Netanyahu demanded to expand the "strengthening package" by 50 billion shekels. The Treasury is furious

While the defense establishment is still waiting for the implementation of agreements reached more than a month ago with the National Security Council (NSC) and Prime Minister Benjamin Netanyahu for an immediate injection of 15 billion shekels into its budget, and the injection of another 25 billion shekels by the end of the year, inter-ministerial frictions continue. In a discussion held by Netanyahu on Thursday with the participation of senior officials from both ministries, he demanded to expand by another 50 billion shekels the "strengthening package" planned to be added to the base defense budget in the coming decade, from about 350 billion shekels to about 400 billion shekels, while extending its deployment period to more than 10 years.

Sources close to the Ministry of Finance see the emerging move as the Prime Minister's surrender to the frequent budgetary demands from the Ministry of Defense, which know no satiety even when its budget may amount to 183 billion shekels at the end of the year. The defense establishment claims on the other hand that the new addition is supposed to finance expenses that are not related to its planned moves. They also said that the new addition includes about 7 billion shekels for the protection of the North, about 12 billion shekels for the Ministry of Foreign Affairs for strengthening Israeli public diplomacy, and dozens of billions of shekels that will be used for the purchase of weapons in the USA – as a backup for a situation where the next American security assistance agreement to Israel will not include annual injections of billions of dollars. The current assistance agreement, under which the administration provides Israel with about 3.8 billion dollars a year, will expire at the end of 2028.

Sources close to the Treasury claimed that the increase in the strengthening package reflects the realization of warnings that the defense establishment is pressing for an increase in its budgets in a way that will severely harm basic services for Israeli citizens, without any efficiency on the part of the IDF and the Ministry of Defense. While in recent weeks sums of tens of billions of shekels for defense are being discussed, the defense establishment clarified that it has not yet received even one shekel. They are still waiting for the 15 billion shekels originating from the Ministry of Finance's reserves to finance urgent orders for weapons production and to cover parts of its debt, which has soared to an unprecedented volume of more than 15 billion shekels.

Apart from that, more than a month ago the NSC and Netanyahu ordered the Treasury to give the Ministry of Defense authorization to commit to future defense procurement in the volume of about 130 billion shekels based on the multi-year addition of 350 billion shekels, starting from 2027. This authorization has not yet been given, due to the need of the Treasury to change the numerator and receive the approval of the Knesset. The Prime Minister's directive to increase the addition by another 50 billion shekels may further complicate the budgetary picture and the already tense relations between the Ministry of Finance and the Ministry of Defense.

Moreover, the feasibility of increasing defense spending is not clear against the backdrop of the approaching Knesset elections on October 27. Minister of Finance Bezalel Smotrich addressed the growing budgetary tension in an interview with the "Bull and Bear" podcast, stating that taxes should not be raised. According to him, "There were attempts to agree on a budget for a decade, in the volume of 350 billion shekels, of which 250 billion shekels from the state budget, and I blocked it, because it is not right in an election period and not in a war period." He added: "It is hard for me with the Ministry of Defense. It is used to operating like this for years, and I tell them all the time that a small slice of a big cake is better than a big slice of a small cake." Regarding the conduct of the defense establishment, he claimed that "it reminds of the child who sees his father insert a card into the wall, receive money, and thinks it is free."