This record is a partial extract of the original cable. The full text of the original cable is not available.

C O N F I D E N T I A L TEL AVIV 001362 
 
SIPDIS 
 
E.O. 12958: DECL: 03/08/2015 
TAGS: PGOV PREL ECON IS GOI INTERNAL ECONOMY AND FINANCE
SUBJECT: NETANYAHU MAY CAVE TO SHAS BUDGET DEMANDS; SHINUI 
DESPERATELY SEEKS WAY BACK TO COALITION 
 
REF: TEL AVIV 1277 
 
Classified By: Ambassador Daniel C. Kurtzer for reasons 1.4 (b,d). 
 
¶1.  (C) As they scramble for votes ahead of the March 17 
budget vote, Prime Minister Sharon and Finance Minister 
Netanyahu appear ready -- albeit tentatively -- to make 
budget concessions to Shas, rather than take Shinui back into 
the coalition.  Sharon needs a simple Knesset majority for 
budget passage, but the 53-54 votes he now holds appear short 
of a win.  Sharon can secure 11 budget votes from Shas, which 
opposes disengagement, by allocating money to Shas interests, 
while leaving Shas outside the coalition.  Getting budget 
votes from Shinui, which supports disengagement, requires 
stiffing Shas, taking Shinui back into the coalition, and 
risking loss of the coalition's religious parties. 
 
¶2. (C) Reacting to the continued threat by 13 Likud MKs 
("Likud rebels") to oppose the budget unless Sharon holds a 
disengagement referendum, Netanyahu stated publicly March 7 
that, without budget support from the Likud rebels, he will 
have no choice but to capitulate to Shas's budget demands. 
The Finance Ministry's director of budgets reportedly said 
that these budget concessions would cost the GOI some half a 
billion shekels (USD 120 million) and would likely come from 
the defense and education budgets. 
 
¶3.  (C) At the same time, the number two leader of Shinui, 
former Interior Minister Avraham Poraz, announced to the 
press that his secular party is willing to join a coalition 
that includes the ultra-Orthodox Agudat Yisrael and Degel 
HaTorah parties (formerly a single party known as United 
Torah Judaism).  Poraz even went so far as to say that Shinui 
would not automatically oppose funding transfers requested by 
the ultra-Orthodox parties if those requests were 
"legitimate."  (Note: Shinui resigned from the coalition 
December 1 when Sharon agreed to transfer NIS 290 million for 
UTJ programs.  End note.)  Shinui leader Tommy Lapid 
nonetheless reaffirmed his earlier statement that his party 
would vote against the budget if not invited back into the 
coalition. 
 
¶4.  (C) Agudat Yisrael MK Ya'acov Litzman and Degel HaTorah 
MK Rabbi Moshe Gafni told poloff emphatically March 8 that, 
Poraz's statement notwithstanding, their respective parties 
would not sit in a coalition with Shinui.  Litzman said that 
Sharon is more likely to strike a deal with Shas than Shinui. 
 Both Gafni and Litzman could not predict which party would 
ultimately rescue Sharon's budget, but both were certain 
--without offering specifics -- that the budget would pass. 
Litzman based his prognosis mainly on his certainty that "no 
(MK) in the (Knesset), except perhaps several of the Likud 
rebels, wants elections now." 
 
¶5.  (C) Comment: Sharon continues to cast a wide net to 
ensure his 2005 budget passes before the March 31 deadline 
(reftel).  Sharon's aides are reportedly continuing 
negotiations with Arab parties as well as individual Likud 
rebels.  Sharon would prefer to rely on Shinui or Shas, 
rather than on the left-wing Yahad party or the Arab parties, 
which the right wing perceives as illegitimate sources of 
support.  Sharon has indicated in the past that he prefers to 
have a coalition that includes at least one religious party 
to lend greater legitimacy to his government both within 
Likud and in the public eye. 
 
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KURTZER