Increased U.S. Aid Could Ease Row Over Israeli Defense Budget

Netanyahu off to Washington next week as finance, defense ministries square off over 2016 spending.

Finance Minister Moshe Kahlon, left, with Defense Minister Moshe Ya'alon.
Marc Israel Sellem

Prime Minister Benjamin Netanyahu, presiding over a bitter dispute concerning the size of next year’s defense budget, is hoping for some fiscal relief from the United States when he meets with President Barack Obama next Monday.

Extra aid will be one of the top agenda items in next week’s meeting, and officials are hoping Israel will be able to convince Obama to add $1 billion annually to the $3.1 billion it now gets. Washington has promised to ensure that Israel retains a military edge in the region as the Iranian nuclear agreement goes into effect.

Netanyahu, who has pledged to increase the defense budget to an unspecified figure above the 56 billion shekels ($14.5 billion) already approved by the cabinet, is holding a series of meetings with Defense Minister Moshe Yaalon and Finance Minister Moshe Kahlon to agree on a final figure.

Kahlon is ready to back a relatively modest increase in spending, but only if the army is ready to undertake the Locker committee reforms, which call for reducing the number of career officers and cutting salaries, among other things.

“I hope we’ll soon see very important reforms in the defense establishment’s budget, reforms we’ve waited many years for,” Kahlon told a meeting of the budget division Tuesday.

Kahlon has opted for a low profile in the debate over the defense budget, while Ya'alon has spoken out strongly and repeatedly on the matter.

On Tuesday he urged the Knesset committee weighing the defense budget not to approve the 56 billion-shekel allocation, a recommendation the lawmakers followed. “Unfortunately, the defense budget as approved by the cabinet ... doesn’t give the defense establishment what it needs to function and fulfill defense needs,” he told the lawmakers.

The 2016 budget, including defense spending, must be voted on by the full Knesset by November 19. The other high figures for defense that have been circulating range from 59 billion shekels, which the Locker committee proposed last summer, plus supplements linked to the army’s implenting reforms. Defense Ministry director general Dan Harel has proposed 60 billion shekels and Yaalon 62 billion.

Added to all these figures is another 8 billion shekels, conditional on Knesset approval — the cost of moving Israel Defense Force installations from the center of the country to the south and building the security fence on the border with Jordan.

While expanded U.S. aid would cover a lot of this increase, it is not yet clear when it will arrive. The current aid agreement only expires in 2018 and the increase may only begin under a new agreement that covers the next decade.

Meanwhile, even though the government has been collecting more taxes this year than it expected, the added spending would have to come out of the civilian budget.

With reporting by Zvi Zrahiya