The defense budget will grow in the coming year, contrary to the stated intention of the government.
Budgetary supplements approved yesterday by the Knesset Finance Committee cancel out the planned cuts for 2014. With the addition of various other supplements that the defense establishment is to receive in the coming months, its budget will grow by a few hundred million shekels over the previous year.
Much of the budget will be spent on human resources (salaries, pensions and payments to handicapped veterans, war widows and orphans), which will reach more than 54 percent of defense spending in the coming year – an all-time high.
Last May, Finance Minister Yair Lapid and Defense Minister Moshe Ya’alon agreed to slash NIS 3 billion (over $857 million) from the defense budget, which was to have totaled about 51 billion shekels. (This sum does not include U.S. defense aid amounting to some $3 billion, or about 10 billion shekels).
Ya’alon and the top Israel Defense Force brass warned at the time that the budget did not reflect the military’s needs. With only 22 billion shekels of the budget actually allocated to the army, security would be harmed, they said.
The IDF did indeed prepare for widespread cuts and has even begun to implement them. It began a two-year program to cashier about 5,500 career army people and civilians who work for the army (to be replaced by about 1,000 young career army people), while reserve armored brigades, air force squadrons and other units were closed down.
It was also decided to almost entirely halt the call-up of reserves for operations in the coming year, and to greatly reduce training of regular forces and the reserves, which the IDF began doing this past summer.
However, in November it became clear that the state budget had a large surplus of 6 billion shekels, both because of what is called “under-implementation” and because of an unexpected increase in the state’s tax revenue. Prime Minister Benjamin Netanyahu accepted the defense establishment’s request to receive 2.75 billion of this sum, which in a few weeks swelled by 40 million more shekels, to 2.79 billion shekels.
But that’s not all: The defense establishment is accumulating more resources. It will receive another approximately 1 billion shekels as a special addition to cover its expenses in drafting ultra-Orthodox soldiers. The IDF is also planning to expedite the plan to evacuate bases in central Israel, including part of the Kirya and Tzrifin, where residential housing will be built instead.
This move, which won agreement at the same time as did the privatization of Israel Military Industries, will bring in another 300 million shekels to Defense Ministry coffers. This amount could grow if the army brings forward its evacuation of more bases next year.
The Knesset Finance Committee also approved the transfer of about 180 million shekels for various needs, most of which involve intelligence agencies outside the IDF.
Thus the resources at the disposal of the Defense Ministry in 2014 have ballooned to at least 54.2 billion shekels, not including the American aid. The U.S. funding is also greater than planned: Because of delays in some of the planned purchases from the United States, a surplus of 1.82 billion shekels was created in 2012. This money, which according to the agreement with the United States cannot be spent for other purposes, will be transferred to the defense establishment for its use next year.
The bottom line is that the defense budget is actually higher by a few hundred million shekels than what was agreed on before the cuts. The budget will not be cut; it will increase, even if part of the sum is based on one-time additions for specific needs.
The army is now putting together a plan to utilize the new resources, which will be spent mainly on operations and expanded training. Some of the money will also be used to make earlier payments to the defense industries for long-term projects.
But neither the government nor the Knesset Finance Committee have touched on the deep-seated structural problems in the defense budget, the greatest of which is the gap between “net” security expenses (for equipment, training and operations) and other expenses, first and foremost, human resources.
The outlay in the defense budget for pensions for defense establishment retirees, which was 6.1 billion shekels in 2013, is expected to increase to at least 6.8 billion. The outlay for pensions, rehabilitation (for handicapped IDF veterans) and families will swell from 11 billion shekels to 12.5 billion shekels in the coming year.
Perhaps the figure that best demonstrates the true burden on the budget is the ratio between expenses for human resources and other outlays. In 2007 the ratio was 53 percent to 47 percent, with greater expenses for security. In 2012, the ratio had reversed, with 53 percent for human resources, and in 2014, the expenses for human resources will increase to 54 or 55 percent.
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