Failure to reach a final decision on cuts in defense spending could lead to a delay in the Knesset's approval of the 2013-14 budget.
The security cabinet was supposed to reach an agreement on the details of the NIS 3 billion in spending reductions in June, but it is now expected to meet on the issue only later this month.
The proposed defense cuts are a key part of the 2013-14 budget package, because any rollbacks in the planned reductions would have to come out of other budget items, such as infrastructure, education, health or welfare.
Defense officials will soon give the security cabinet - which includes Prime Minister Benjamin Netanyahu, Defense Minister Moshe Ya'alon, Finance Minister Yair Lapid and Economy Minister Naftali Bennett - their plan for the next five years, in line with the multiyear defense budget approved a month ago.
Sources in both the government and the defense establishment expect these officials to say that given the defense goals set by the cabinet, both the 2013-14 budget and the five-year budget are too low.
In the Knesset, lawmakers are angry over the expected attempt to amend the defense budget. The joint committee on the defense budget, which is headed by MK Avigdor Lieberman (Yisrael Beiteinu ), is planning exhaustive and thorough deliberations of the defense spending cuts. It has invited Ya'alon and Israel Defense Forces Chief of Staff Benny Gantz to attend a series of meetings on the matter.
But defense officials said they will not have prepared their proposal in sufficient detail to begin discussions before next week. They originally asked to delay a vote on the defense budget until July 28, but under pressure to speed up the process, said they are now prepared to advance the date to July 21 or 22.
The problem is that the full 2013-14 budget is supposed to undergo its second and third readings in the Knesset plenum by the end of July. Failure to win Knesset approval in time could cause the government to collapse.
The 2013 defense budget is comprised of two parts - a NIS 52.5 billion core budget and another NIS 5.9 billion of appropriations conditional on Knesset approval. The 2014 budget is similarly structured - NIS 51 billion in core spending and NIS 6.7 billion dependent on Knesset approval. In 2012, total spending reached NIS 61 billion, some NIS 5 billion more than originally approved for the year.
In exchange for agreeing to the NIS 3 billion cut for 2013-14, the defense establishment is entitled to spending supplements in 2015-2018.
Government sources said the army is not expecting to fight a conventional war any time soon. But money will need to be devoted to areas such as cyber warfare, intelligence, the air force and new technologies. In contrast, despite the turmoil that has seized neighboring countries such as Egypt and Syria, the army is prepared to weigh cuts in ground forces and weaponry.
The security cabinet is likely to propose freezing development of the next-generation Merkava tank.
The 2007 Brodet Committee, which examined defense spending, said the army should institute some NIS 30 billion in efficiency measures from 2008 to 2017. But one source said it has accomplished nothing close to that figure. Thus the security cabinet may demand that the army move ahead on these savings.