Netanyahu Pushes Massive Defense Budget Increase Ahead of Elections Amid Economic Strain

Prime Minister Benjamin Netanyahu, following his recent consolidation of control over the Likud party list and the failure of the primaries, is now focusing on a major challenge: securing a substantial increase in Israel's defense budget. In recent weeks, Netanyahu has notably ceased public commentary on the cost of living crisis, which has seen soaring fuel prices above 8 shekels per liter, skyrocketing grocery bills, and unaffordable housing. This shift signals his strategic pivot from economic issues to national security as the centerpiece of his agenda.

At a recent cabinet meeting, the government redirected 850 million shekels initially allocated for high-tech investment and employment incentives toward urgent defense procurement, supplemented by an additional 150 million shekels from budget reserves. However, this is merely a preliminary step. Netanyahu aims for a far more expansive move, proposing a new state budget with tens of billions of shekels added to defense spending, potentially inflating the defense budget to 200 billion shekels annually, or 8% of GDP.

This plan faces strong opposition from key economic figures, including Bank of Israel Governor Amir Yaron, who has consistently warned against increasing the debt-to-GDP ratio to avoid higher interest expenses and future austerity measures. Finance Minister Bezalel Smotrich, while supporting the governor's fiscal prudence until now, appears sidelined as Netanyahu pursues this aggressive defense spending increase. Critics warn this approach could saddle the next government with a "poison pill" budget.

Netanyahu's security strategy includes preparing Israel for reduced U.S. aid starting in 2028 and exploring costly projects such as a 400 billion shekel investment in a domestically developed stealth fighter jet. Skeptics question the feasibility of such ambitions just 75 days before elections and suggest the timing of urgent defense needs is politically motivated. Parliamentary procedures to approve the new budget face hurdles, as the Knesset is in recess and opposition parties have not consented to convene, with legal advisories recommending restraint during the election period.

Despite these challenges, Netanyahu continues to emphasize security threats, recently highlighting a month without Iranian attacks as a positive development. However, analysts note his tendency to open multiple fronts rather than seek de-escalation, raising concerns about the long-term impact of his defense spending policies on Israel's economy and political stability.