Daily Reports
Finance Minister Bezalel Smotrich has announced the creation of a public committee to examine and evaluate the defense budget of Israel. The committee will include representatives from the Prime Minister's office, the Minister of Defense, and the Minister of Finance, along with regular participation from the Bank of Israel, Ministry of Finance, Ministry of Defense, the IDF, and the National Economic Council. The goal is to provide transparency and consistent review of defense expenditures.
"Establishing the committee to examine the defense budget is an important step for the economy and security," stated Minister Smotrich. He emphasized that the recent Iron Swords War and events of October 7 exposed flaws in the current defense budget structure, necessitating a reassessment to align with current threat levels while maintaining economic balance.
The committee will recommend the required defense budget, identify funding sources and uses, and ensure that taxpayer money is spent efficiently to maintain national security. This initiative is viewed as a crucial learning step in response to recent security challenges.
Defense Minister Galant has critiqued Smotrich’s approach, advocating for a significant increase in the defense budget. Galant underscored the urgent need for purchasing additional military squadrons from the USA, warning of a three-year delay and increased costs if procurement is postponed. He reasoned that with escalating international security threats, Israel needs to double its defense investment, which he describes as an essential insurance policy.
Despite criticisms and claims of intentional delays, Smotrich is steadfast in his decision, supported by top officials including the Prime Minister. Recent revelations pointed to the ministry’s delay in budgeting for war-related arms, but Smotrich dismissed these as false claims from the Ministry of Defense. He insists that the establishment of this committee is non-negotiable and crucial for future strategic balance between economic and defense needs.
Senior economists, including former governor of the Bank of Israel, Prof. Karnit Flug, have echoed the necessity of updating the security budget based on professional work. Flug stressed that the committee should include both security and economic experts to balance national security needs with economic growth.
Current Bank of Israel Governor, Prof. Amir Yaron, has also advocated for the committee. He pointed out that the defense system's needs due to the war require a significant increase in the defense budget. He emphasized that any budget expansion should be accompanied by budgetary adjustments to maintain the debt-to-GDP ratio. Thus, the establishment of this committee is seen not just as a security measure but also a critical economic strategy.
- Finance Minister Bezalel Smotrich's unwavering stance on forming a public committee stems from a broader vision to enhance transparency and efficiency in defense spending. This aligns with the larger goal of ensuring that Israel's defense mechanisms are both robust and economically viable.
- Critics within the government, particularly Defense Minister Galant, argue that the current escalating threats necessitate an immediate and substantial increase in defense funding. Without this, there is a risk of compromised security, particularly if procurement of vital military assets from international partners is delayed.
- Economists suggest that the committee's formation could serve as a blueprint for other governmental sectors, highlighting the need for a balanced approach that considers both immediate security needs and long-term economic stability. The implications of such strategic financial planning are vast, potentially setting new standards for governmental budget allocations.
