Israel's Security Budget May Have Shrunk, but Arms Exports Will Inject It With NIS 6 Billion

Unlike other ministries, the Defense Ministry gets to keep for itself revenues from the sale of state assets, from weapons systems and other equipment to land and broadcast frequencies, including joint projects with foreign countries.

In 2013 and 2014, as always, the Defense Ministry will have the biggest of all the ministry budgets, at NIS 58.4 billion and NIS 55.7 billion, respectively. But again, as always, the final figures will almost certainly be billions of shekels higher than those approved by the cabinet and the Knesset.

In 2012 total Defense Ministry spending was NIS 60.5 billion, NIS 4.7 billion over budget.

Despite the government’s desire to hold down costs, both Defense Minister Moshe Ya’alon and Israel Defense Forces Chief of Staff Lt. Gen. Benny Gantz are already agitating for more money. It appears that even before the 2013-2014 state budget goes to the Knesset for its second and third readings, in late July, at least part of the defense establishment's desires will be met - at the expense, of course, of other government services.

At the end of June top defense officials are slated to submit a multiyear plan to the inner cabinet. However, they are expected to demand additional funding on the grounds that the proposed budget will not enable the IDF to meet its goals, particularly with regard to boosting combat forces - even if significant cuts are made in procurement, personnel and other areas. For example, they may raise the option of freezing the Merkava tank project for the coming years.

Unlike other ministries, the Defense Ministry gets to keep for itself revenues from the sale of state assets, from weapons systems and other equipment to land and broadcast frequencies, including joint projects with foreign countries.

The 2013 draft defense budget thus contains two expenditure categories, "net" and "revenue-dependent," NIS 52.5 billion and NIS 5.9 billion, respectively. In the 2014 draft budget these figures are NIS 51 billion and NIS 6.7 billion, respectively. For both years, the revenue-dependent spending figures set record highs.

The Defense Ministry previously agreed to a NIS 3 billion budget cut in 2013-2014, in exchange for increased allocations in the 2015-2018 period, for annual net expenditures of NIS 52 billion, NIS 55 billion, NIS 57 billion and NIS 59 billion for 2015, 2016, 2017 and 2018, respectively. Total net expenditure for the 2014-2018 period is pegged at NIS 274 billion.

The new 2013-2014 draft budget also, unusually, provides the Defense Ministry with an additional credit line of up to NIS 32 billion in each of the two years for long-term procurement commitments to local and foreign defense suppliers, in amounts of NIS 19 billion and NIS 13 billion in shekels and in foreign currency for each year, respectively.

The defense budget includes U.S. military aid of $2.9 billion (NIS 12.6 billion) in 2013 and $3.1 billion (NIS 13.3 billion) in 2014. Israel must spend 73.7% of this aid in the United States.

In addition to the regular annual military assistance, the United States gives Israel ad hoc allocations for weapons development and procurement in specific areas, primarily for active anti-missile defense systems (such as Arrow and Iron Dome).

The earmarked U.S. military assistance, part of revenue-dependent expenditures, comes to $480 million in 2013 and $489 billion in 2014.

Ariel Hermoni / Ministry of Defense