Does the Israeli Army Cheat the Treasury Out of Millions?

Former senior IDF budgets official reveals for first time how wars and special projects are used to fund the military in other areas.

Rotem Shtarkman
Rotem Shtarkman
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IDF soldiers facing Gaza during Operation Defensive Edge, on Aug. 3, 2014.
IDF soldiers facing Gaza during Operation Defensive Edge, on Aug. 3, 2014.Credit: Reuters
Rotem Shtarkman
Rotem Shtarkman

The heated battle over the defense establishment’s budget for the next two years will be waged soon, with Finance Minister-designate Moshe Kahlon set to draw up budgets for 2015 and 2016. Once again it will be nearly impossible to discuss specific facts and figures, especially since we never hear voices from the defense establishment complaining about a lack of transparency, bloated budgets, an inefficient and unreliable system, or that the time has come to cut the state-funded pensions of defense retirees.

So why could things be different this time around? First, because the public is a little wiser and more critical this time. And second, because something has begun to change from within the security establishment itself – or at least, from some who have retired from it. True, they have chosen to remain anonymous for now. And also true, it is only a trickle. Nonetheless, their contribution to the debate is enormous.

We are reporting here for the first time statements made by a former senior official privy to the workings of Israel Defense Forces budgets, who reveals details about the continued failure to manage the defense budget.

The former senior official explains firstly how the military reports inflated costs just in order to receive larger budgets. “They calculate costs of activities at 30 percent higher than what it costs in practice, and the treasury has almost no ability to challenge it,” the ex-army man says. “The military presents details of all the resources it used – reserve duty days, flight hours, tank engine hours, ammunition, etc. – and the treasury has almost no way of ascertaining the quantities, even if it attempts to reduce the costs.

“During the Second Lebanon War,” he continues, “we kept two Excel files: One for internal use, which showed how much it cost us in practice; and the second, intended for external use, which showed how much we were asking for. Of course, in the external file the costs were higher. The Second Lebanon War was the number one source of funding for the military for a year or two afterward.”

The military’s operations – even the regular activities it conducts with other government ministries – are budgeted based on costs that are higher than in actuality. For example, flying the prime minister and president (in the past, when the Israel Air Force flew them) was based on cost estimates higher than the actual costs. Also, the various aid missions and other missions assigned to the military – which sometimes really are saving the country, such as fighting the Mount Carmel forest fire in 2010 or during the blizzard that hit Jerusalem in 2013.

“They do it all the time,” reveals the source. “As if they are saying to the country, ‘You want us to help you? Okay, but we also want to make something from it.’ Let’s say now, there were flights to Nepal – I assume they will price them higher when they submit their bill to the treasury.”

For decades, we have become accustomed to a rather pathetic public debate on the defense budget. There is almost no data, but a lot of fearmongering based on the axiom: “We are providing you with security, and therefore you must pay. If there is no budget, there will be no security.” It almost always works, and the IDF receives large supplements to its budget – even in the middle of a budgetary year, whether or not there has been a war or relative quiet. This works since the various senior officials and officers – and also those who have already retired – explain how terrible it will be if we don’t give the IDF everything it says it needs, because the aircraft and APCs are too old. Although the Finance Minister screams there is no money, the prime minister almost always gives in and compromises somewhere in the middle.

“We would use the same methods when we built a new base, too,” explains the source. “We would make crazy demands. But after we received the budget, in reality we would do much less. For example, the air force would explain why it needed to build another control tower in Nevatim [airbase, near Be’er Sheva] or another runway. But after the money arrived, it turned out they no longer needed so many control towers. I am convinced the same thing is happening today, with the evacuation of Tzrifin [army base, relocating to a new site in the south]. The army explains what it needs, but in practice it uses far fewer resources. The problem is that no one can supervise what is carried out. The defense budget officials in the treasury simply are incapable of containing so much information.”

Where are there superfluous expenses?

“It is possible, for example, to look at the housing for families [on air force bases]. They will always tell you we need it because people are not willing to move down south, so they build them beautiful homes with a pool and preschools, and pay their water and electricity bills for them. There were years when many air force pilots lived in Tel Aviv, and every morning there was a flight [for them] to bases such as Ramat David [about an hour’s drive north of Tel Aviv].”

The source backs up something a former IDF budgets officer posted on Facebook: “Wars, operations, special incidents were our way of bridging the budget shortfalls and even keeping reserves for coming years.”

What about the personnel in the military in general?

“That’s where the big money is. The problem is that, during a period of disagreement, the Defense Ministry always takes it to the point of ‘The combat soldiers don’t make much [money], so they deserve more as they are protecting us all.’ This is true, but the problem lies with the excess number of combat support roles. The problem is that when cuts are made, we don’t look carefully enough at what to close. The military protects all the career army people by using the combat soldiers, who are not the majority. We need to stop talking about career soldiers and start talking according to professions and jobs. Of course, there is also early retirement. They release professional personnel with a bridging salary for 20 years until [official] retirement [age] – and then they go on to a second career.

“It’s obvious that this isn’t okay. But when you’re in the middle of an institution and you’re not stealing the money and taking it home, you give yourself a break. You feel like you’re doing something good for the country. You don’t see the alternative of beds in hospitals, or tackling poverty. You simply maximize the benefit of the institution where you are.”

The IDF Spokesperson’s Office responded, “In recent years, the IDF has undergone extensive processes of transparency and supervision, and is supervised by numerous bodies, including the Finance Ministry’s accountant general; the Knesset Foreign Affairs and Defense Committee; the security cabinet; the cabinet; and the National Security Council.

“In 2012, a [computer] terminal was placed in the Finance Ministry that allows for ongoing supervision over the defense budget and provides information based on the specifications of the Finance Ministry. Moreover, during Operation Protective Edge [in Gaza last summer], the collection [of the information on] the costs was conducted with the full cooperation of representatives of the accountant general.

“In recent years, many missions have been given to the IDF that are not part of its core activities – for example, the assistance during the [2013] snowstorm, without receiving compensation for it. As to the claims concerning the salaries of career army personnel, the IDF acts with the approval and full transparency of the [Finance Ministry’s] director of wages. The salaries of the career army have eroded in recent years. To demonstrate this, the average salary of professional military personnel is lower than their counterparts in the security forces,” said the IDF spokesperson.

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