Incoming Gantz-Led Government to Invest in Israel’s Infrastructure

Israel’s incoming prime minister Benny Gantz unveiled an emergency government, to take power following an upcoming confidence vote in the Knesset. The last two MKs required to give Gantz a 61-59 majority, two members of Gantz’s own Blue and White Party who were previously resolute not to go into coalition supported by the mostly Arab Joint List, relented after Gantz’s controversial attempt to enter a Netanyahu-led emergency unity government stalled due to disagreements over both security and coronavirus policy. Moreover, following revelations of government failures discovered last week by senior B&W MK Ofer Shelah, the new government announced sharp changes in policy toward both the Covid-19 emergency and broader domestic and foreign policy questions.

Of note, a major reshuffle in the state budget is expected. Some details are forthcoming, but short- and long-term reductions in settlement subsidies are expected. Moreover, reductions in subsidies to yeshiva students have been announced, delayed by a year due to the magnitude of the crisis within the Haredi community, which has 10% of Israel’s population but about half of Covid-19 hospitalization cases. Finally, a review of military procurement will be done due to the influence of the indicted Netanyahu on the process, but analysts expect that with so many former generals in the new government, including former IDF chief of staff Gantz himself, few real cuts to the IDF are forthcoming.

In lieu of these cuts, the new government is announcing a massive infrastructure investment program, funded partly by deficit spending to limit unemployment. Incoming health minister Ahmad Tibi of the Joint List, a medical doctor by training, promised that budget increases will invest in hospital capacity and hygiene, raise the wages of staff from doctors down to cleaning staff, and buy personal protective equipment (PPE) in sufficient quantities for universal mask-wearing. Outside health, energy and transportation are both on the list of budgetary winners. In energy, the collapse of the consortium of Yitzhak Tshuva and Noble Energy managing Israel’s natural gas reserves and the falling prices of solar power mean the state will invest in thermal solar power plants in the desert. In transportation, an infrastructure plan will invest in additional urban public transit capacity.

The situation of transportation is particularly instructive, because of the political element involved. Throughout most of the past 11 years of Netanyahu’s coalitions, the transport minister was the same politician, Yisrael Katz of Netanyahu’s Likud; Katz prioritized highway investments with some rail, and was viewed as the least controversial of Likud’s heavyweight politicians, many of whom find themselves embroiled in scandal following last month’s election. Nonetheless, to signify a break with the past, the new government is giving the transportation portfolio to Nitzan Horowitz, leader of the leftist Meretz party who has called for expansion of public transportation.

While car ownership in Israel is low, this is the result of car taxes and high poverty rates. Activists at Meretz, B&W, and the right-wing secular Yisrael Beitenu party all pointed out to religious laws banning public transportation and other services from running on Saturdays, promising to repeal them within months. Meretz activists as well as independent analysts expect everyday public transportation to encourage people to give up driving and rely on buses and trains more even on weekdays, requiring additional investment to cope with capacity.

Another political element identified by sources within B&W who spoke anonymously is that residents of Tel Aviv and most of its inner suburbs have long felt stiffed by state infrastructure plans; last decade, Mayor Ron Huldai clashed with Katz, demanding a subway in dense, upper middle-class North Tel Aviv. Meretz is especially strong in North Tel Aviv. However, Horowitz said that his priority was socioeconomic equality, and while he did favor subway expansion in and around Tel Aviv and would accelerate construction of the Green Line through North Tel Aviv, the budget would boost rail construction in working-class southern and eastern suburbs.

Several MKs at the Joint List added that there would also be additional funding for connections to the centers of Arab cities. One plan calls for a tunnel through Nazareth, Israel’s largest Arab-majority city, which would connect it with Tel Aviv and other larger Jewish cities while also functioning as a regional rail link for the majority-Arab Galilee region. Towns too small to justify a direct rail link would get a bus to the nearest train station on the same fare system with a timed connection. One Meretz member explained, “in unbroken countries of similar size to ours, like Switzerland and the Netherlands, bus and train planning is coordinated nationally and there is no conception that buses are for poor people and trains for rich people.” Members of both Meretz and the Joint List added that there had long been underinvestment in Arab areas, calling past policies racist and vowing to correct them.

Sources at B&W stressed that there’s short and long term. In the short term, the priority will remain the coronavirus crisis, and the state will go into a large deficit in order to invest in health care and limit the death toll. Additional spending on other infrastructure will focus on planning, so that the state can begin construction after the crisis is long over, and will be funded by reducing yeshiva funding; B&W and Yisrael Beitenu plans to also reduce child credits, as Haredi families are larger than secular ones, have stalled due to opposition by the Joint List, as Arab families are poor and larger than secular Jewish ones too.

While Gantz himself stressed the pragmatic aspects of the plan, sources close to him mentioned the spirit of the 1990s. Negotiations with the Palestinians will resume shortly, they promised, and a two-state compromise will be worked out. They further promise that the peace dividend will allow Israel to grow through closer trade ties with the Arab world and reduced ongoing security spending. But other sources within the new coalition are more skeptical, pointing out Gantz and Yisrael Beitenu leader Avigdor Lieberman’s trenchant opposition to dismantling most settlements as a red line that may scuttle future negotiations.

Nonetheless, all sources agree that a clear change in foreign and domestic policy is coming. The more skeptical sources say that the end result will be a shift in domestic spending building a more expansive urban rail network and higher-quality health care. But the more idealistic ones are saying that a new Middle East is coming, one in which a thriving Israel will be at the center, with world-class public infrastructure and private entrepreneurship.

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