“The budget deficit ballooned even without a war in Gaza – all it will take is a new round of fighting and the deficit will skyrocket.” These words were expressed over the last few months when I asked two former treasury officials about the government’s growing overspending.
What was then only a theoretical problem looked over the last two days as if it would emerge into a real one. A cease-fire agreement appeared to have been reached late Tuesday evening, but the risk remains that it won’t hold and/or that real conflict will eventually break out.
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In the meantime, the first lines of the Defense Ministry’s Excel sheet, summarizing the costs of fighting is being filled in with big numbers and will be presented to the Finance Ministry when it is all over. As it is, the government is contending with a swelling budget deficit and now it has more expenses.
No one knows how many sorties the Israeli Air Force flew over Gaza this week, but it is known that the cost of a single Iron Dome anti-missile of between $50,000 and $100,000 and as of 5 P.M. Monday more than 100 of them had been used. An hour of flying time by a fighter jet runs to $20,000 and smart bombs cost tens to hundreds of thousands of shekels each, depending on how accurate they are. The ones used in Gaza have to be very accurate.
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On the ground, precision tank shells cost in the tens of thousands of shekels each. To that is added the costs of running tank engineers and of transporting the tanks themselves to the border by truck. Bringing troops down south is another expense and is the loss of the services they are supposed to be performing while they are there.
In 2014, the 51-day Operation Protective Edge had a price tag of 8 billion shekels ($2.2 billion at the current exchange rates) – and that figure was only arrived at as a compromise at the end of long negotiations between the defense and finance ministries.
The war costs were one reason why Finance Minister Yair Lapid had to contend with a fiscal crisis during his term. If the fighting this week had become a real war, Moshe Kahlon, his successor, would face the same, if not worse.
A back-of-the-envelope calculation shows that Protective Edge, which included ground incursions into Gaza, cost on average 160 million shekels a day. The daily cost of the current round of hostilities is certainly less but still probably has come to tens of millions of shekels. The bill will soon be presented to the treasury.
And that doesn’t include the losses to the economy from businesses in the range of Hamas missile fire.
The fighting has also again laid bare the fact that large number of Israelis living just kilometers from the Gaza border still do not have fortified security rooms (mamads) in their homes.
It’s become a big business locally, with advertisements in regional weeklies coming on with pitches like, “You don’t have a mamad? In the next round, your family should be protected? We can build a fortified room in 10 work days using a new system that’s cleared Homefront Command trials.”
In the last nine years, the government has invested 1.5 billion shekels in fortifying rooms in private homes. More than 10,000 mamads have been built in 44 towns in the area adjacent to Gaza and (officially at least) no home within seven kilometers of Gaza is supposed to be without one.
In practice, that’s not the case. Many have underground shelters dating back from before the 1990s, which can’t house a family that needs to sleep in them overnight. Others are agricultural buildings that were converted into homes and were never approved for a mamad.
The message is that on top of the costs of fighting, Israel still needs to invest hundreds of millions of shekels for shelters.