Occupied Jerusalem- The Israeli government is heading to increase spending significantly over the next year, due to the repercussions of the war on the Gaza Strip and the security and military measures it entails. Specialized newspapers reviewed the expected scenarios for this.
During the war on Gaza, the Israeli government allocated 30 billion shekels ($8 billion) to defense expenditures, which is equivalent to 1.5% of the GDP, which raises the military burden to about 5.7% of the GDP.
The Calculist economic newspaper compared security spending in Israel with other countries, where the average in the Organization for Economic Cooperation and Development is 1.5% of GDP, while the average defense spending in the Eurozone is about 1.3%, and in powers such as the United States, defense spending is 3.5%. .
According to the latest estimates of the Israeli Ministry of Finance, the direct cost of war expenses will reach 110 billion shekels ($30 billion). This is a huge one-time amount, but it does not reflect long-term changes to the defense budget after the war.
Security spending
Despite all bodies emphasizing the ambiguity and uncertainty regarding developments in security events, Calcalist economic correspondent Adrian Velot says, “There is a consensus that the jump in Israeli security spending is a reality. This is a far-reaching change for Israel’s economy, financial policies, and budget in 2024.” .
The correspondent pointed out that Israeli security expenditures in recent years, although they rise every year, are decreasing in terms of their percentage in the GDP, explaining, “Thirty years ago, security expenditures constituted about 8.2% of the GDP, but they By 2022, it decreased significantly and amounted to only about 4.2%.”
Vilot explained that there is a consensus in Israel that there is a need for greater investment in security after the sudden attack by the Palestinian resistance in Operation “Al-Aqsa Flood,” saying: “The small and smart army model collapsed on October 7, and the army will have to be restructured in the coming years.”
Funding sources
In answer to questions about the sources of funding for the jump in security spending, Calcalist said that the Ministry of Finance has several ways, namely increasing taxes, transferring civil and social spending budgets in favor of security spending, a plan to rationalize military spending, and increasing loans.
But the most dangerous method, which may have negative repercussions on the Israeli economy, and therefore it is not worth relying on it exclusively, according to the estimates of economic correspondent Vilot, “is allowing the general budget deficit to increase by resorting to external loans.”
Budget gaps
Permanent additions that will enter the budget base, says Globes finance correspondent Orden Dury: “The additions requested in the budgets will have to allocate part of the salary expenses, in addition to plans to increase the personnel of the regular and reserve army.”
Dori explained to Al Jazeera Net that the professional teams in the army and the Ministry of Finance do not know the amount of funds and budgets for security and military reinforcement in 2024, but statements by politicians indicate an increase in the security budget between 20-30 billion shekels, meaning an increase in the budget base and security spending by a rate ranging from 31% to 47%. %.
He pointed out that before the war on Gaza, Israel’s security budget was 63 billion shekels ($17 billion), and another 13 billion shekels ($3.5 billion) from American aid funds, and the administration of President Joe Biden is seeking to increase security aid to Tel Aviv by about 52 billion shekels ( 14 billion dollars) for the year 2024.
While security and military expenses constitute 3.8% of the gross domestic product, the security establishment is demanding that they be raised to the level of 7%, to reach 126 billion shekels ($34 billion).
