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

Prime Minister Benjamin Netanyahu has demanded an increase of approximately NIS 50 billion to the planned "security strengthening package," raising the total from NIS 350 billion to around NIS 400 billion over the next decade. This demand came during a meeting on Thursday involving senior officials from both the Defense Ministry and the Finance Ministry, further straining already tense relations between the two departments.

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 new demand as a concession to the Defense Ministry's frequent budget requests, despite the defense budget potentially reaching NIS 183 billion by year-end. The Defense Ministry argues that the additional funds would cover expenses unrelated to planned operations, including about NIS 7 billion for northern Israel's defense, NIS 12 billion for the Foreign Ministry to bolster Israel's international public diplomacy, and tens of billions for arms purchases from the United States. This is seen as a precaution in case the next U.S. security assistance agreement, expiring in 2028, does not include annual multi-billion dollar aid as in previous decades.

Finance Ministry sources warn that the Defense Ministry's push for budget increases could severely impact essential public services in Israel without financial efficiency improvements. Despite recent announcements of large sums allocated for defense, the Defense Ministry has yet to receive any of the funds. They are still waiting for the NIS 15 billion from Treasury reserves to finance urgent weapons production orders and cover unprecedented debt exceeding NIS 15 billion.

Additionally, over a month ago, Netanyahu and the National Security Council instructed the Treasury to authorize the Defense Ministry to commit to future defense procurement worth about NIS 130 billion starting in 2027, based on the multi-year NIS 350 billion increase. This authorization has not yet been granted due to the need for legislative approval and budgetary adjustments.

The Prime Minister's directive to increase the package by another NIS 50 billion complicates the Defense Ministry's budget outlook and intensifies the fraught relations with the Treasury, marked by mutual suspicion and accusations. The feasibility of such a budget increase remains unclear, especially with the upcoming Knesset elections scheduled for October 27. Netanyahu originally approved the NIS 350 billion increase himself, but the groundwork for this decision is uncertain, and now he seeks to expand it further. Economic officials fear this could lead to tax hikes.

Finance Minister Bezalel Smotrich recently addressed the growing budget tensions, stating in a podcast interview that raising taxes is not an option. He criticized the Defense Ministry's longstanding procurement practices and emphasized the importance of fiscal responsibility, saying, "A small slice of a big cake is better than a big slice of a small cake." He also likened the Defense Ministry's financial behavior to a child who sees money coming in and assumes it is free.