With the war seemingly at an end, Finance Minister Bezalel Smotrich on Tuesday went into high gear in a new “war” with the IDF and the Defense Ministry over the future of the country’s security budget.
At stake from the defense establishment’s perspective is making sure Israel has enough funding for future potential battles and wars with Iran, Hezbollah, the Houthis in Yemen, Hamas in Gaza, and terrorist threats from the West Bank and elsewhere.
For Smotrich and the Finance Ministry’s professional echelon, what is at stake is the very beginning of trying to rein in defense spending, which has gone through the roof during the last two years of the war.
By press time, neither side had actually thoroughly clarified what their budget cut-off number was for 2026, despite requests for clarification, but it appeared that the Defense Ministry wanted NIS 144 billion, including standard annual funding plus post-October 7 special additional funding. In contrast, the Finance Ministry wanted to get the budget down closer to NIS 130b.
If, in 2015, the IDF was sparring with the Finance Ministry over the Locker Commission report on whether its budget would be NIS 59 billion or NIS 61 billion, even having a budget debate where the low figures for future years are in the high-70 to 90 billion shekels range, it indicates how much the world has changed since October 7. And those numbers do not include notable increases post-October 7 or any new wars to come.
IDF, Smotrich debate defense budget after Gaza War
The Nagel Commission, established by Prime Minister Benjamin Netanyahu to provide forward-looking, concrete global recommendations on national security and budgets, had suggested in January of this year a 2025 budget of NIS 123 billion.
Both the defense establishment and the ministry may have agreed on an NIS 90 billion figure for the standard 2026 defense budget. Now, the fighting is over the additional budgets for the post-October 7 reality.
Brig.-Gen. (res.) Jacob Nagel, who heads the commission, had himself made his NIS 123b. recommendation without reference to future major battles.
But take, for example, the Finance Ministry adding around NIS 42 billion to the defense budget, which was dedicated to the war with Iran in June and its fallout in 2025 and beyond.
Moreover, the ministry approved considerable additional funding for three months of fighting in Gaza, extending into 2025. In the end, the IDF paused its fighting as of October 4 due to the intervention of the US and the eventual ceasefire with Hamas.
If Nagel had suggested at the start of this year that a gradual process begin in 2026 to return the budget to prewar levels by 2030, Smotrich is now intent on making a first dent in this process.
Defense Ministry director-general Maj.-Gen. (res.) Amir Baram lashed out at Smotrich and the Finance Ministry on Tuesday, accusing them of undermining Israel’s ability to strike Iran or Hezbollah in the future, despite the real possibility that such strikes may be necessary.
From Smotrich’s standpoint, noting that the entire cost of the 2014 50-day war with Hamas in Gaza was NIS 7 billion, there is no need to advance the IDF funds on money it does not yet need.
In other words, his argument is that even if the IDF has to initiate a month of new operations in Lebanon, the price tag would probably come in at NIS 7 billion, or half of that, such that the ministry can provide the funding on the fly, and will not need a massive new boost.
Rather, Smotrich’s view is that the significant increase in funding was primarily due to periods when the IDF had to call up hundreds of thousands of reservists, including paying them, feeding them, providing them with supplies, and equipping them with working gear.
Since Smotrich does not expect such a large call-up, even if there are new conflicts with Iran and Hezbollah, he and the ministry believe the funding can already start to be reduced. In addition, Smotrich believes that a series of complex trends and countertrends are interacting.
He is concerned about reports and evidence suggesting that, in parallel with times during this war when not enough reservists showed up and many who did did not have proper equipment due to budget or logistics issues, in other areas, some soldiers and officials are abusing the system.
Examples he likes to discuss range from reservists who are only serving half of the time that the state is paying them full-time for, to reservists who are double-dipping with a private sector and IDF salary, to Defense Ministry bureaucrats whose vacations are funded by the state because, at some point, someone lost control over the funding for combat soldiers.
Other problems he flags are the IDF insisting on working with specific suppliers who might overcharge by five to 10 times the market price, as well as instances of tax evasion. The finance minister also questions the need for the IDF to employ its own kitchen hands in large numbers at high reservist salaries, rather than hiring market-rate, private-sector kitchen employees.
The defense establishment has its own responses to many of these issues. It prefers to go on the attack against Smotrich and the Finance Ministry rather than remain on the defensive.
The IDF is still furious with Smotrich and the government for failing to draft haredim (ultra-Orthodox) in large numbers, which would ease the service time of other sectors, including allowing the number of high-paid reservists to be cut.
Next, even if the war is over, after October 7, the IDF opposes viewing military needs as static, preferring to remain ready to go on the attack at all times to hold the enemy at bay.
To do this, the IDF needs extensive inventory, more soldiers, and greater financial flexibility to maneuver its forces to face new
challenges quickly.
Nagel’s report favored such an adjustment, stating that 70% of the IDF’s budget should be devoted to attack, with defense reduced to 30%. But unlike being on the defensive, which is more quantifiable, being on the attack requires constant adjustments, creative thinking, and new budget items.
Another problem the IDF faces is a lack of motivation to serve and to serve for longer.
While the Finance Ministry often tries to cut back on pensions to IDF officers, arguing logically that no other field gets a pension after retiring in one’s 40s, the defense establishment replies that other careers do not involve dying or being permanently wounded nearly as much.
In other words, building a desire to serve under such risky conditions requires special financial incentives, even after this specific war is done.
Smotrich may argue that the IDF should retire many of its helicopter units in favor of drones, which are much cheaper and easier to produce in larger quantities.
But the IDF may point out that the IDF’s helicopter pilots, with their human discretion and getting to witness Hamas up close, something not entirely possible using a remote drone, were the only efficient element of the air force in the early hours of the October 7 massacre.
The Finance Ministry is concerned that if the defense budget does not start to drop, the IDF will never return to thinking in terms of efficiency, and all of the other ministries will suffer from insufficient budgets because of one war, as bad and as long as it was, which ended some time ago.
Mainly, the military and the Defense Ministry are worried that if they agree to being placed back in a smaller box, the Finance Ministry will eventually return to calling for a “smarter and smaller army,” a call many deem was a substantial cause of the military’s failure on October 7.