The Histadrut labor federation threatened early Monday to claim a general labor dispute following the government’s approval of the 2005 budget (Israeli Army Radio)

After failing to reach agreement with Finance Minister Benjamin Netanyahu, Israeli Interior Minister Avraham Poraz said Monday that a strike within the local councils would be inevitable.

After a stormy session, the Israeli cabinet approved the 2005 state budget early Monday morning by a 17-3 majority.

The approval was only possible after Netanyahu and Defense Minister Shaul Mofaz concluded a deal that allows the defense ministry NIS 650 millions extra as a loan from the 2006 state budget.

After the approval of the budget, Labor party leaders are faced with difficult choices. MK Benjamin Ben-Eliazer called his party to stop coalition talks with Likud, but other party leaders are still looking for a compromise that allow them to join the ruling coalition.

Labor is left with two options, either to support the disengagement plan sitting in the opposition seats, or join the cabinet and be held responsible for its economical-social program which without being allowed a say in state budget disputed items.

Cabinet is Likely to Approve 2005 State Budget Today

Against Labor party protest and Histadrut strike warnings, the Israeli cabinet is expected to approve the 2005 state budget in its Sunday meeting.

Israeli Prime Minister Ariel Sharon extended Sunday support to his finance minister Benjamin Netanyahu, but told cabinet ministers that there was room for changes to avoid hurting the weak sectors of the community.

Sharon is said to be anxious to have the NIS 266.9 billion budget passed – ahead of the conclusion of negotiations to expand the coalition.

Shniui party warned that its ministers would vote against the budget if the demands for an additional NIS 1.7 billions to solve the financial crisis of local authorities are not approved.

The Histadrut labor federation is planning to declare Sunday a labor dispute if the budget is approved. Two weeks after the declaration, workers may begin a strike or apply sanctions.