The Governor of the Bank of Israel is worried. Amir Yaron is keeping an eye on the ballooning costs of his country’s war against the Palestinians in Gaza and the West Bank. The government of Benjamin Netanyahu promised initially to increase the defence budget by NIS 20 billion ($5.48bn) per annum in the aftermath of the war. However, according to a document from the Finance Ministry presented to the Knesset Finance Committee on 25 December, that figure is likely to be NIS 10bn higher.
The ministry is also projecting that the war against the Palestinians will cost somewhere in the order of NIS 50bn ($13.8bn). Of this, NIS 9.6bn will go towards expenses such as evacuating residents close to the nominal international borders in the north and south of the occupation state, buttressing emergency forces, and rehabilitation.
The increased military budget is predictable and in keeping with the proclivities of the Israeli state. What is striking is that Prime Minister Netanyahu has regarded Israeli defence expenditure as generally inadequate when looked at as a percentage of gross domestic product (GDP). Between 2012 and 2022, military expenditure as a percentage of GDP fell from 5.64 per cent to 4.51 per cent. Doing so enables him to have two bites at the same rotten cherry: to claim he was blameless for that decline in military expenditure; and to show that he intends to rectify a problem for which he was hardly blameless.
Even in war time, Netanyahu is proving to be oleaginous in his policy making.
The mid-December supplementary budget for 2023, NIS 28.9bn, was intended to cover the ongoing conflict with the Palestinian Islamic Resistance Movement, Hamas, and Lebanon’s Hezbollah militia. Its approval, though, was hardly universal. Opponents of the budget noted the allocation of hundreds of millions of shekels towards “coalition funds” intended for non-war related projects relevant to parliamentarians and ministers. Benny Gantz’s National Unity Party, a coalition partner, would have nothing to do with it. Intelligence minister Gila Gamliel was absent from the vote, while Yuli Edelstein of Netanyahu’s own Likud Party abstained. Opposition leader Yair Lapid pointed his finger at the rising budget deficit.
Bank Governor Yaron gave vent to some of his concerns on 18 December. “During this period, more than at any other time, and as investors, rating agencies, financial markets and the public as a whole are carefully examining policymaking in Israel, it is necessary to manage economic policy – fiscal and monetary – with great responsibility,” he urged.
Rising body counts interest Yaron less than budget figures and reputational damage in the markets, although killing Palestinians is proving an expensive business. “The government will have to find the right balance between financing war expenses and the expected increase in the defence budget and the need to continue investing in other civilian budgets, which are already low, in particular in growth engines such as infrastructure and education.”
He has every reason to assume that costs will continue to balloon. For one thing, Netanyahu’s idea of peace in the current conflict reads like a blueprint for ongoing, lengthy massacres, accompanied by permanent mass incarceration; the destruction of Hamas itself; the demilitarisation of Gaza; and a Palestinian society free of so-called radical elements. This is a nightmare for humanitarians and the belt-tighteners in the finance ministry alike.
Notably, the plan says nothing about Palestinian statehood which, in the scheme of Israel’s aims, has been euthanised. Gaza, the designated monstrosity Israel nourished as a supposedly useful tool to keep Palestinian ambitions in check, is to be turned into a prison entity that sounds pretty much like it was prior to the 7 October attack by Hamas.
A “temporary security zone on the perimeter of Gaza and an inspection mechanism on the border between Gaza and Egypt” will be established in accordance with “Israel’s security needs”. The zone will also serve to prevent “smuggling of weapons into the territory”, which sounds much like the original blockade, lasting 16 years and counting, that was meant to achieve the same objective.
Netanyahu is, however, promising that the destruction of Hamas will take place “in full compliance with international law”, begging the question what sort of international law books he is consulting. Given various official statements from his cabinet and the Israel Defence Forces, it must be the law of the jungle. That same standard of legal analysis has permitted the generously expansive massacre of over 20,000 Palestinians, more than half of whom were children and women, the ongoing flattening of Gaza, and the total destruction of critical infrastructure.
Given that Israeli law, alongside military and administrative policy, does nothing other than encourage the radicalisation of Palestinians and the fertilising of resistance soil, this is delusionary. The current war will simply prove to be the same as previous ones: protean, adjustable and shape changing. Seemingly never-ending conflict by other means beckons, with the continued growth of hatred, leaving Israel with a massive butcher’s bill and a growing casualty list that it is only now chewing over.
The views expressed in this article belong to the author and do not necessarily reflect the editorial policy of Middle East Monitor.