A commission established under the Prime Minister’s Office’s directive is set to discuss further increases to Israel’s defense budget before its approval amid the country’s ongoing war with Hamas in Gaza and against Hezbollah in Lebanon.
"While increasing the defense budget might be necessary, the average annual cost per household due to a 10 billion shekel increase is estimated at around 4,000 shekels ($1,000) per year," the Finance Ministry’s Chief Economist's division wrote on Monday in a position paper to the Nagel Commission, which is set to decide on the matter.
The decision will impact the public in several ways. According to the chief economist, raising the budget will lead to higher taxes, reduced public services, and diminished household income. "Therefore," the paper read, "it's important to increase defense spending cautiously, maximizing efficiency and prioritizing funding measures that will minimize the impact on growth and households."
The Nagel Commission was formed after significant gaps emerged between then-defense minister Yoav Gallant and Finance Minister Bezalel Smotrich regarding the increase in Israel’s defense budget. Back in October, the commission published its interim recommendations, though they didn’t address the primary reason it convened – additions to the defense budget.
Sources familiar with the matter noted that this omission mainly stemmed from the significant gaps between the defense establishment’s demands and the Finance Ministry. The final conclusions, to be published in December, will determine the required budget increase for each year through 2030 at the least.
In a discussion on the interim recommendations a month ago, the topics considered included military procurement and production, expanding the range of munitions and air defense systems in the country, ground operations viability, naval superiority, personnel bolstering, new methods for development and production, and border defense elements.
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Prime Minister Benjamin Netanyahu, Finance Minister Bezalel Smotrich
(Photo: Retuers/Amir Cohen)
The discussion aimed to approve or deny a series of urgent requests from the IDF in light of constraints and considerations surrounding expanding conflicts across all borders even before the 2025 state budget was approved, which includes the defense budget.
The military is requesting the urgent and immediate procurement of thousands of bombs and missiles for the Air Force due to ongoing use and increased demand across all fronts. Some of this procurement process will involve Israeli defense industries. The military is also expected to demand the expedited purchase of interception missiles for air defense systems.
In September, it was reported that the request for an interim report arose from the need to plan the upcoming 2025 state budget, in which the defense portion is expected to make up 12%-15% of total allocations.
This year’s overall expanded defense budget will amount to a one-time total of approximately 117.5 billion shekels ($29.1 billion), compared to 83.2 billion shekels ($20.5 billion) in 2023. Security officials have already requested an additional 220 billion shekels ($54.5 billion) over the next four years, a demand the Finance Ministry deemed "entirely excessive."
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First published: 14:52, 11.11.24