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Israel’s defence and finance ministries clash over military spending amid ongoing conflicts

Get you up to speed: Israel’s multiple wars see finance, defence ministries clash over spending

What remains unclear — It is uncertain how the Israeli government plans to balance military funding demands with budget constraints amid ongoing conflicts and upcoming elections.

Israel’s defence and finance ministries clash over military spending amid ongoing conflicts

News|Israel-Palestine conflictIsrael’s multiple wars see finance, defence ministries clash over spending

Spiraling costs of Israel’s conflicts deepen rift between finance and defense ministries ahead of budget decisions.

Published On 1 Sep 20261 Sep 2026

Israel’s Ministries of Finance and Defence have clashed over the spiralling costs of Israel’s multiple and ongoing wars in the region, which are adding pressure to the government’s budget.

The Israeli military has warned that if the dispute is unresolved it could jeopardise the security of the country.

Since the war on Gaza began in October 2023, Israel has entered its longest period of sustained conflict in its history.

Israeli forces are deployed in Lebanon and Syria as they continue to occupy the Gaza and the West Bank, and are prepared for further conflict with Iran.

Israeli military Chief of Staff Eyal Zamir warned that these costly conflicts are being undertaken with “empty coffers.”

The Israeli government has attempted to inject a further 15 billion shekels ($5bn) into the military, the Israeli news website YNet reported, increasing the 2026 defence budget to 184 billion shekels ($60.8bn). The defence funding is a near-record in the country’s history, second only to the 188 billion shekels ($62.2bn) spent on defence during the first year of its genocide in Gaza.

Tensions between Israel’s defence and finance ministries have been building for some time, with the two sides divided over the scale and management of military spending.

In late August, YNet News reported that the dispute was likely to continue even after the additional funding had been approved.

Senior finance officials rejected the military’s claim that it was “on the edge of the abyss” and warned that meeting its demands could push military spending to nearly one-third of the country’s entire state budget, the Israeli media outlet added.

“Everything costs money. Their only mode of operation is using military force, as we’ve seen in Lebanon, Syria, Gaza and Iran, but they never seem to want to talk about paying for it,” Yossi Mekelberg, a senior consulting fellow at Chatham House, told WTX News.

“It costs. The hardware, the ammunition, the soldiers, and the benefits if they’re injured,” he said. “It all needs paying for, which is something they rarely seem to want to discuss.”

Complicating the picture is the fragmented nature of Israeli politics, said Makelberg. Politicians compete for small and often uncompromising parts of the electorate that are often unwilling or unable to see beyond their own interests.

That was especially true for Finance Minister Bezalel Smotrich, whose far-right Religious Zionist Party might not pass the electoral threshold to sit in the next Knesset.

“Smotrich is in an uncomfortable position. On the one hand, he needs the support of these hardcore nationalists who demand more expenditure on the military and their occupation of the West Bank. On the other, as minister of finance, he has to pay for it,” he said.

Israel’s armed forces chief, Lieutenant-General Eyal Zamir (centre), has said the army is engaged in a separate “battle” over its budget, one that it is fighting with “empty coffers” [File: Menahem Kahana/AFP]

Blame games

Briefings from within the Israeli military have blamed foot-dragging from the Finance Ministry for a number of potential spending cuts. This includes a sharp reduction in reserve forces in the Northern and Southern Commands, while the West Bank Division will be maintained at current levels despite heightened tensions and security warnings after a wave of settler pogroms against Palestinians in the occupied territory.

The military has also warned that it will significantly scale back intelligence gathering, where operations rely on costly technologies. At the same time, the military has warned that it will need to prepare for a possible escalation with Iran and other threats, including the Houthis in Yemen and pro-Iranian Shia militias in Iraq. All of this will require continuous costly training and adequate stocks of spare parts and munitions.

“Struggling departments often blame the Ministry of Finance for their own problems, much in the way that the government of developing countries sometimes blame the IMF [International Monetary Fund],” said Michael Ben-Gad, a professor of economics at City St George’s, University of London said.

“The Ministry of Finance will make sure the army’s funded. Most of the people in the ministry have family in the army and/or served themselves.”

The political difficulty, especially close to an election, is to be seen to oppose the army.

“Smotrich can either pay now and raise taxes after the election, or pay now and then criticise the next government for doing just that,” Ben-Gad said.

The Israeli army has said it is placing a further division on standby ahead of anticipated settler violence during the forthcoming Jewish holidays [File: Majdi Mohammed/AP]

Future wars

Few ministers are showing any appetite to curb Israel’s military endeavours, despite the warnings of “empty coffers”. In the occupied West Bank, the Israeli army has announced it is preparing a widescale deployment to stem the unrestrained settler violence that many in the government, including Smotrich, have been accused of encouraging.

At the same time, Israel is preparing for an escalation in the conflict with Iran. Billions of dollars are being spent to replenish munition supplies that were expended in both the last war with Iran and Israel’s neighbours.

“It’s like a rule of nature. Every year, the Israeli army asks for more money and every year the Ministry of Finance will impose a cut of around one to two percent across all other departments to pay for it,” Israeli political analyst Nimrod Flaschenberg told WTX News.

“We’re seeing a fresh military doctrine develop where the Israeli army is establishing front lines in enemy territory, with what they call ‘dead zones’ behind it,” he said.

Not one of the frontrunners in October’s election was questioning the wisdom of that tactic.

“If this is the new doctrine, then it could be an expensive one, as those frontlines are going to need to be replenished with both manpower and equipment,” Flaschenberg said.

“There might be disagreements over how that capacity is eventually deployed, but not the doctrine of building it up.”