Third Government of Israel

The Second Knesset elections were held on 30 July 1951, and the Knesset first met on 20 September.[5] Mapai remained the largest party, winning 45 of 120 seats, while the General Zionists rose from seven seats in the First Knesset to 20 in the Second.[6] Their gains reflected public protest against austerity, rationing, shortages, rising prices, and allegations of favoritism and corruption.[6]

Despite their strong showing, the General Zionists did not enter the Third Government. They had made participation conditional on receiving the Ministry of Commerce and Industry, and that condition was not met.[5] Ben-Gurion took two months to assemble the coalition, which received the Knesset's confidence on 8 October 1951.[5][7] Only 56 members voted in favor, the first time an Israeli government was approved without the support of a majority of all 120 Knesset members.[8]

The coalition comprised Mapai, Ha-Po'el ha-Mizrachi, Ha-Mizrachi, Agudat Israel, Po'alei Agudat Israel, and three minority lists associated with Mapai. It therefore included broadly the same groups as the Second Government, except for the Progressive Party.[5]

With 16 ministers, the Third Government set a record for cabinet size in Israel at the time.[2] Ben-Gurion served as both prime minister and minister of defense. Moshe Sharett was foreign minister, Golda Meir was labor minister, Levi Eshkol initially held agriculture and development, and Eliezer Kaplan was finance minister.[1]

Religious-party partners held several important portfolios. Moshe Shapira served as minister of interior and religion, Yitzhak Meir Levin as minister of social welfare, Yosef Burg as minister of health, and David Zvi Pinkas as minister of transportation.[1] Ben-Zion Dinur held education and culture, while Dov Yosef held trade and industry and justice. Pinhas Lavon and Peretz Naftali became the first ministers without portfolio in Israeli history.[1][2]

Several assignments changed during the government's term. On 25 June 1952, Kaplan became deputy prime minister, a newly created position, and Eshkol took over the Finance Ministry. Naftali moved from minister without portfolio to agriculture and development, while former attorney general Haim Cohen succeeded Dov Yosef as justice minister.[5][7] Kaplan died on 13 July, Pinkas died on 14 August, and Mordechai Nurock assumed responsibility for postal services on 3 November.[5]

Three decisions taken at the end of 1951 defined much of the government's agenda: limiting immigration, implementing a "new economic plan," and opening direct talks with the Bonn government over reparations.[9] These issues had been deferred in part because Mapai ministers did not want to provide political ammunition to opponents on the Left and Right during the election campaign.[9]

On 31 December 1951, the cabinet voted to enter negotiations with West Germany. The decision followed a letter from Chancellor Konrad Adenauer indicating that the Federal Republic was prepared to negotiate on the basis of Israel's claim of 12 March 1951. The government stipulated that talks would be held neither in Germany nor in Israel, but in another European country, and would address payment in money and goods.[9]

Israel's March 1951 claim demanded $1.5 billion from Germany, approximately one quarter of an estimated $6 billion in Jewish property plundered under Nazi rule. The amount was connected to the cost of absorbing and rehabilitating approximately 500,000 Holocaust survivors and refugees.[9] Israel distinguished this collective reparations demand from individual compensation and restitution claims. A conference of Jewish organizations held in New York on 23–24 October 1951 supported the claim, although disagreement remained over whether Israel alone or a broader framework of Jewish organizations should represent collective Jewish interests.[9]

From 7 to 9 January 1952, the Knesset held one of the most dramatic debates in its early history over the government's proposal to negotiate directly with West Germany.[9] Ben-Gurion presented the $1.5 billion demand as a minimum, maintained that material compensation could not atone for the destruction of Jewish life, and argued that those responsible for murder should not also inherit the property of their victims.[9]

The debate began amid a Herut-organized demonstration outside the Knesset in Jerusalem. Menachem Begin addressed approximately 15,000 demonstrators, after which protesters surrounded the building and some threw stones, breaking windows and sending stones into the chamber. Police used tear gas, and the proceedings were temporarily suspended.[9] Begin was later suspended from the Knesset for three months.[4]

Thirty of the Knesset's 120 members participated in the debate. Sources differ slightly on the final division: one detailed account records a vote of 61 to 50, while the World Jewish Congress gives 60 to 51, with five abstentions and four members absent.[9][4] Both accounts agree that the Knesset endorsed direct negotiations.

Opposition crossed party lines. Critics argued that talks would dishonor Holocaust victims, imply recognition or forgiveness of Germany, or assist German rehabilitation and rearmament. Opponents included Herut, Mapam, the Israeli Communist Party, and members of other parties. Supporters led by Ben-Gurion and Sharett argued that Israel had a duty to recover plundered Jewish property and that direct negotiations were necessary to obtain it.[9]

Negotiations were held in Wassenaar in the Netherlands. The government made its final decision to approve the agreement on 8 September 1952, and the agreements were signed in Luxembourg on 10 September by Sharett, Adenauer, and Nahum Goldmann.[9][4] Under one agreement, West Germany transferred goods worth more than $800 million to Israel, helping it develop infrastructure, railways, and maritime transport amid austerity and food and fuel shortages.[4]

The government's final months were dominated by a coalition crisis. Agudat Israel and Po'alei Agudat Israel were dissatisfied with education policy and opposed proposed national service for religious girls who had been exempted from military service. Their representatives resigned from the coalition on 19 September 1952, leaving the government without a parliamentary majority.[5] The remaining coalition held 60 seats.[10]

Ben-Gurion attempted to bring the General Zionists into the coalition but initially failed and resigned. The Third Government remained in office until 22 December 1952.[5][1] Ben-Gurion then formed the Fourth Government with the General Zionists and the Progressives, while Agudat Israel and Po'alei Agudat Israel remained outside the new coalition.[5]

The new coalition agreement provided for replacing the education "streams" system with national and religious sections. It also called for income-tax reforms and liberalized export regulations.[5]

The reparations negotiations remain the defining controversy of the government's term. Opposition to direct talks only seven years after the Holocaust was expressed with exceptional intensity, including mass demonstrations and violence around the Knesset.[4][9] The surviving sources also preserve the minor numerical discrepancy between a 61–50 and a 60–51 parliamentary vote, although both record approval of negotiations.[9][4]

A separate controversy followed the Wadi Ara shooting of 25 June 1952, in which two Arab citizens of Israel were killed and five wounded while a group approached the border during Eid al-Fitr.[11] The IDF said the group had been warned not to approach or cross the border; witnesses and Mapam representatives disputed that account, saying the civilians were on Israeli territory and received no warning.[11]

Ben-Gurion appointed an inquiry committee on 8 July. The committee reported conflicting testimony about whether warnings were heard, avoided assigning individual responsibility, and recommended that known Israeli residents approaching the border be handled first through policing methods rather than treated as infiltrators.[11] The INSS study argues that the government sought to delay public debate partly to protect the standing of the state, the IDF, and the coalition. A subsequent no-confidence motion was defeated by 52 votes from coalition parties and Herut, against 14 from Mapam and Maki, with 27 abstentions.[11]

The Third Government's most enduring legacy was the Luxembourg Agreement. It opened an official channel between Israel and West Germany and directed substantial material resources toward Israel's development during a critical period of mass immigration and economic scarcity.[4][9] The agreement's more than $800 million in goods supported transport and infrastructure projects and strengthened the state's capacity to absorb immigrants.[4]

The government also established several institutional precedents. It was the first Israeli government to include ministers without portfolio and the first to create the position of deputy prime minister.[2] It was also the first government approved by fewer than a majority of all Knesset members.[8] Its eight-party structure was repeated, with changes in composition, by the Fourth and Fifth Governments formed during the same Knesset.[3]