The Defense Ministry will be asking for an 11 billion shekel ($3.2 billion) increase in the defense budget for next year, the ministry’s director general, Dan Harel, told a government committee on Thursday.
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This was the first official statement by a defense official on the matter since the outbreak of hostilities between Israel and Hamas in the Gaza Strip a month ago. If approved, the additional funding would bring next year’s defense budget to an all-time high of nearly 70 billion shekels – the equivalent of about 17% of this year’s entire government budget.
Finance Ministry sources have said the ministry will accept any decision on defense spending made by the political leadership, but expressed the view that an 11 billion hike is excessive and would require a full explanation as to how the state could afford it.
Harel was speaking to the committee that is developing a multiyear policy on military spending for the period 2016 to 2025. The panel is chaired by Yohanan Locker, the former military secretary to Prime Minister Benjamin Netanyahu and the brother of Harel Locker, director general of the Prime Minister’s Office.
The request for the major military spending increase is designed, in part, to fund an extended defense perimeter around the Gaza Strip after the end of the current fighting, sources in Jerusalem said, as well as for the expense of any steps taken based on lessons learned from the Israel Defense Forces’ current military engagement against forces in the Gaza Strip.
The additional funds for next year’s budget come on top of a 7 billion shekel request by the ministry to cover the military’s costs for the first 30 days of Operation Protective Edge from this year’s budget.
Finance Ministry sources have pegged the cost of the war so far at 3 to 4 billion shekels, while other reliable sources put it at about 5.6 billion shekels.
The military spending supplement for this year is due to be entirely funded from existing resources within the 2014 budget. The Finance Ministry’s accountant general, Michal Abadi-Boiangiu, is the ministry’s contact person on the ongoing costs of the war.
Before the outbreak of the current fighting, next year’s defense budget was expected to increase by 2 to 3 billion shekels, although the defense establishment had been seeking 5 billion more in funding.
“We’re sitting with the defense establishment, hearing their demands, looking into the significance of the concept of ‘covering the costs of the war’ from their perspective, and investigating how much their demands involve,” Finance Ministry director general Yael Andorn told TheMarker over the weekend.
“We’re also investigating what expenses the army would have had if it hadn’t been for the war,” she said, adding that the inquiry would be completed in about two weeks “if the war ends in the coming days.
“From our perspective, real reforms have to be instituted in the defense budget,” Andorn added. “That was our initial intention for the 2015 budget, and we’re not prepared to forgo the subject. They have a huge budget of more than 60 billion shekels a year, constituting about 40% of the [total] state budget, not including interest and debt repayment expenses.
"Undoubtedly, despite the current discussions regarding a supplement for one-time expenses in 2014, there will be no avoiding fundamental, in-depth reforms in the defense establishment and its budget, to enable the continued existence of the civilian economic agenda.”
In related news, the Prime Minister’s Office and the Finance Ministry have agreed that the entire 2015 state budget, along with the supplementary Economic Arrangements Bill that accompanies it, will be presented for cabinet approval in early September.
That’s later than in recent decades, when cabinet deliberations on the budget began in July and ended at the end of that month or early August. However, cabinet sources have said they expect the military hostilities in Gaza to be over by the end of August and that the sources for additional military funding will be apparent.
At a news conference on Thursday, Finance Minister Yair Lapid promised that there would be no new taxes next year, adding that the economy requires engines of growth rather than having the civilian sector weighed down.
“I won’t pretend that Operation Protective Edge isn’t prompting renewed discussions regarding national priorities,” Lapid acknowledged. “The defense establishment has demands that it didn’t have before, and that’s legitimate. But countries are not run based on the mood,” he said, adding that his ministry is working with defense officials and will provide funds to address the threat of tunnels built by Hamas into Israel and funding to protect communities in the south.