Budget rift in Tel Aviv reflects Israel’s strategic anxiety over Iran’s expanding capabilities

The War Ministry has requested an extra 7 billion shekels (approximately $2.2 billion) to boost Israel’s preparedness against the escalating Iranian threat.

According to the Calcalist news outlet, Iran—following Israel’s “imposed war”—is allegedly “accelerating the strengthening of its military structure, expanding purchases from China and other countries, conducting extensive military drills, and increasing its ballistic missile production.”

The report noted that this request comes roughly six months after the “12-day war,” during which Israel and the U.S. attacked Iran’s nuclear facilities and damaged its ballistic missile production and launch infrastructure.

Overall, the War Ministry’s proposed budget for 2026 amounts to 144 billion shekels (about $44.7 billion). Of this total, roughly 100 billion shekels ($32 billion) constitutes the “base budget,” which covers previously approved and initiated programs under the Finance Ministry’s authorization.

The War Ministry is also seeking an additional 37 billion shekels ($11.5 billion) in “supplementary allocations for reserve forces,” which would include the recruitment of tens of thousands of reservists across all branches in the coming year.

According to the ministry, around 60,000 reservists are expected to be called up, though representatives of the army’s Human Resources Directorate told a Knesset committee earlier this week that the number could reach 70,000.

The ministry says the growing reliance on reservists is partly due to the non-extension of compulsory military service, resulting in an annual shortfall of around 12,000 soldiers, most in combat roles. Meanwhile, exemptions for yeshiva (religious seminary) students continue.

War Ministry criticism of the Finance Ministry

The report continued: Amir Baram, Director-General of the War Ministry, warned amid reports of Iran’s rapid weapons buildup ahead of a possible renewed confrontation that the Finance Ministry is blocking dozens of procurement contracts worth billions of shekels. These include contracts for essential weapons and ammunition, tank spare parts, drones for maneuvering units, and defensive systems for areas near the Gaza and Lebanon borders.

His remarks followed a directive from Yali Rotenberg, the Accountant General, stating that from this week onward, nonessential War Ministry contracts exceeding approved budget frameworks will not be authorized.

Baram, in a meeting of the ministry’s board on Tuesday, reviewed Israel’s current threat landscape after two years of regional conflict across seven fronts.

Calcalist revealed yesterday that several major equipment supply contracts with U.S. defense industries have been halted due to insufficient budget allocations.

Baram accused the Finance Ministry of focusing on trivial issues—such as claims of waste and mismanagement during wartime—to divert public attention from urgent security needs, while severe emerging threats from Iran and other fronts are being ignored.

He said: “The concentration of our enemies’ efforts requires Israel to invest now, on an emergency scale, in large-scale rearmament. We must restore combat forces that were exhausted during the war to full capacity. Instead, the Finance Ministry is delaying the signing of dozens of vital contracts.”

He added that among the blocked projects is a contract for constructing a new security barrier along the Jordanian border, “contrary to the decision of the Ministerial Committee on Equipment, despite the clear emergence of new threats.”

Accusations of military extravagance

According to the report, the Finance Ministry, in turn, accuses the military of excessive spending.

Ilan Rom, Director-General of the Finance Ministry, warned last week of irregularities in the reserve system that “border on criminal offenses.” Treasury officials argue that the current “spending appetite” within the war establishment could push Israel toward a “decade of severe economic stagnation”—similar to the post–1973 Yom Kippur War recession.

Baram responded to these claims, saying: “The war establishment must indeed learn lessons and improve efficiency. However, after the Yom Kippur War, defense spending accounted for 35% of Israel’s GDP, compared to only 6.7% today. Even with the requested additional funding, this share would only rise to about 5% within two years.”

In response, the Finance Ministry stated: “The Ministry of Finance has fully supported the defense establishment’s efforts over the past two years and will continue to ensure that Israel’s security challenges are met comprehensively. Recently, a significant deviation from the approved 2025 budget framework has been recorded. Consequently, the Accountant General—responsible for sound financial management—has ordered a halt to new commitments that lack approved budget backing.”

The statement added: “The Finance Ministry calls on the War Ministry to finalize an agreed mechanism for commitments and financial oversight to ensure responsible budget management and sustained capability to meet Israel’s security needs.”