which he said that they never even considered that Israel would respond so strongly to their attack, that he would not have attacked had they known the consequences and, consequently, they will not attack again — at least in the near future.

Israel must certainly prepare for the next round. Whether it takes place, chas vesholom, next month or next year or a decade from now or even never, lessons must be learned and preparations must certainly be made, to defend against Hizbullah weapons and tactics. Preparation is deterrence, for the enemy has lower expectations of true victory.

All of this costs money, no doubt. However the bill should not have to be paid by those least able to afford it, and the real decisions on guns or butter should be taken in the open with the consent of those affected, and not made by faceless bureaucrats pushing social agendas under cover of prudent accounting.

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