Netanyahu vs. Smotrich: The Battle for a 200 Billion Defense Budget
The Prime Minister and the Finance Minister are in a standoff over the IDF's demand for a massive budget increase to over 200 billion shekels. The Treasury warns that there is no room left for further spending cuts.
Tens of billions of shekels are at the center of a struggle between Prime Minister Benjamin Netanyahu and Minister of Finance Bezalel Smotrich. The defense establishment is demanding an immediate budget increase; Netanyahu supports the army's requirements, while Smotrich insists on approving only the bare minimum.
A decision must be reached in the coming days to allow the 2026 budget to pass three readings in the Knesset before the Tishrei holidays. The defense establishment argues that waiting for the next government to be sworn in would cause critical delays in procurement, potentially harming national security.
Smotrich refuses to provide a "blank check" during an election period, arguing that the financial burden will fall on the next government. The Treasury also points to the defense establishment's failure to meet previously agreed-upon efficiency targets.
Crossing the 200 Billion Threshold
Discussions are ongoing, and the final figure remains uncertain. The 2026 defense budget, previously set at 158 billion shekels, is expected to exceed 200 billion shekels—nearly triple the budget at the start of the Iron Swords war.
Despite the figures, the Ministry of Finance remains cautiously optimistic. A source familiar with the details notes that the 2026 deficit target of 4.9% of GDP will likely remain unchanged due to strong tax revenues. A cross-the-board cut for government ministries is not currently expected, as "there is nothing left to cut from."
Long-Term Obligations
The current debate follows months of tension. While the Nagel Committee recommended a 130 billion shekel addition over a decade in late 2024, defense requirements have since surged. The current proposal involves a 350 billion shekel addition over a decade, with 100 billion expected to come from efficiency measures.
Netanyahu is pushing to anchor these additions for 2027 and 2028 as well. This would impose significant obligations on the next government, which would have to find funding through tax hikes or further spending cuts, as the expenditure limit is already near its maximum.
