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July 1, 2015 / 14 Tammuz, 5775
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Israel Celebrates Yom Ha’Atzmaut As Challenges Mount

JERUSALEM – Even as millions of Israelis celebrated the country’s 65th birthday with prayers, lavish barbecues and star-studded entertainment in city squares, many citizens expressed worry about troubling domestic and foreign developments.

Within the next week Prime Minister Benjamin Netanyahu’s coalition government and the Knesset, which have been on spring vacation for nearly a month, will return to work and likely deal with a variety of pressing internal and external issues. How those issues are dealt with could determine Israel’s fiscal, diplomatic and military fates in the months ahead.

Finance Minister and Yesh Atid party leader Yair Lapid has recommended a series of tough austerity measures as part of closing the government’s $10 billion deficit. His plan calls for slashing the defense budget, trimming the salaries of public sector employees, and decreasing monthly child stipends. He would increase the VAT (value added tax), the state income tax and municipal tax rates.

Lapid has also recommended a nearly 10 percent salary cut for MKs and government ministers. His severe proposals are meeting stiff resistance from Netanyahu’s Likud colleagues and leaders of the opposition Labor Party and the Shas Party. Many have vowed to fight Lapid’s plan in both the Knesset and the local media.

Likud Mks have told Netanyahu that Lapid’s budget cuts and tax hikes would harm the already overtaxed middle class and put the nation’s defense at risk. Opposition Leader Shelly Yachimovich said that the proposed austerity measures and child tax cuts would decimate lower-income-earning families and dramatically increase Israel’s poverty level. According to government statistics, nearly a quarter of the nation’s eight million people already live below the poverty level.

Israel’s new budget must be ratified by July 31. Without a formal budget, the government would fall and new elections held. Sources report that Netanyahu will attempt to pass the budget by mid-June, allowing himself some time if the first attempt to pass it is rejected in the Knesset.

On the diplomatic front, the stalled Israeli-Palestinian peace process was dealt a blow earlier this week when Palestinian Authority (PA) President Mahmoud Abbas accepted the resignation of Prime Minister Salam Fayyad. The former premier, with extensive experience in global finance, was able to curb incessant corruption within the Fatah-controlled PA, earning him praise from President Obama for his prudent fiscal policies.

Fayyad, a political independent, is known to staunchly support the restarting of peace negotiations with Israel. Arab newspapers have reported that Abbas considered Fayyad a political rival, while Hamas publicly lambasted him for his “Mr. Clean” image and his pro-American political stance. Haaretz said that if Abbas continues to allow Fayyad to leave government service, it “could spell the beginning of the end of the Palestinian Authority.”

Defense Minister Moshe Ya’alon criticized any attempt to slash hundreds of millions of dollars from the nation’s defense budget at a time when Syria and Lebanon are on the verge of imploding, and while Iran continues its uranium enrichment and its building of intercontinental missiles (with North Korea’s help). Additionally, Israel’s security services are reportedly waging a clandestine global battle against Hizbullah, Hamas and Iranian Revolutionary Guard terrorists who are deliberately targeting Israeli citizens and Jewish sites across the world.

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