What’s happened: The Knesset approved the 2025 budget by a solid 66 to 52 majority, one week before the legal deadline that would have triggered new elections.
- The budget includes across-the-board cuts in every Ministry, affecting education, health, welfare, and transport, as well as broad tax hikes on the working public.
- Unsurprisingly given the security situation, it includes a dramatic rise in defence allocations. Finance Minister Smotrich called it “everything we need to win on the front and on the home front.”
- More controversially, the budget includes over 5 billion shekels (over 1 billion pounds) in what the Israeli media terms “coalition funds.” These amount to large transfers and benefits, mostly to the ultra-Orthodox and settler publics. These include benefits for networks of private religious schools that refuse to teach core curriculum.
- Leader of the Opposition Lapid described this as “stealing the money and future of Israel’s middle class, the productive public that works, pays taxes and enlists in the army.”
Context: Failure to pass a budget by March 31 would have triggered an automatic dissolution of parliament followed by general elections. With polls protecting a disastrous result for the current governing coalition, in power since the election of November 2022, the Likud-led government could not take any risks ahead of the upcoming vote.
- The current coalition has a 68-52 majority in the Knesset. This figure includes four MKs recently added to the coalition by the merger of Gideon Saar’s party with the Likud. Saar and the other three parliamentarians entered parliament as part of Benny Gantz’s opposition list, but split from Gantz about one year into the current parliament, and joined the Likud about a year after that.
- The far-right Jewish Power party led by Itamar Ben-Gvir rejoined the governing coalition with the collapse of the ceasefire in Gaza earlier this month.
- The ultra-Orthodox parties, without whom no conceivable majority exists for Netanyahu, had long threatened to bring down the budget vote unless legislation cementing a sweeping draft exemption for their public was first passed. Such legislation faces enormous constitutional hurdles, and it remains the single most divisive issue in the right wing and religious coalition. Ultimately, both ultra-Orthodox parties supported the budget and its generous provisions for their sectoral interests without getting, for now, any progress on their biggest legislative priority.
- Despite public opinion being decidedly against him and at odds with his government’s position on three burning issues — hostages, draft exemptions, and a commission of inquiry — Netanyahu now has a larger parliamentary majority than before October 7. He has successfully navigated the most significant threat that might have toppled his government in the current period, and will likely now turn his attention to the twin efforts to oust the Attorney General and the director of the Shin Bet.
- Anti-government protests continued in Tel Aviv, Jerusalem, and elsewhere, largely over three separate issues. Protestors in Tel Aviv demanded a return to the ceasefire and a renewed effort to liberate hostages. In Jerusalem, demonstrates blocked the entrance to the Knesset in protest of the budget. Hostage families protested inside the Knesset. Over the weekend, large demonstrations were held against the firing of the Director of the Shin Bet and the Attorney General, with a general strike threatened if and when the Government violates a Supreme Court ruling on the matter, expected sometime in April.
- Hours after the budget’s approval, the credit agency Moody’s put out a negative forecast for the Israeli economy, in light of both the domestic political situation and the ongoing war.
- Demonstrations also erupted in northern Gaza against Hamas rule and against the war that Hamas is fighting with Israel. Some protestors openly called for an immediate release of Israeli hostages as a way of ending the war which restarted when a two-month ceasefire collapsed just over one week ago. There were reports that protests had spread from the most northern parts of the Strip closest to Israel to other locations including the Hamas stronghold of Jabalia inside Gaza City, where a 2019 protest against governing authorities was violently suppressed by Hamas forces.
- A rare public clash between Minister of Defence Katz and the new IDF Chief of Staff Eyal Zamir whose appointment he oversaw appears to have been resolved. Katz had publicly criticised an internal IDF investigation of an officer implicated in leaking classified documents, to which Zamir responded by saying that he didn’t take orders through the media and made clear proper legal procedures inside the army wouldn’t be affected by political pressures from outside.
Looking ahead: Today the Knesset will debate a bill which would alter the makeup of the Judicial Appointments Committee. All such legislation was frozen in the immediate aftermath of October 7. This would take away influence of the Bar Association and give more power to MKs.
- Talks continue in Egypt on a new ceasefire and hostage release with competing reports and conflicting rumours as to their progress. Most of the media coverage in both Arab and Israeli outlets focuses on an Egyptian proposal that, if approved by both sides, would lead to the immediate release of five living hostages (including an Israeli soldier who has dual US and Israeli citizenship).




