The Israeli Army Got the Budget It Wanted - but With Strings Attached

It’s not certain that any of the proposed belt-tightening measures, such as shortening compulsory service and lowering IDF pensions, will actually happen,

An Israeli soldier prepares artillery shells at an army deployment area near Israel's border with the Gaza Strip, on July 20, 2014.
Jack Guez, AFP

The Finance Ministry’s budget department sounds unusually happy these days. The Knesset is now discussing the next state budget, and the department, almost without opposition, managed to secure approval for several changes in the defense budget.

Yet treasury officials probably aren’t as happy as they pretend. On closer examination, the defense establishment has, as usual, gotten what it wanted on most issues. In contrast, the numerous conditions attached to the treasury’s achievements make them of questionable value.

These achievements include reducing compulsory army service for men from 32 to 30 months in 2020, implementing the Goren Committee’s recommendations for cutting outlays on rehabilitating wounded veterans, and reducing the cost of career officers’ pensions to an average of 12,000 shekels a month ($3,100) over the next nine years.

The treasury rightly attributes all of them to better cooperation with the Defense Ministry and the Israel Defense Forces, sparked by talks last year between Finance Minister Moshe Kahlon and IDF Chief of Staff Gadi Eisenkot and a subsequent agreement signed by Kahlon and former Defense Minister Moshe Ya’alon. And this cooperation is indeed an improvement from the very public clashes that have marred discussions over the defense budget for decades. Nevertheless, questions remain about all the items listed above.

Defense Minister Avigdor Lieberman visits an Israeli army unit on a high point overlooking the Gaza Strip, July 2016.
Ariel Hermony

* Shorter service. In 2014, when the government reduced compulsory service for men from 36 to 32 months, the IDF fought the change. This time, surprisingly, it didn’t. The difference, as usual, is in the details.

The earlier reduction will come into force in March 2018, when the soldiers inducted in March 2015 and July 2015 will be released simultaneously. The IDF still isn’t sure what impact that will have, and both Eisenkot and Defense Minister Avigdor Lieberman said last week that they oppose any additional reduction.

But 2020 is a long time away, and the agreement says the diplomatic-security cabinet will reconsider the latest two-month reduction in 2019. In other words, for now, that reduction is purely theoretical, and the army can still try to avert it in another few years by arguing that a difficult security environment (which always exists) makes the risk too great.

The treasury counters that even with the reductions in service, the army will have more draftees in 2021 than it does today, thanks to population growth. It also notes that having young men spend less time in the army means they can enter college and the job market sooner, a benefit it hopes will ensure support for the law.

* Wounded veterans. After trying for years, the treasury has finally managed to enact the Goren Committee recommendations into law. This means that soldiers whose injuries are unrelated to their military activity (like those injured in traffic accidents while on leave) will henceforth be handled by the National Insurance Institute rather than the Defense Ministry, which generally pays higher benefits.

But MK Ofer Shelah (Yesh Atid), a member of the Knesset Foreign Affairs and Defense Committee who tried for years to enact a more expansive version of the law, said the current version will produce only minor savings – 10 million shekels a year or less – and affect at most about 50 soldiers a year, inter alia because it won’t apply retroactively.

* Pensions. Under Eisenkot’s multiyear plan, the army fired some 5,000 career officers, lowering the total to 40,000. It has also begun reducing the age at which officers can retire with full pension to 42 (for noncoms, the age is 53), while also granting less generous exit terms to those who leave between age 28 and 35. The treasury initially wanted noncombat officers who retire at 42 to receive much less generous retirement packages than combat officers do, but the army fought back hard, and won.

Instead, the treasury won an agreement to lower the average pension for a retiring officer from 21,000 to 12,000 shekels a month by 2025. Under pressure from Shelah, the deal also stipulates that the Foreign Affairs and Defense Committee will review the situation in 2021 to ensure that the IDF is meeting its pension reduction goals.

But while the treasury is proud of this deal, past experience doesn’t bode well. Just two months ago, a state comptroller’s report revealed that pension overruns are rampant in the military. Last year, for instance, retiring officers were granted pensions that were 14.8 percent higher, on average, than they should have been, without the treasury even knowing about these increases. Thus one has to wonder whether the weak oversight stipulated in the deal will be enough to prevent similar overruns in the future.

The IDF got most of what it wanted from last year’s negotiations with the treasury, including a large, stable budget for the next five years. But looking at what the Knesset has approved in the last two weeks, one can’t help wondering whether the treasury’s optimism over the deal is equally justified.