Final Shot Hasn’t Sounded in War Over Defense Budget

Netanyahu and Lapid may think they’ve covered the hard yards agreeing on a $1.6 billion increase for the defense budget, but Moshe Ya’alon begs to differ.

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Defense Minister Moshe Yaalon at the weekly cabinet meeting, Sunday, Sept. 22, 2014.Credit: Emil Salman

The defense establishment wasn’t party to the agreement between Prime Minister Benjamin Netanyahu and Finance Minister Yair Lapid regarding the amount of the increase for next year’s defense budget.

It was reported over the weekend that Netanyahu and Lapid had agreed on an additional 6 billion shekels (approximately $1.6 billion) for defense in 2015, although the two didn’t make an official statement to that effect. However, Defense Minister Moshe Ya’alon believes that the amount reported is not enough and intends to demand more for his ministry.

The dispute over additions to the defense budget comes in the context of the end of the war in Gaza and as calculations of its costs emerge. The Israel Defense Forces calculated the direct costs of the fighting at 8.6 billion shekels, while the treasury says the direct cost was 6.2 billion shekels (most of the dispute revolves around what to include as direct costs, not about the data itself).

At the same time, a debate has been triggered over the need to increase the 2015 security budget due to various requirements that were revealed during the fighting. The Defense Ministry at first demanded an additional 11 billion shekels, while the treasury’s opening gambit was that no extra money would be forthcoming.

Talks between Netanyahu and Lapid last week gave rise to the figure of an additional 6 billion shekels, which would be financed mainly by increasing the gross domestic product deficit to 3.4 percent. (The original deficit was 2.5 percent, which Netanyahu later agreed to raise to 2.9 percent.)

Lapid told journalists on Saturday he believed “we are close to agreements. Our goal is to submit the budget to the government as soon as possible.” However, it transpires that the defense establishment believes 6 billion shekels is not enough. Security sources told Haaretz on Sunday that Ya’alon doesn’t accept the agreement, and that the needs are greater. The sources indicated that Ya’alon would soon be informing Netanyahu of his objections.

The apparent budgetary increase to the Defense Ministry is high, but isn’t quite as extreme as it seems. In fact, over the past five years the defense establishment has received an annual increase of approximately 4.5 million shekels, each time for different reasons – among them, compensation for expenses of the previous operations against Hamas in Gaza (Cast Lead and Pillar of Defense).

In the 2014 budget, for example, during a year in which there was no unusual military action before the war broke out in July, the Defense Ministry received an additional 3.6 billion shekels to its budget.

In any case, some defense outlays are expected to mushroom in 2015, unconnected to the war in Gaza or applying any lessons learned from it. For example, expenses for pensions and rehabilitation are expected to reach 13.1 billion shekels next year, 1 billion more than this year. Thus, even if Netanyahu now rejects Ya’alon’s demand for an increase beyond 6 billion shekels, it is not at all certain that this will end the dispute.

It is very possible that, later on, the defense minister and army will take similar tactical steps to the ones they took this year in the struggle over the defense budget from April to June. During that time – before the escalation in the West Bank and, after that, the Gaza Strip – the IDF announced it was halting training almost entirely in its field units and the air force, because it had already used up all its training budget.

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