Following the defeat of the Herut Party in the elections for the Second Knesset, receiving only eight seats, Begin announced his resignation as head of Herut. However, his friend, Yochanan Bader, did not present his resignation to the Knesset Foreman. After a month-long leave in Europe, Begin began to contact lawyers to prepare for obtaining a license practice law. A few months later it was revealed that the government, led by David Ben-Gurion, intends to sign an agreement toward getting reparations from Germany. Begin, who objected strongly, decided to return to the political arena and lead the movement to fight against the reparations.

The idea of receiving reparations sparked strong public controversy. The government asked the Knesset to approve its power to negotiate with the German government for providing reparations to Israel. Begin attacked the upcoming agreement due to problematic phrasing – the agreement was presented as a kind of a way to correct and wipe clean the genocide committed by the Germans – and because the payments did not reflected on the true amount of the looted and stolen items from the Jewish people in Europe.

On January 7^th, a debate took place at the Knesset, which was then located on King George Street in Jerusalem. Before the hearings started, Begin gave a heated speech at a mass rally in Zion Square nearby, and then returned to the Knesset, where he was the target of repeated insults from Ben-Gurion. Begin retorted with harsh words of his own, and when he refused to retract them, he has been banned for three months from the plenum. The battle regarding the reparations became a violent demonstration, during which protesters clashed with police and threw stones at the Knesset, shattering the windows of the building.