Israel's Defense Budget Cut for Now, but Will Increase Over Long Term

Israeli budget allocations to defense are set to reach a record-high NIS 59 billion in 2018, which helps explain why Defense Ministry officials are not up in arms over the immediate budget cuts.

Amos Harel
Amos Harel
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Amos Harel
Amos Harel

Although the security cabinet decided on an immediate cut of NIS 3 billion in the defense budget, over the longer term the budget will actually increase.

The defense establishment was promised that after a budget reduction in 2014, there would be a gradual increase in its allocations over the ensuing four years, up to a record NIS 59 billion in 2018. That's apparently the main reason why news of the cut was received with equanimity by top Defense Ministry officials. The treasury had originally proposed cutting the defense outlay by NIS 4 billion.

Defense Minister Moshe Ya'alon had said, even before assuming his post, that he understood the defense establishment would have to do its part to help cover the huge deficit in the state budget. As defense minister, however, he tried his best to limit the force of the blow, and the decision made Monday at the behest of Prime Minister Benjamin Netanyahu to cut only NIS 3 billion met his expectations.

The cut for 2013 will be smaller, only NIS 1.5 billion; there was only so much that could be done given that half the year is over, and a significant portion of this year's budget was already tied up in contractual obligations. The Israel Defense Forces is preparing for a limited reduction in the days of reserve service and training. It is next year that will present defense officials with a hole.

Next year the defense budget will be NIS 51 billion, compared to NIS 54.2 billion in 2012. This calculation includes most of the American defense assistance, some NIS 2.4 billion of the NIS 3 billion. Exactly which budget items will be cut has yet to be finalized. Ya'alon and IDF Chief of Staff Benny Gantz have already decided on the gradual elimination of a few reserve units, primarily those that rely on aging armored vehicles. At the same time, a plan to dismiss 4,000 standing army officers will be launched. They will gradually be replaced with some 1,000 younger standing army people, so only 3,000 positions will actually be cut. The Defense Ministry will also put off implementing some weapons procurement projects and particularly try to spread the payments to the large defense industries over more years.

"There will need to be broad reductions, but we will do everything we can not to undermine the IDF's preparedness and readiness, nor to harm the procurement of weapons systems that will be important in the future," a senior security source said.

The security cabinet also approved the IDF's new multiyear plan that will start in 2014, after two years in which two different multiyear plans were scrapped. The NIS 59 billion outlay to be reached in 2018 does not account for inflation, and experience has shown that nearly every year the defense establishment wins some kind of special additional funding because of changes in the security reality, whether it be a war (Second Lebanon War) a Gaza operation (Operation Cast Lead), or merely the extensive preparations made for a possible Israeli attack against Iranian nuclear sites.

Optimistic assumption on economy

The plan as formulated also relies on the optimistic assumption that the state of the economy will improve over the next two years. But the conditions and pensions of standing army officers won't be touched. Ya'alon and Gantz had offered to discuss this in the context of a broad reduction in the salaries of all senior civil servants. "We are prepared to be the first, but not the only ones," they said.

Their proposal didn't even come to a vote during the security cabinet meeting which the top defense brass probably foresaw, given the agreements already reached between the treasury and the Histadrut. During the meeting it was agreed that a significant portion of the funding for securing the economic waters of the Mediterranean Sea, including the large gas installations, will come from sources outside the defense budget.

The Israel Navy will get only a small allocation from the defense budget to equip itself with vessels that will participate in patrolling these waters. The senior security official said of Monday's meeting: "It was the first time in years that the discussion was businesslike and without any bad-mouthing either from the defense establishment or the Finance Ministry. The approval of the IDF multiyear plan was the most important part as far as we're concerned, and since we're also aware of the state of the economy, we accepted the temporary cut in the budget."

Defense Minister Moshe Ya’alon, left, Finance Minister Yair Lapid, center, and Justice Minister Tzipi Livni at a cabinet meeting, May 13, 2013. Credit: Emil Salman

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