Netanyahu Demands Additional NIS 50 Billion for Defense Budget Expansion Amid Treasury Tensions

Prime Minister Benjamin Netanyahu has called for an increase of approximately NIS 50 billion to the planned "strengthening package" for Israel's defense budget, raising it from NIS 350 billion to around NIS 400 billion over the next decade. This demand was made during a meeting on Thursday with senior officials from the Defense Ministry and the Treasury, further complicating already strained relations between the two ministries.

The Defense Ministry is still awaiting the immediate release of NIS 15 billion and an additional NIS 25 billion by the end of the year, as agreed over a month ago with the National Security Council and Netanyahu. Treasury officials view Netanyahu's latest demand as a concession to the Defense Ministry's persistent budget requests, despite the defense budget potentially reaching NIS 183 billion by year-end. The Defense Ministry argues that the new funds would cover expenses unrelated to planned initiatives, including about NIS 7 billion for northern Israel's fortifications, NIS 12 billion for the Foreign Ministry to bolster Israel's international advocacy, and tens of billions for U.S. arms purchases as a hedge against potential reductions in future American military aid.

The current U.S. security assistance agreement, providing Israel with approximately $3.8 billion annually, expires at the end of 2028. Treasury sources warn that increasing the defense budget without efficiency measures could severely impact essential public services in Israel. Despite large sums being discussed, the Defense Ministry has yet to receive any of the allocated funds and is still waiting for authorization to commit to future defense procurements totaling around NIS 130 billion starting in 2027.

Netanyahu's directive to increase the defense budget package by NIS 50 billion may further complicate the budgetary landscape and deepen mistrust between the Treasury and Defense Ministry. This comes ahead of the October 27 Knesset elections, raising questions about the feasibility of such budget expansions. Finance Minister Bezalel Smotrich has publicly opposed tax increases to fund defense spending and criticized the Defense Ministry's procurement practices, emphasizing the need for fiscal responsibility during wartime and election periods.