Dispute Over Apache Helicopter Deal Pits Finance Against Defense Ministries

A dispute between Israel's Finance and Defense Ministries over the defense budget has escalated, now centering on the procurement of new Apache helicopters. While Finance Minister Bezalel Smotrich characterized the delay in funds for the deal as a "technical issue," defense establishment sources presented a different picture, citing a NIS 40 billion budget shortfall for promised funds that have yet to be transferred. Smotrich stated the deal was approved in August based on the existing budget, but immediate payments to Boeing became necessary. He added that the Finance Ministry has now identified a budget source to finalize the deal and that a government decision would allocate NIS 2.6 billion to the military.

However, defense officials claim that despite an agreement with Prime Minister Benjamin Netanyahu in June, tens of billions of shekels have not been transferred. They assert that the defense establishment faces a severe NIS 40 billion deficit in 2026, and the funds are urgently needed to meet its missions. The disagreement also involves how the financing for the helicopters is being secured. Defense sources indicated that a government-approved cut of approximately NIS 1 billion from future budgets was intended to enable the deal's signing after the deadline passed last week. They emphasized that the funds for the Apache deal would come from deferring payments on other defense contracts, not from new budget additions. The cut from future budgets, they explained, was a technical accounting procedure demanded by the Finance Ministry as a condition for approving the signing.

The government approved funding for the Apache helicopter deal, valued at about $1 billion, and other defense equipment through an urgent phone poll. The funding sources include a cross-ministry cut and adjustments to budgets for 2027-2029, affecting funds allocated for the five-year plan for the Arab society. The defense establishment continues to warn that beyond the helicopter deal, a solution for the 2026 budget deficit and the shortage in "force-building" budgets for the coming years remains unfound, despite prior agreements and directives.