The IDF is preparing its demand for a budget supplement to finance the recent outbreak of fighting against Hamas. The Tamir missiles of the Iron Dome system, flying hours for the Israel Air Force, shells and rockets fired into the Gaza Strip, reserve duty for those called up (who were not many), all cost money.
How much money? It depends whom you ask. According to a defense source, the IDF estimates a day of combat at over NIS 100 million, which means about NIS 1.5 million for the twelve days that the IDF was in action. To that the IDF adds over NIS 500 million in ancillary costs. The total demand will therefore be over NIS 2 billion. It is not yet clear whether, in addition to this demand, the IDF will once again raise the demand dating from the beginning of this year for an additional NIS 3 billion to its budget, to compensate for the fact that Israel is on a continuation budget, no new state budget having passed for the past two years because of the political deadlock, resulting in a fall in the real value of the IDF's allocation.
How does the IDF arrive at NIS 100 million a day? Its calculations include elements such as the cost of an hour's flying time, fuel and so on, and also more obscure items such as costs of required technological developments, new training programs, and other things that Ministry of Finance staff find hard to deal with.
The lack of clarity even affects what ought to be clear-cut items, such as the cost of the Tamir, the interceptor missile of the Iron Dome System. The cost is estimated at $40,000-100,000, again depending whom you ask. There are those who claim that the cost is inflated and includes components and costs that shouldn't be there.
"It's a political question, not a professional one"
According to a senior economic official, the IDF's calculation of the cost of a day's warfare is inflated and its real aim is a permanent addition to the defense budget as requested at the beginning of this year. The official recalled that after Operation Protective Edge in 2014, the IDF estimated the cost of the operation at NIS 9 billion, while the Ministry of Finance put it at just over NIS 6 billion.
"The question whether the army will receive the money is not a professional, budgeting one, but political," the official says. "We're in a complicated political situation, and at the moment it looks as though the ministers responsible and the prime minister have an interest in settling the matter without undue argument, which means that a substantial portion of the IDF's demand will be accepted."
The official pointed to the story of the financing of the new program for treating disabled soldiers. Originally, half the finance was supposed to come out of the defense budget and the rest from other ministries. The Ministry of Defense set disabled soldiers to demonstrate outside the Minister of Finance, and Minister of Finance Israel Katz agreed to the demand to divide the total cost - NIS 250 million - among all the ministries.
Nevertheless, several obstacles lie in the way of the current demand. One is political - the defense budget supplement will require a cut for the other ministries, to which ministers will object. In any case they are coping with a constraining continuation budget which prevents the implementation of new programs.
One minister says, however, that if there is agreement between Prime Minister Benjamin Netanyahu and Minister of Defense Benny Gantz, no opposition will change it.
The big obstacle is technical. In the absence of an approved state budget, it's impossible to add budgets. During the coronavirus period, for example, special legislation was required for what were termed "boxes", special budgets.
At this stage it looks as though a fifth election is more likely than the formation of any kind of government and approval of a state budget. To this should be added the High Court of Justice's ruling this week against tinkering with basic laws and specifically the Basic Law: The State Economy, although the judges' ruling related to what was described as provisional, personal legislation for the purposes of satisfying coalition demands, and they may well refrain from intervening in the case of the defense budget.
Will the US come to our aid?
The US might help. President Joe Biden has already undertaken to replenish stocks of interceptor missiles for Iron Dome, some 2,000 of which were fired over the twelve days of combat. In the background is also the nuclear agreement with Iran. It could be that as compensation for returning to the agreement, the US will (again) expand its military aid to Israel, as President Barack Obama did after the agreement was originally signed in 2015.
The last proper defense budget was set in 2019. It amounted to NIS 72.9 billion gross and NIS 55.3 billion net (11.5% of the state budget). This was the budget of the fourth and last year of the "Gideon" program, which was cut short by a year by Chief of Staff Aviv Kochavi in order to start the "Tenufa" five-year plan in early 2020. Tenufa, however, is being conducted without an agreed multi-year budget and without approval from the security cabinet, because of the continuing political crisis.
A NIS 3 billion supplement was given to the 2020 defense budget in order to bring it in line with the budget for 2019. A NIS 2.2 billion addition to the 2021 budget was approved by Prime Minister Benjamin Netanyahu out of a total demand by Kochavi and his financial advisor Brigadier General Ariela Lazarovich of NIS 4.2 billion, after it became clear that approval of a state budget for 2021 was not going to happen.
The professional staff at the Ministry of Finance criticized the supplement and demanded that the IDF should justify it. The IDF then turned to Netanyahu, who agreed to it in part.
In January this year, Minister of Defense Benny Gantz raised a demand for a supplement of NIS 3 billion to the 2021 budget "for routine defense needs," to bring the 2021 budget up to the actual level of the 2020 budget.
Published by Globes, Israel business news - en.globes.co.il - on May 25, 2021
© Copyright of Globes Publisher Itonut (1983) Ltd. 2021