Cablegate: No Budget: No Coalition -- And Vice Versa

null
Leza L Olson 08/25/2006 02:07:33 PM From DB/Inbox: Leza L Olson

Cable
Text:

UNCLAS TEL AVIV 03395

SIPDIS
CXTelA:
ACTION: POL
INFO: IPSC PD IMO RES ECON DAO AID ADM DCM AMB RSO
CONS

DISSEMINATION: POL
CHARGE: PROG

APPROVED: DCM:GCRETZ
DRAFTED: POL:RBLAUKOPF
CLEARED: POL/C:NOLSEN

VZCZCTVI107
RR RUEHC RUEHXK
DE RUEHTV #3395/01 2370727
ZNR UUUUU ZZH
R 250727Z AUG 06
FM AMEMBASSY TEL AVIV
TO RUEHC/SECSTATE WASHDC 5897
INFO RUEHXK/ARAB ISRAELI COLLECTIVE

UNCLAS SECTION 01 OF 02 TEL AVIV 003395

SIPDIS

E.O. 12958: N/A
TAGS: PGOV PINR IS

SUBJECT: NO BUDGET: NO COALITION -- AND VICE VERSA

-------
SUMMARY
-------

1. This year, the budget wrangling got under way early in the form
of a government attempt to slash 2 billion NIS from its own 2006
expenditure in order to free up funds for rehabilitation of the
Katyusha-battered north of Israel. Initial attempts to secure
Knesset Finance Committee approval for the cuts have been stymied by
Kadima's primary coalition partner -- Labor. Does this spell defeat
for the governing party of PM Olmert over the 2007 budget? Not
yet, but time, as well as funding, is in short supply.

-------------------------------
THE GOVERNMENT TESTS THE WATERS
-------------------------------

2. When the government brought its proposal for a 2 billion shekel
reduction in ministerial spending to the Finance Committee last week
it did not anticipate the intensity of opposition it encountered
from its Labor party coalition partner. The purpose of the cuts --
funding the physical reconstruction and economic rehabilitation of
the north of Israel after a month-long Katyusha bombardment which
paralysed business and industry -- is hardly controversial. But PM
Olmert's Kadima party did not reckon with the "rebels" in the Labor
party who dug their heels in at the first Finance Committee session
scheduled to vote on the cuts and did so once again this week. The
Labor "rebels" led by MKs Avishai Braverman and Orit Noked, both of
whom are "standard bearers" for Labor's social agenda insist they
object on principle and that Labor would be betraying its electoral
commitments were it to support the cuts. The government now plans
to bring the matter to the Knesset committee August 28 in a third
attempt to secure approval.

---------------------------
LABOR DOING WHAT LABOR DOES
---------------------------

3. Since 1977, when the Labor party lost its historic monopoly on
government, it has found itself compromising its socio-economic
platform in uneasy coalitions with the Likud and latterly with
Kadima. Those Labor MKs who secure ministerial positions are eager
to retain them while the disappointed legislators -- currently 12 in
number -- operate as unofficial party whips, who seek to pull their
ministerial colleagues back from the brink of betrayal of election
promises. This perpetual coalition dissent could prove politically
lethal, specifically in the context of the draft budget legislation
for 2007 which will loom large in October, when the Knesset emerges
from its summer recess.

----------------------------------
KADIMA -- WITH A COALITION TO LOSE
----------------------------------

4. Coalition whip Avigdor Yitzchaki lost his patience this week --
or gave a good imitation of doing so. Following swiftly on the
failed second attempt of his Kadima party to secure Finance
Committee approval of the budget cuts, Yitzchaki threatened Labor
with political divorce. In a deliberate leak to the media, Yitzchaki
said if Labor refuses to comply with coalition discipline, he will
advise PM Olmert to bid farewell to its primary coalition partner,
in favor of an alliance with the right-wing Yisrael Beiteinu. Some
media commentators took Yisrael Beiteinu chairman Avigdor
Lieberman's remark, that his party would only join the coalition
once Labor is removed, to mean that he was eager to enter the
coalition. But Lieberman was making PM Olmert an offer he cannot
afford to accept: 11 Yisrael Beiteinu MKs in place of 19 Labor
members. It later emerged that media spin was responsible for
promoting the dubious logic of such a coalition trade-off: A cursory
check by an Israel Radio reporter revealed that no substantive
contacts had taken place so far between Kadima and Yisrael
Beiteinu.

--------------------------------
CAN KADIMA CONTROL THE COALITION?
--------------------------------

5. Kadima's budget dilemma will be compounded, this year, by its
precarious situation in the aftermath of Israel's failed Lebanon
campaign. In addition to the traditional horse-trading which
accompanies budget negotiations with all political parties, be they
coalition or opposition members, Kadima may face a rearguard action
by coalition parties using the budget as a pretext to abandon the
partnership with Kadima if they perceive the coalition as facing
political demise. From the perspective of Kadima's coalition
partners, the budget is the ideal platform on which to base such a
maneuver: The budget is a distinct issue of weight and seriousness;
and dissent on a matter of principle, ostensibly unrelated to the
delicate issue of who is to blame for the Lebanon debacle, would be
a convenient pretext for abandoning a doomed political partnership.

------------------------
LABOR WEIGHS ITS OPTIONS
------------------------

6. Labor is holding a midweek closed-door faction meeting. On the
agenda is a discussion of the opposition of its representatives in
the Knesset Finance Committee to the budget cuts. Labor chairman
Amir Peretz and party whip Efraim Sneh are expected to demand the
imposition of coalition discipline when the cuts are submitted for a
third time to a Knesset Finance committee vote. Whatever is decided
in the closed-door planning session, it is certain that the question
of Labor's future in the coalition will be discussed. In law, the
coalition has until the end of March 2007 to pass the draft budget
by a simple majority vote. But Kadima and its coalition partners
know that events unrelated to the budget could overtake them and
force fateful decisions for their political survival in the near
future.

JONES

© Scoop Media