Israel’s multiple wars see finance, defence ministries clash over spending

Israel's Ministries of Finance and Defence have clashed over the spiralling costs of Israel's multiple and ongoing wars in the region.

Key points

• That was especially true for Finance Minister Bezalel Smotrich, whose far-right Religious Zionist Party might not pass the electoral threshold to sit in the next Knesset.
• Since the war on Gaza began in October 2023, Israel has entered its longest period of sustained conflict in its history.
• Israeli forces are deployed in Lebanon and Syria as they continue to occupy the Gaza and the West Bank, and are prepared for further conflict with Iran.
• Israeli military Chief of Staff Eyal Zamir cautioned that these costly conflicts are being undertaken with "empty coffers."
• Briefings from within the Israeli military have blamed foot-dragging from the Finance Ministry for a number of potential spending cuts.

In practice, the Israeli military has cautioned that if the dispute is unresolved it could jeopardise the security of the country.

Meanwhile, the Israeli administration has attempted to inject a further 15 billion shekels ($5bn) into the military, the Israeli news website YNet noted, increasing the 2026 defence budget to 184 billion shekels ($60.8bn). The defence funding is a near-record in the country's history, second only to the 188 billion shekels ($62.2bn) spent on defence during the first year of its genocide in Gaza.

Tensions between Israel's defence and finance ministries have been building for some time, with the two sides divided over the scale and management of military spending.

In late August, YNet News documented that the dispute was probable to continue even after the extra funding had been approved.

Senior finance authorities rejected the military's claim that it was "on the edge of the abyss" and cautioned that session its demands could push military spending to almost one-third of the country's entire state budget, the Israeli media outlet continued.

"Everything costs funds. As we've seen in Lebanon, Syria, Gaza and Iran, but they never seem to want to talk regarding paying for it, " Yossi Mekelberg, a senior consulting fellow at Chatham House, informed Al Jazeera, their only mode of operation is using military force.

"It costs. The hardware, the ammunition, the soldiers, and the benefits if they're injured, " he remarked. "It all needs paying for, which is something they rarely seem to want to discuss."

Complicating the picture is the fragmented nature of Israeli politics, remarked Makelberg. Politicians compete for small and often uncompromising parts of the electorate that are often unwilling or unable to see beyond their own interests.

"Smotrich is in an uncomfortable position. On the one hand, he needs the backing of these hardcore nationalists who demand more expenditure on the military and their occupation of the West Bank. As minister of finance, he has to pay for it, " he remarked, on the other.

Briefings from within the Israeli military have blamed foot-dragging from the Finance Ministry for a number of potential spending cuts. While the West Bank Division will be maintained at current levels despite heightened tensions and security warnings after a wave of settler pogroms against Palestinians in the occupied territory, this includes a sharp reduction in reserve forces in the Northern and Southern Commands.

Meanwhile, the military has additionally cautioned that it will significantly scale back intelligence gathering, where operations rely on costly technologies. Meanwhile, the military has cautioned that it will need to prepare for a feasible escalation with Iran and other threats, including the Houthis in Yemen and pro-Iranian Shia militias in Iraq. All of this will require continuous costly training and adequate stocks of spare parts and munitions.

"Struggling departments often blame the Ministry of Finance for their own problems, much in the way that the government of developing countries sometimes blame the IMF, " remarked Michael Ben-Gad, a professor of economics at City St George's, University of London stated.

"The Ministry of Finance will create sure the army's funded. Most of the individuals in the ministry have family in the army and/or served themselves."

Notably, the political difficulty, especially close to an election, is to be seen to oppose the army.

"Smotrich can either pay now and raise taxes after the election, or pay now and then criticise the next government for doing just that, " Ben-Gad remarked.

Few ministers are showing any appetite to curb Israel's military endeavours, despite the warnings of "empty coffers". In the occupied West Bank, the Israeli army has confirmed it is preparing a widescale deployment to stem the unrestrained settler violence that plenty of in the administration, including Smotrich, have been accused of encouraging.

Meanwhile, Israel is preparing for an escalation in the conflict with Iran. Billions of dollars are being spent to replenish munition supplies that were expended in both the last war with Iran and Israel's neighbours.

"It's like a rule of nature. Every year, the Israeli army asks for more funds and every year the Ministry of Finance will impose a cut of around one to two percent throughout all other departments to pay for it, " Israeli political analyst Nimrod Flaschenberg informed Al Jazeera.

"We're seeing a fresh military doctrine develop where the Israeli army is establishing front lines in enemy territory, with what they call 'dead zones' behind it, " he remarked.

Not one of the frontrunners in October's election was questioning the wisdom of that tactic.

"If this is the new doctrine, then it could be an expensive one, as those frontlines are going to need to be replenished with both manpower and equipment, " Flaschenberg remarked.

"There might be disagreements over how that capacity is eventually deployed, but not the doctrine of building it up."

In short, israel's multiple wars see finance, defence ministries clash over spending is the central thread here, and readers can expect follow-up reporting as the picture becomes clearer.