As it turns out, the fighting didn't end last week. Just the front line shifted. The war between Israel and Hamas is over, for now at least, but the one over military spending between the Defense Ministry and the treasury is just getting started.
- Sorry to Burst Your Bubble, but Israel's Economy Won't Gain Much From Peace
- Israel's U.S. Aid Addiction: Time for Rehab
- Is Israel Really in Such Bad Economic Shape?
- Israeli Students Suffering From State Failure to Invest in Education, OECD Study Shows
- Israeli Neglect Is Why Jerusalem Is Divided
The army is not just seeking 9 billion shekels ($2.5 billion) for Protective Edge; it wants an extra 11 billion annually starting from 2015, amounting to a 20% increase over what it was supposed to get next year.
That makes the debate underway over the budget not just the usual dickering over a couple of billion shekels here or there: it's an ideological war. On the one side are those who aspire to a Social Democratic Israel that provides ensure the best heath, education and welfare services for its people; on the other are those who see us as Fortress Israel beset by enemies and threats.
Although there are certainly many on the right who are hopelessly enamored of an Israel with a gun in one hand, a flag aloft in the other and a Palestinian under foot, it's not hard for most of us to decide which side has the more inspiring vision. Who would trade Sweden for Sparta?
Well our prime minister, for one, who made it clear which side he was on before the cabinet voted on Sunday to shift 1.5 billion shekels of civilian spending this year over to the army. "Defense is first," Netanyahu declared.
Fascist dross or just pessimism
Netanyahu's vision isn't so much the nationalist – dare we say fascist – dross of the far-right. It's a vision of an unhappy world where problems can at best be managed but never go away, a vision of Israel that has to be ever-vigilant is the face of persistent threats.
Operation Protective Edge managed the Hamas problem for now, but it will come back. Then there is the growing strength of Islamic zealots in Syria and Iraq, Iran's nuclear aspirations, the anarchy in Sinai, a hostile White House, a more hostile Europe and a most hostile Turkey. Peace agreements with the Palestinian and nuclear compromises with Iran aren't solutions in this dark, Hobbesian world.
Many of us suffer what could be called an OECD syndrome, or perhaps Swedish envy. Israel is a high-tech economy, we've thrown off the old Zionist ideology of self-denial for a life of shopping malls, two-car families and holidays abroad, and our per capita gross domestic product – the usually measure of a country's wealth – puts us among the world's developed economies. But every couple of weeks the Organization for Economic Cooperation Development puts out another report or issues another statistic that shows that our classrooms are more overcrowded, our poverty rate higher and our roads and we have more potholes than countries in Europe or North America.
Lining up all the country's tycoons against a wall and shooting them would help, but more realistically, increasing government spending on education, health and infrastructure would make us more like the Scandinavian countries that always come out on the top of all these rankings.
The fact is that Israel is niggardly in terms of social spending – according to the OECD, of course – spending just 15.8% of GDP on it in the 2012/13 year, versus an OECD average of 21.9%. By comparison, the World Bank says we spent 5.6% of GDP on defense last year, versus 1.6% for European Union countries. Even the United States when it was pouring money into Iraq and Afghanistan wasn't spending more than 4.5-4.6%.
One key element of Swedish envy is denial, a psychological defense mechanism that insists Israel doesn't face any real security threats and, if we do, they can also be solved by a signature on a peace agreement with the Palestinians.
Netanyahu's world view may also be informed by irrational fears, but it seems to more closely approximate the reality of the Middle East we live in today.
The army is almost certainly exaggerating the cost of Protective Edge. No government body in the world opens budget negotiations by asking for what it conservatively estimates it really needs. But it did fight a 50-day war that involved hundreds of Iron Dome missiles and tens of thousands of reservists, that didn't come cheap. No one realistically doubts it will be fighting others on the borders of Gaza, Lebanon, and maybe one day Syria too.
The struggle against reindeer
We are not going to bring our defense burden down to the 1.6% that Sweden spends fending off threats from Norway, Denmark and greater Lapland irredentists. The question is whether we need to spend more than we do now and what is that going to cost us, not just in pure shekel terms, but in terms of less money for schools, hospitals, social welfare and less investment in infrastructure.
The army certainly has a lot of fat that could be trimmed, but so does the civilian sector. Efficiency simply isn't one of the hallmarks of Israeli government, so that anyone who claims that the guns versus butter dilemma can be solved by cost-cutting is selling smoke. Here and there, pensions, salaries, payrolls or procurements may be cut, but that is never going to be enough to close a gap of several billion shekels annually.
The army may be wasteful, but relative to the size of the economy, direct defense spending has declined from close to 8% as recently as 2006 to 5.6% last year.
Unfortunately, it looks like we will be spending more on defense at a time when the economic growth looks to headed for a long-term slowdown.
The treasury, for instance, is expecting GDP to expand at just 2.8% a year for the next five years, compared with rates of as much as 5% in the previous five years. Increased defense spending is another weight on growth, but there are ways of offsetting that other than cutting defense spending.
In any case, it's not as if every shekel going to the army enters into a black hole of tanks, warplane and guns with no redeeming social value. The army is a more important training ground for high-tech than the universities. It keeps the defense industry, a major employers and exporter, alive. And, more than its detractors care to admit, it is a source of career opportunity and a great meeting place for Israelis of all classes, communities and parts of the country.
Even Iron Dome, which cost tens of billions of shekels to develop and more to operate, is as much an investment in saving lives as a new hospital wing and a contribution to (preserving) the country's infrastructure as much as repaving a road.
Of course, spending more for the army means spending less for everything else, but that is our fate. To think we can wish away the Middle East because it is inconvenient is a fantasy.