Netanyahu's Budget Plan Faces Opposition Over Political Funding

Prime Minister Benjamin Netanyahu's proposal to increase the defense budget by approximately 40 billion shekels for 2026, through special legislation, is expected to include allocations for civilian purposes, including political objectives such as settlements and "superfluous" ministries, according to Knesset assessments. This move is seen as an effort to court voters from the religious Zionist and "Srugim" (knitted kippah) communities, aiming to prevent vote erosion to parties like "Am Israel" led by Ofer Winter. The government's ability to submit a budget increase bill even during the current election recess means Netanyahu does not require opposition leader Yair Lapid's support. Lapid has stated his support for a defense budget increase but insists on cuts to coalition funds and support for draft dodgers. The coalition, holding a majority of 68 Knesset members, can advance the bill without opposition backing. However, the Knesset's legal advisor noted that while the government can pass a defense budget increase during elections, further legislative steps in the Finance Committee require the consent of a joint coalition-opposition "Agreement Committee." The opposition is willing to approve funds solely for defense but objects to allocating money for yeshivas, settlements, and ministries, which would necessitate opposition agreement for committee discussion, an agreement they are unwilling to give.

The dispute over the 40 billion shekel defense budget increase is thus perceived as a battle over civilian and political funding. While the opposition supports a defense budget hike, they fear associated cuts and increased political spending. Advancing the defense budget requires a new budget law, raising spending targets, and adjusting deficit goals, potentially involving budget cuts or tax increases. Even if the bill includes non-war-related civilian funding opposed by the opposition, the coalition could still push it forward. Knesset Speaker Amir Ohana could permit the Finance Committee to convene during the recess, citing exceptional circumstances, as he did in early August to approve political and coalition budget transfers, some of which are currently frozen by the High Court of Justice. Meanwhile, the defense establishment faces a budget deficit and requires additional funds, yet the chairman of the Finance Committee has not scheduled a discussion for a 11.7 billion shekel transfer from reserves to the defense budget, a request made over a month ago. Several committee members, including its chairman, have been removed from realistic Knesset slots for the next term. The coalition can appoint replacements, but the committee chairman must convene the committee for the defense budget increase. The final vote on the defense budget increase would occur in the Finance Committee, with details presented to a classified subcommittee. The convening of this defense budget subcommittee does not require opposition consent. Netanyahu appears to be attempting to obligate the opposition to support the defense budget increase, which includes civilian and political funds. Given the need for the "Agreement Committee's" consent, any political funding approved against the opposition's will is likely to be frozen by the High Court of Justice. In the interim, Likud and Yesh Atid are engaged in a public dispute over responsibility for the stalled defense budget increase, a debate that serves both parties politically ahead of the elections.