The battle over Israel’s $133 billion defense bill
The Defense and Finance ministries are clashing over a massive long-term spending package that could reshape the country’s budget for years to come.
While the defense establishment is still waiting for the implementation of agreements reached more than a month ago with the National Security Council (NSC) and Prime Minister Benjamin Netanyahu for the immediate injection of NIS 15 billion ($5 billion) into its budget, and for an additional NIS 25 billion ($8.3 billion) by the end of the year, inter-ministerial tensions continue to deepen. The already fraught relationship between the Defense and Finance ministries is becoming increasingly complicated.
In a discussion held on Thursday night with the participation of senior officials from both ministries, Netanyahu demanded that the "strengthening package" planned to be added to the defense budget base over the coming decade be expanded by an additional NIS 50 billion ($16.7 billion), from about NIS 350 billion ($116.7 billion) over the decade to about NIS 400 billion ($133.3 billion), while extending its deployment over a period of more than 10 years.
Those close to the Finance Ministry see the emerging move as the prime minister's capitulation to the Defense Ministry's repeated budgetary demands, which they view as increasingly difficult to satisfy even as the defense budget could reach NIS 183 billion ($61 billion) by the end of the year.
The defense establishment, on the other hand, argues that the additional funding is intended to cover expenses unrelated to its planned moves. Officials said the package includes about NIS 7 billion ($2.3 billion) for the defense of northern Israel, about NIS 12 billion ($4 billion) for the Foreign Ministry to strengthen Israel's international messaging, and tens of billions of shekels for weapons purchases in the United States. The latter would serve as a contingency fund in case the next US security assistance agreement with Israel does not include annual transfers worth billions of dollars, as has been the case in recent decades. The current aid agreement, under which the US provides Israel with about $3.8 billion a year, expires at the end of 2028.
Sources close to the Treasury said the proposed increase in the strengthening package reflects the realization of warnings issued in recent months that the defense establishment is pushing to expand its budgets in ways that could severely undermine the basic services available to Israeli citizens in the coming years, without sufficient efficiency measures or disciplined financial management by the IDF and Defense Ministry.
While tens of billions of shekels in additional defense spending have been discussed publicly in recent weeks, the defense establishment has made clear in recent days that it has yet to receive any of the money. It is still waiting for the NIS 15 billion ($5 billion) expected to come from Finance Ministry reserves to finance urgent orders for weapons production by Israel's defense industries and cover part of its outstanding debt to them, which has risen to an unprecedented level of more than NIS 15 billion ($5 billion).
To enable this, more than a month ago the NSC and Netanyahu instructed the Treasury to grant the Defense Ministry authorization to commit to future defense procurement worth approximately NIS 130 billion ($43.3 billion), based on the planned multi-year addition of NIS 350 billion ($116.7 billion) beginning in 2027. That authorization has not yet been granted, however, because the Treasury needs to amend the budget framework and obtain Knesset approval.
The prime minister's directive to increase the package by another NIS 50 billion ($16.7 billion) could further complicate the defense establishment's budgetary picture and the already strained relationship between the Finance and Defense ministries, which has long been characterized by mutual suspicion and accusations.
And with all this, it is far from clear how feasible it will be to increase defense spending in the coming years, particularly with Knesset elections approaching on October 27. Netanyahu himself made the decision on the NIS 350 billion ($116.7 billion) budget addition, and it remains unclear what preparatory work preceded that decision. Now, he is seeking to increase the amount by a further NIS 50 billion ($16.7 billion). Such an increase could eventually lead to higher taxes, according to concerns in the economic establishment.
