The Costs of Things

My children often accuse me of being too pre-occupied with the costs of things. One of them comes home and starts to tell me about the most fabulous 'this and that' but the first words out of my mouth are always, “So what’s is going to cost me?”

To me, being both anal-retentative and a woman with very limited resources, I am psychologically compelled to figure out the cost of literally everything. In that way, I can then determine whether it can be worked into the budget or not. Besides, experience teaches me I am not overtly fond of both financial surprises or being seriously unprepared. When I am financially surprised and unprepared - bad things happen. While this principle guides my life it also has wider applications for governments.

The Israeli government has failed to calculate the true cost of evicting 8,000 plus Jews from their home in the Gaza Strip says the Israeli Comptroller. The Jerusalem Post carries this report on the Comptroller's report:

The government failed to properly debate and calculate the true cost of the evacuation of 25 settlements in Gaza and northern Samaria in August of 2005, according to charges laid out in the 2007 State Comptroller's Report. It noted that original cost estimations for the Disengagement Plan in the winter of 2004 spoke of NIS 4.5 billion, which had doubled and turned into NIS 9 billion by May of 2006.

"Decision makers did not have exact figures about the budgetary needs," and were not properly briefed, the report stated. It blamed the problem largely on both the Ministerial Committee for Disengagement and the forum of directors-general that fed the committee information regarding the plan.

According to the report, which was released for publication Wednesday, the forum should have presented a more general overview with complete financial considerations. At the same time, the ministerial committee should have picked up on the problem and demanded better information. The Treasury should have developed a mechanism to track all the funding as well.

Even now, according to the report which was presented Wednesday to the Knesset, there is not enough information available to calculate the final cost of disengagement. The comptroller blamed a portion of the hike on the government's failure to initially address the resettlement costs not associated with personal reimbursements to the evacuees.

In addition, financial considerations took a back seat to the diplomatic ones. Budgetary considerations should have been an important part of the decision making process when it came to weighing different implementation options, the report stated.

Even when the plan first passed the cabinet in June 2004, according to the report, "the government knew that financing it [disengagement] required a large scale budget... After the government approved the disengagement plan, a high priority should have been given to budgetary considerations when weighing implementation options." This didn't happen.

Decisions were made in a haphazard and piecemeal fashion that led to a budgetary hike of some NIS 2.4b. within half a year for evacuee assistance separate from personal compensation payments. In addition, no proper budgetary framework and limit was developed for all the aspects of the plan involved in taking the evacuees out of Gaza and northern Samaria.

The setting of overall financial limits would have forced a more effective allocation of funds, according to the comptroller. It added that some of the transfer requests to the Prime Minister's Office violated proper financial procedure and made it hard to implement budgetary controls.

While some of the uncalculated budget hike is attributable to military spending, which to date has reached NIS 2.5b., the report focused its attention on the decision making process with respect to additional civilian resettlement costs of NIS 2.4b. Included in this sum was NIS 210 million for hotel rooms where many of the evacuees were initially housed and NIS 775 million for temporary housing where most of the evacuees still live. According to the report, that NIS 2.4b. was the result of decisions made only after the initial disengagement budget passed the Knesset in March 2005. In that period, the focus was on the NIS 4.1b. set aside for personal compensation, of which it was expected that no more than NIS 2.5 to 3b. would actually be needed. While to date only some NIS 2.3b. has been given for personal compensation, it is expected, according to the comptroller's office, that at least the full NIS 4.1b. will be used.

There is more and it’s all dark but I would be remiss if I did not remind readers that full compensation has yet to be paid out, and almost two years later; the prospects for permanent housing for the majority of Gush Katif refugees is still bleak in the short-term.

So the next time anyone has a suggestion or peace plan for the region, let us start with the cost of calculating the "peace" by evicting almost half a million Jews from their homes in the West Bank.

Then we can move on to look at the Rand Corp study which estimated the needed influx of capital to help the Palestinians build a viable state out of the West Bank and the Gaza Strip. The Rand study is a few years old and was calculated before the rise of Hamas. It also counts on the non-destruction of the greenhouses of the Gaza Strip, as well as allowing for a significant influx of Palestinian labour fully into the Israeli economy which may or may not be allowed to happen. The Rand study, lowball-best-case scenario, starts at US$33 Billion.

Transfer has never looked better or more cost efficient.