Cost of Hostilities to Israel Estimated at NIS 6 Billion So Far

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Israeli soldiers stand near the border with Gaza, July 30, 2014.Credit: Reuters

The cost of the current military operations in the Gaza Strip as of Wednesday, after 23 days of fighting, is estimated by senior government officials at a minimum of 6 billion shekels ($1.7 billion), including certain civilian sector losses in addition to the direct military costs.

The direct military cost is estimated at 4.2 billion shekels, with an additional 1.8 billion to 2 billion shekels in the civilian sector. The military expenses include the use of weapons and ammunition, the costs incurred in mobilizing reserve soldiers as well as food, medical and fuel expenses. The 6 billion-shekel figure includes civilian sector losses to businesses in the south, the absence from work of staff living within 40 kilometers (25 miles) from the Gaza border and the direct damage to property around the country.

At a Finance Ministry meeting in Tel Aviv on Wendesday , the ministry’s director general, Yael Andorn, said the economy is resilient to the effects of the security situation as it had been with similar hostilities over the past decade.

Israel entered Operation Protective Edge in good financial shape, Finance Ministry officials have said, with a low ratio of national debt compared to the country’s gross national product in recent decades. The fact that the fighting is occurring in the middle of the budget year, which in Israel is the same as the calendar year, provides a measure of budgetary flexibility, ministry officials noted, allowing the government to absorb the military and civilian costs of the hostilities in this year’s budget rather than carrying them over to next year.

One option in accomplishing this could involve an across-the board cut to government spending at every ministry except the Defense Ministry. Every cut of 1% in government spending generates savings to the treasury of about 4 billion shekels, although this would not be accomplished without affecting the level of service the public receives.

Even before the beginning of the current fighting, the defense establishment had requested an additional allocation of 5 billion shekels for the current year. After considerable wrangling, it received 3.75 billion in two installments. Defense officials had also asked for a 5 billion-shekel budgetary increase for next year, which Finance Ministry officials adamantly opposed, but that was before Operation Protective Edge. Now the officials are prepared to approve the request on the condition that the Defense Ministry not later ask for more. In light of the current hostilities, however, it is thought likely that the military will get more than a 5 billion-shekel supplement next year, although it is expected to be less than 10 billion.

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