“For 20 years or more, around the month of July, the usual headlines about how the Finance Ministry is demanding a cut in the defense budget start to appear. A bit later, there appear new headlines — someone in the defense establishment is alarmed because the cuts would mean a grave blow to national security. Then the Defense Ministry starts issuing various announcements to the media about different things that are going to close, to be canceled, to evaporate or to be nullified if the cuts are put into effect. After having clarified that any cut in defense spending — any cut — would bring about the demise of the nation residing in Zion, the defense establishment tries to explain why. For that, they make use of threats.” — (Shaul Amsterdamski, “Calcalist” 5.18.2014).

 

In the Israeli state budget for 2015, finalized in the beginning of July, the defense budget was set at 53 billion shekels, comprising the largest part (16%) of the state budget.[1] The defense budget is composed of several types of expenses: overall maintenance of the IDF, funding for military industry operations, funding for the control systems in the occupied territories, funding for security for settlements, GSS (Shabak) and Mossad operations, and more. The defense budget is different from budgets of other ministries in that it enjoys special budgetary rights, in that it is controlled completely by the Defense Ministry[2], in that it is mostly classified, and in that changes to the budget do not require approval by Knesset Members.[3]

 

The accepted procedure for determining the defense budget is saturated with problems, primary among them being the transparency issue. Budgetary decisions are made mostly in internal meetings in the IDF and the defense establishment, with no oversight over the process.[4] The budget, which is divided into public sections and classified sections, is supposed to be given to Knesset Members ahead of time. The public part of the budget contains transparent information on only a tiny fraction of the overall budget, covering only 15 of the total 60 billion shekels. The only people that are given the classified details of the defense budget, which is most of the budget, are the members of the defense cabinet and a small group of Knesset Members on the joint Budgetary Committee, as well as members of the Foreign Affairs and Defense Committees of the Knesset (according to the Budget Foundations Law, YEAR)[5] whose meetings are conducted behind closed doors.[6] In addition, the Defense Ministry forms the proposals that are put before the Finance Ministry on an exclusive basis, without external involvement, despite the fact that the Budgetary Committee is supposed to be involved. This is how the defense budget is hidden from decision makers, not to mention from the public.

 

Beyond the transparency issue, the defense establishment has increased its share of the budget every year at the expense of social service budgets. Defense spending has increased in two major ways: through added funds to the Defense Ministry from the overall state budget at the beginning of the year, and deviations from the Ministry’s expenses throughout the year. This year, for example, additions to the Defense Ministry budget were made possible through an across-the-board cut of the basic budgets of all government ministries (cutting the basic budget means creating a deficit in the budget at a rate of billions of shekels that will continue in the following years as well) in order to transfer 1.5 billion shekels to the defense budget.[7] Of all government ministries, the Education Ministry suffered the biggest cut of all, a total of 690 million shekels (517 million for the education system, and 175.56 for higher education).[8] This is the biggest cut to the Education Ministry’s budget in the last decade.[9]

 

In September 2014, Knesset Member Zehava Galon asked the State Comptroller to evaluate governmental conduct concerning the defense budget. Galon said that “The defense establishment has deviated from its Knesset-approved budget for the last six years (2004-2010). The total deviations have reached more than 20 billion shekels.” Though the information was published in a Bank of Israel report in 2011 and reached the Finance Ministry and the Defense Ministry in the same year, there has been no serious response. Another claim made by Galon is that the Defense Ministry asks for additions every year despite the fact that it still has money in its reserves, such that funds accumulate every year on top of the growing additions.[10]

 

Another issue concerning the defense budget is the exceptionally high spending on human resources and pensions. The percentage of the defense budget spent on salaries, pensions, rehabilitation and payments to families is 43% of the budget.[11] According to a Finance Ministry report in 2008, wages for Major-Generals in the IDF has increased by 94% in the last 14 years, while the average wage in Israel rose by only 26%.[12] Likewise, there is a huge gap between retirement ages of defense establishment personnel and that of other workers in Israel. For example, an enlisted officer who worked until the age of 45 is eligible to receive a pension for the rest of his life, while civilian workers are required to work for at least another 20 years before receiving a pension, which will also  be provided for fewer years.[13] Even former Major-Generals who accumulate wealth in the private market (some of them earn 100,000 shekels a month) continue to get another 30-40,000 shekels a month from the pension budget.[14] In addition, the defense establishment continues to exercise its right to award a “Chief of Staff grant” — an added 6% to the pension of a newly released enlisted officer.[15]

 

The government’s attitude to defense budget crises receives annual attention in the State Comptroller’s report, as well as in various committees that are formed to discuss the issue. The conclusions from the last Comptroller’s report include findings of constant violations by the defense establishment and Finance Ministry of their obligation to report to the Knesset, constant violations of the obligation to perform internal budgetary oversight, and an absence of satisfactory explanations for changes in the budget.[16] The report of the budget evaluation commission (The Brodet Commission, 2007)[17] recommends that another 100 billion shekels be added to the defense budget over a decade, saying that 30 billion shekels of the overall amount should come from increased internal efficiency within the IDF rather than from additional funds. This increased efficiency has not been implemented as of 2014.[18] In 2013, the Locker Commission was appointed to replace the Brodet Commission. Its mission is to evaluate and propose recommendations as to the size and desired composition of the defense budget.[19]

 

Deliberations on the 2014 budget (which are ongoing at the time of the writing of this document) reflect the same patterns that we are witness to each year: requests for budget increases, requests for compensation on deviations from the defense budget and special requests related to Operation Protective Edge. According a 2012 state-security cabinet decision, the total defense budget for 2015 was supposed to be 52 billion shekels. In the Budget Department, a billion shekels were added to the budget, as well as a request for 9 billion shekels due to Protective Edge. In addition, reserve Major-General Dan Harel, Director-General of the Defense Ministry, said at the start of September that the defense establishment will request another 11 billion shekel addition to its budget in 2015.[20]

 

The Defense Ministry’s requests for additional funds ignited an argument between the Finance Ministry and the Defense Ministry about the cost of Operation Protective Edge. The Finance Ministry claims that the cost is 6.5 billion shekels, while the Defense Ministry claims that the real cost is 9 billion shekels.[21] The Defense Ministry is asking for a higher amount in order to receive additions for next year. The money is supposed to fund “…research, development and implementation related to dealing with the tunnels, as well as active defense for the IDF’s armored array (like the “Wind Jacket” systems for tanks and “Namer” armored personnel carriers).” The Finance Ministry, on the other hand, argues that “Defense expenses do not need to be more than 5 billion shekels and the maximum that can be budgeted for the defense establishment in 2015 is 2.5 billion shekels.”[22] If the Defense Ministry receives the funds that it requested, the defense budget will comprise 18% of the state budget, an increase of 2% compared with the previous year.

[1] http://www.themarker.com/news/1.2405586

[2] http://www.nsc.gov.il/NSCWeb/Docs/Brodet.pdf

[3] http://www.calcalist.co.il/local/articles/0,7340,L-3607850,00.html

[4] http://www.knesset.gov.il/mmm/data/pdf/m02945.pdf

[5] http://www.calcalist.co.il/local/articles/0,7340,L-3607850,00.html

[6] http://www.ynet.co.il/articles/0,7340,L-4557861,00.html

[7] http://www.themarker.com/news/1.2420643

[8] http://www.themarker.com/news/education/1.2420090

[9] http://www.calcalist.co.il/local/articles/0,7340,L-3636224,00.html

[10] http://www.themarker.com/news/1.2432981

[11] http://www.themarker.com/misc/1.2155408

[12] http://www.knesset.gov.il/mmm/data/pdf/m02945.pdf

[13] http://www.themarker.com/markerweek/1.2316297

[14] http://www.calcalist.co.il/local/articles/0,7340,L-3632020,00.html

[15] http://www.calcalist.co.il/local/articles/0,7340,L-3632020,00.html

[16] http://www.calcalist.co.il/local/articles/0,7340,L-3607850,00.html

[17] http://www.nsc.gov.il/NSCWeb/Docs/Brodet.pdf

[18] http://www.calcalist.co.il/local/articles/0,7340,L-3632020,00.html

[19] http://www.themarker.com/news/1.2334410

[20] http://www.themarker.com/news/1.2405586

[21] http://www.calcalist.co.il/local/articles/0,7340,L-3640771,00.html

[22] http://www.themarker.com/news/1.2432512