Subsequent to the war, numerous surveys indicated increasing needs, on the one hand, and decreasing options for meeting those needs, whether the needs were of schoolchildren or adults, and whether the needs were for school councillors, social workers, psychologists or psychiatrists.

With regard to resilience centers, whose purpose is to provide emergency mental health care, their treatment schedules were curtailed, and the continuation of treatment at health funds for individuals in need was and still is limited by a shortage of personnel.

Everything boils down to money: Israel spends relatively little on public mental health care, evidenced by the percentage of the total budget for public health care budgeted and expended on mental health care. For example, during the years 2016-2021, the budget for public mental health services constituted no more than 4% of the expenditures on total  public health care , in 2022 it amounted to 5%, and during the years of the 2023 war, 6%, followed by 7% budgeted for 2025. However, that budget increase (following a war, it should be remembered), is not impressive when compared with the recommended 10% spending on mental health services in high-income OECD countries and with the actual percentage in western European countries, which is much higher — between 12% and 16%.

The present crisis in the treatment of individuals in need of mental health services is first and foremost a crisis of personnel, that is, the difficulty of attracting mental health specialists to the public services, and the shortage of positions in those services, as well as the need to define the number of patients to be treated by professionals in each specialty.

The main recruitment obstacle is the pay, which fails to reflect the investment required with regard to study and training, and is much lower than that in the private sector. It should be pointed out that the majority of public sector mental health workersare women; their inadequate pay contributes to the larger phenomenon of what we havereferred to in other studies as “the treatment deficit.” The shortage of personnel and of positions results in a huge workload, leading to further erosion and leakage of man and woman power from the public services.

The origin of this crisis is inadequate budgeting of the public services over the years, resulting in the inability to provide public mental health services in accordance with demand. Two serious crises that occurred in recent years – the corona epidemic and the October 7, 2023 war – resulted in a sharp increase in needs for such services on the part of the general population as well as of specific social groups – needs that the mental health and welfare services find it hard to meet. This situation is harmful especially to poverty-stricken families and individuals residing in the economic and geographical periphery of the country, where the services are even less accessible, but also to members of the middle class who may find private services beyond their means.

The Ministry of Health introduced a reform that included a budget increase, but its implemention remains partial, due mainly to an ongoing shortage of personnel. Following the 2023 war, mental health services were budgeted at 1.4 billion shekels for the years 2024-25, and in 2025 two labor agreements were signed that significantly increased the salaries of psychiatrists and psychologists employed in the public services. A similar amount was allocated to the Rehabilitation Department of the Defence Ministry, in charge of the treatment of soldiers. However, no solution was provided for the shortage of psychologists, psychiatrists, social workers, educational psychologists and educational counselors.

Raising the salaries of psychiatrists and psychologists is an important step that has the potential to attract personnel to the public services, but it was taken very late, and it will take years to harvest the fruits of that move. Moreover, no decision was taken regarding how many patients were to be treated by each mental health expert, thus failing to deal with the huge burden experienced by each — and the subsequent erosion.

Against the background of mental health problems that arose or worsened due to the 2023 war and the social groups that were highly affected, among them reserve soldiers and residents dislocated from their homes, and the inability of the social services to answer the many calls for help, it is entirely likely that the problems will increase in severity. The steps taken to provide real time care, like crash courses for psychology graduates prior to their specialization and their inclusion in the cadre of treatment personnel, the creation of positions like trainers and supporters of mental fortitude, and chat-bots set up by the health funds, are no substitute for genuine professional treatment.

Mental health services cannot be dependent upon ad hoc solutions or emergency services, which are but poor substitutes for professional help: they need to be part and parcel of ongoing, long-term government services that are properly budgeted; otherwise the burden will remain on individual families and thousands of persons in need will remain without.

Translator’s note: This report was written prior to the Iran war, which has no doubt increased the needs described herein.

The full research in Hebrew is available here.

הפוסט The Serious Crisis of Mental Health Services in Israel הופיע לראשונה ב-Adva Center.

With one fell swoop of an expensive presidential pen, Donald Trump, the new-old president of the United States, announced a series of actions intended to preserve and strengthen the standing of his country as the world’s major power. This was done against the background of the rise of competing powers like China and the European Union. The main actions in question:  a sharp rise in tariffs, a move that will have a negative effect on the economic growth and standard of living of countries for which a significant amount of their national income derives from exports to the US – Israel for example – and a huge cutback in budgets for social services within the home country.

In short, the Donald Trump’s US has abandoned its historical role as the leader of the Western world, concentrating its gaze inward and turning its back on countries that need US assistance in order to become part of the “Western” camp.

It is no secret that the US did not exactly “suffer” from the unique standing it created for itself in the wake of WW II. It went on to enjoy an unprecedented standard of living, continuous economic growth, the development of the most advanced scientific infrastructure and the unchallenged prestige as the leading power in the “Western world.”

At the same time, the US developed the highest military capacity worldwide — and as such served its allies as the place to go for arms and other wartime supplies in time of need. Israel was the main recipient in this respect: Between 1951 and 2024, it received 317 billion dollars in assistance, including 251 billion dollars in direct military aid. During the present war, dubbed “Iron Swords,” the US finances no less than 70 percent of Israel’s war effort.

This aid creates the illusion that Israelis are able to withstand any development on the war front. Thus, the powers that be are able to change the end-date of the war almost daily.

Had the present US aid been utilized for civilian purposes, it might be acceptable. However, US aid to Israel is now exclusively military.

And it is no secret that the financing goes to support the US arms industry, as the money needs to be spent on US-produced weaponry.

Thus, all things considered, it is the Israeli public that is actually financing the war, either through direct taxation or by continuous cutbacks in the social services they receive.

From the standpoint of those social services, which have, at times, been the pride of Israeli society, the worst thing that is happening is that Israel’s military agenda is now sidetracking its socio-economic agenda.

The generous US financing is what stands behind an unprecedented situation for Israelis. At present, it appears possible to continue the war with no end-date and no endgame. And the fact is that civilian life in Israel in the center of the country continues as if there were no war.

While the fighting continues with no clear endgame, it dictates Israel’s political and social agenda. It is said that the war is a great leveler; however, the production of weaponry is not: a good portion of the millionaires and billionaires that made their fortunes in Israel in the course of the last two or three decades did so by producing arms based on hi-tech.

This development had a destructive effect on the agenda of socio-economic equality, for when most of the resources of the economy are in the hands of a few individuals or corporations, the issue of equality is no longer statistical but rather political: Who is able and permitted to speak with the ruler. And better yet, who, literally, calls the shots.

Since the last elections, Israelis have been witness to attempts to create legislation whose main results have been regime corruption, on the one hand, and mass demonstrations against the attempts of a small minority to take over the government of Israel, on the other.

We appear to be returning to the age of kings, in which the king is not only the most powerful man in the kingdom but also the richest.

// Published originally in Hebrew on Zman Israel

הפוסט One Fell Swoop הופיע לראשונה ב-Adva Center.

The Defense Budget and the Socio-Economic Budget

Some three decades ago, in October 1995, the Adva Center began publishing independent annual budget analyses of the proposed national budget. In most of the years since that time, the Adva document focused on the socio-economic budget. The reasons for that focus were twofold: one, the fact that Israel’s defense budget was never revealed in full; and two, Adva’s socio-economic analysis became in high demand for dozens of socially oriented organizations that were founded in subsequent years. It will be recalled that a decade before, in 1985, the Emergency Economic Stabilization Plan was initiated, whose main thrust was privatization of the social services. Since then, most of the social welfare services were handed over to external contractors, as were informal and enrichment educational services. At the same time, efforts were made to weaken labor unions, first and foremost the Histadrut – the national federation of labor.

Not long afterwards, in 2001, Israel found itself in a double bind:  it experienced both the second intifada and the global hi-tech crisis. In response, the government adopted drastic economic measures, the main one being cutbacks in the budgets of Israel’s social services. While those unkind cuts had an adverse effect on the majority of Israelis, the individuals most affected were those with middle and low incomes.

That being the case, we at the Adva Center entitled our annual budget analysis Dark Year. When the national budget of the following year held no respite, we named the next analysis Dark Years. (Published in Hebrew)

A generation has passed since those dark years, and here we are, once again faced with two crises at one and the same time: a war and a severe economic setback. It is no secret that the defense budget and the social affairs budgets are interdependent.

The human suffering caused by the present war is unprecedented in Israel’s war history. Tens of thousands of families are now bereft of loved ones, of their sources of livelihood and of the roof over their heads. On the defense front, the IDF mobilized tens of thousands of reserves for more than a year and utilized a huge quantity of equipment and ammunition. The mobilization of so many reserve soldiers, in turn, had a deleterious effect on many parts of the economy.

What is needed, therefore, is a socio-economic budget that will put the economy back on its feet.  However, this time the budget debate goes beyond the “usual” division between the defense and the social budgets, for the “Iron Swords” war, which began as a “regular” conflict between Israel and the Palestinians, expanded into a far broader confrontation:  a power conflict between the United States and its allies, on the one side, and China, Russia and Iran on the other, over control over the entire Middle East.

As one of the US partners in this battle, Israel found itself fighting in seven different arenas.

Since the beginning of the war in October 2023, the US has provided military aid in the amount of NIS 22 billion.[1]

This amount is often presented as a “gift”; however, it is a self-gift, as most of it is utilized for the purchase of equipment and armaments from US firms, thus strengthening the US defense industry. [2]

Not only that: the equipment thus purchased requires active utilization and regular maintenance by Israeli military personnel. In other words, what we have is an arrangement that obligates Israel to maintain a large defense budget for years to come. Stated differently, that arrangement stands in the way of Israel’s continued development of a proper social budget.

That is exactly the way the present extreme right-wing Minister of Finance, Betzalel Smotrich, views the situation, but from the opposite point of view. In a press conference held on September 3, 2024, Smotrich described the burden of defense as one that is to continue for a long time to come. He stressed that Israel will have to continue to fight on all the fronts of the present war – the South, the North, the West Bank and also more distant locations, as it has no choice.

Against this background, the 2025 budget proposal promises Israelis numerous “dark years” — years without a social agenda.

הפוסט Dark Years for Israel: Comments on the Proposed National Budget for 2025 הופיע לראשונה ב-Adva Center.

A different approach is exemplified in an essay entitled “The Cost of Living in Israel: Low Salaries or High Prices?” written at the research institute of the Histadrut (federation of labor unions) – Forum Arlozoroff.[3]

Firstly, in contrast with the “optimistic” approach, this essay finds that the cost of living in Israel is indeed high; moreover, the phenomenon is attributed to low salaries rather than high prices. It should be noted that the indicator of pay utilized is the average hourly wage rather than the average (monthly) one. The reasoning behind this choice is that “the hourly wage provides a measurement of how many hours a person needs to work in order to purchase a certain amount of consumer goods.”[4] We add that a significant proportion of employed persons do not have full-time jobs (Some 25% in Israel according to a manpower survey for the month of October 2023).[5] The main contention of this article is that despite Israel’s “impressive” economic growth over the past two decades, the purchasing power of salaries has eroded in international comparison; not only that: the purchasing power in Israel at present is lower than it was at the turn of the century. Regarding household expenditures, two categories  — housing, electricity and water; and food and beverages — have become much more expensive in Israel, compared with the OECD average. In contrast to the previous approach, this one does not view food and housing expenses as exceptional and certainly not as peripheral, but rather as the main expenses of Israeli households, as together they constitute more than 50% of the difference between what we Israelis spend and what households in the developed nations of the OECD spend. I venture to add that most Israelis would agree that these expenditures are far from marginal.

Yet another approach is that familiar to readers of The Marker, the financial and business magazine of the newspaper Haaretz,  whose focus is on prices and not on income – specifically, the prices of food and beverages. This approach coincides with the perceptions of numerous Israelis, who see with their own eyes how food purchases become more expensive from month to month — and even week to week. The contention of The Marker is that what we see is an increase in the cost of living, and it stems mainly from SIMPLE GREED on the part of the supermarket chains  (more than others) and the companies that produce foods and beverages. These parts of the food chain have been raising their prices above and beyond increases in raw materials and the costs of production. Furthermore, the present government has done nothing whatsoever to prevent wildcat increases in the costs of essential items.

The three different approaches to the cost of living in Israel point to a number of directions to be taken. The “optimistic” approach seeks the solution in reducing concentration (of supermarkets, for example) and in increasing competition;  the low income approach seeks the panacea in increasing the educational level of Israelis and their productivity and, of course, in raising salary levels; the high food prices approach looks to competition, competition and yet more competition (in food production, food marketing and food importation). That said, there is no sign of any governmental body taking any action that might contribute to one or more of the solutions proposed. In the absence of significant government intervention or serious opposition of the Histadrut and/or consumer organizations aimed at placing the welfare of the population front and center,  numerous families will continue to cope with the high cost of living and low salaries that severely limit their options.

הפוסט Everybody is Talking About the Cost of Living in Israel but Nobody is Doing Anything About It הופיע לראשונה ב-Adva Center.

Dr. Shani Bar-On and Ms. Tehila Sharabi of the Adva Center presented concrete recommendations for policies that would have the best chance of leading to full recovery in the areas affected by the war.

The conference aimed to promote policies based on the experience, the knowledge and the involvement of the displaced individuals themselves. The recommendations presented were based on research conducted by the Adva Center among individuals displaced since October 7, 2023, at state initiative, for an extended period of time: The Trials and Tribulations of Israelis Who Became Refugees in Their Own Land.

הפוסט Knesset Conference: “It Won’t Work without Us” הופיע לראשונה ב-Adva Center.

A recent Adva Center study revealed that close to a third (28.5%) of employed persons in the northern and southern districts earn low salaries, compared with less than a fifth (17.5%) of employed persons in the central area of the country.

Below are some of the budget cuts planned for 2025, all of which are expected to have a negative effect onlow wage workers:

1. Placing a freeze on negative income until 2027. (Retracted) 
2. Placing a freeze on child allowances until the end of 2025. These allowances, paid to mothers, reflect at least a minimal recognition of the cost of raising children. They constitute a significant source of income for households in the lower income deciles, and the failure to link them to rises in the cost of living will widen inequality.
3. Increasing the lower level of the national insurance (social security) tax . This tax hike will lower take-home pay, and will, of course, affect low-income workers more than others. Women constitute 65% of low earners and will thus bear the brunt of the tax hike.
4. Initiating across-the-board budget cuts in the public services – to the tune of some 6.5 billion shekels. These cuts will affect, among others, Israel’s education, healthcare and social welfare systems; they will be sorely felt not only by women living in poverty, who are almost entirely dependent on public services, but also on lower middle class households.

Dislocated Persons from the South and the North of Israel Will be Especially Affected by the Absence of Relevant Policy

A study recently published by the Adva Center showed that the continued dislocation of Israelis from their homes resulted in the desolation of communities; it also forced numerous households to move from place to place and resulted in employment as well as personal crises.

The extended residence of displaced individuals and families in hotels also extracted a heavy price. Parents reported a loss of authority, among others due to the lack of stable educational frameworks; adults and senior citizens coped with forced inactivity and in some cases isolation from their families. The longer the hotel stay, the more invidious its effects. When the time comes for displaced households to return to their homes, the experience of dislocation is liable to affect the capability of internal refugees to forgo dependence and return to normal life.   It should be noted that a possible result of a too-early cessation of financial assistance for housing, unemployment, and businesses for those adversely affected by displacement, may very well have implications for the economic resilience of households and whole communities and result in increased poverty in the North and South of Israel.

Poverty and Debt in Arab Society in Israel

Most Arabs in Israel live in separate rather than mixed Jewish-Arab localities, and many Arab localities are to be found in the North and South of Israel.

In recent years, against the background of the high cost of living and increased interest rates,  a debt crisis has developed among Arab households. These households are more likely than Jewish households to experience economic distress (In 2022, 39% of Arab families lived in poverty, compared with 16% of Jewish families). This situation has led to a type of double jeopardy:  as institutional credit is not readily accessible to Arab citizens, they are dependent on the gray market, which does offer loans, but at high interest rates and danger to life and livelihood if the loans are not repaid in time. This situation not only creates and exacerbates the debt crisis, but also buttresses organized crime, which takes full advantage of the economic distress in Arab society for its own gain.

A study conducted by the Adva Center found that in 2021, 7.9% of Jewish households were in debt, compared with 19.4% of Arab households. Despite this situation, Arabs were under-represented in insolvency rehabilitation programs, and the average time it took to return a loan for Arabs was fully 18 times longer than for Jews, despite the fact that Arabs’ loans were smaller.

Protecting the Poor in the Periphery: Policy Recommendations

Adva Center recommends initiation of a broad-based policy of economic rehabilitation and debt servicing assistance. In addition, we recommend the initiation of a multi-year strategy whose goal is to rehabilitate those who were uprooted from their homes in the North and South of Israel. In the short-run, we call on the government to adopt the following recommendations:

1. To cancel the proposed budget cuts proposed by the Ministry of Finance, as they will have harmful effects on low-income workers, and to consider in their stead raising tax rates for high earners and on profits on capital investments. In the middle and long run, the negative income tax for parents should be significantly increased.
2. To design non-profit programs to provide credit accessibility for low-income persons, on better terms than those currently available. This can be effected by utilizing the Postal Bank or by creating a fund on the basis of monies obtained following criminal proceedings against those who break the law mandating fair credit terms.
3. To continue to support individuals and families displaced by the October 2023 war, with existing or new allowances. This can be done, for example, by utilizing the mechanism of the Victims of Hostile Actions Law of 1970, via a temporary order.

הפוסט In the Absence of a Broad-based Economic Rehabilitation Policy, Poverty in Israel is Expected to Grow הופיע לראשונה ב-Adva Center.

The figures show that government investment in early education in Israel is 54% lower than the average in OECD countries: while Israel spends on average $5,864 for every child, the OECD average spending per child is actually more than double: $12,750.

Graph: Per Pupil Expenditure by Level in 2021, Israel and OECD Average, in PPP dollars

Source: Adva Center analysis of OECD.  Education at a Glance 2024.

The situation of early education in the public sector is of special concern. Only about a fourth of children aged 0-3 are to be found in subsidized educational frameworks, like family and institutional day care systems. There is a shortage of day care due to the low rate of construction of new institutions and also a shortage of care workers, due to heavy workloads and low remuneration. In addition, staff members are responsible for more children than recommended by professionals, making it more difficult to provide high-quality care and education.

The construction of day care centers has been progressing at a painfully slow pace, mainly due to problems like the lack of public spaces designated for building. Thus, the usage of budgets allocated for the construction of day care centers remains low at all types of local authority. The problem is especially serious in Arab localities, where between 2014 and 2020, these local authorities utilized only 50% of the budgets allocated for day care centers. This contrasts with the situation in non-Haredi Jewish localities, where 61% of such budgets were utilized, and Haredi localities, where 79% of designated budgets were utilized.

As mentioned above, the problem is not only construction but also personnel, from the standpoint of both quality and quantity.

At the level of early education, the figures reveal that Israel’s investment in this level of education in 2021 was significantly lower than the OECD average: Israel invested some $6,800 per child, a sum that was 42% lower than the OECD average, which stood at $11,735 per child.

When it comes to higher levels, Israel invests comparatively more in elementary than in secondary education. At the elementary level, Israel’s outlays per student are only 5% lower than the OECD average. However, in secondary education, which includes both middle and high school, the gap is larger: 21%.

In 2023, the average annual expenditure per student from elementary through high school was higher in state religious education than in state secular education: NIS 25,634, compared with NIS 22,153.

Graph: Percentage Disparity in Per Pupil Expenditure between Israel and the OECD Average, 2021

Source: Adva Center analysis of OECD. Education at a Glance 2024.

As indicated in the above figure, Israel’s investment in post-secondary education is especially low – 52% less than the average in OECD countries; Israel also spends much less on occupational training and non-academic degree programs. Thus, in 2021, the public expenditure on direct training for the job market amounted to 0.13% of GDP, compared to the average of 0.63% of GDP in OECD countries. When it comes to active labor policies, Israel ranks second from the bottom, with only the United States spending relatively less.

Despite the fact that in Israel higher education is subsidized, its investment per student is 33% lower than the average in OECD countries. This means fewer supplementary services like libraries and laboratories, lower investment in research and development and a higher student/instructor ratio.

הפוסט Per Student Investment in Education in Israel is Lower than the Average among OECD Countries הופיע לראשונה ב-Adva Center.

Still, the first decades of statehood were characterized, among others, by attempts to develop social welfare services based on the Scandinavian social-democratic model of the time: one that would provide subsidies, services and/or cash payments to citizens who were in need due to unemployment, lack of training, parenthood, illness, injury, age or other permanent or changing life circumstances. The creation of a welfare state was part and parcel of the very nation-building process.

It took some 30 years to finalize the process of social welfare legislation, with the passage of the Long-Term Care Act in 1982.

It took only three years before the process of dis-investment was initiated by adherents of neo-liberalism.

Israel’s financial crisis of 1985, which provided the impetus for the Economic Stabilization Program, involving, among others, budget cuts, privatization of public services and tax reductions[1] — as well as subsequent events, notably the Second Intifada (2000-2005), led to retrenchment of the social-democratic model, in favor of a very different model, one that had already taken hold in the United Kingdom and the United States: a neo-liberal model. As is well known, social services are financed by taxation or other sources of government income. While the social-democratic model is based on relatively high, progressive taxation, the neo-liberal model aspires to low taxation and minimal public services, especially social welfare services. It favors small government and big business.

In Israel, 2002 marked the decisive victory of what has come to resemble the neoliberal model of a welfare state, over the more generous, social-democratic model — against the background of the second Intifada, increased terrorist activity, an economic crisis, and what Maron and Shalev[2] term “an unusually favorable government coalition,” which provided the political opportunity for the Ministry of Finance to impose cuts and limitations on many cash benefits.

Under the new model, potential recipients of “social welfare services” no longer referred to the majority of the population, who, in accordance with the idea of social-democracy were to receive from the state or the local authority services, subsidies and monetary transfers in accordance with need; rather, “social welfare services” (not including social security) were to be limited primarily to individuals and families located at the bottom of the income ladder and who lacked the wherewithal to benefit from a reasonable standard of living.

The October 7, 2023 massacre and Israel’s subsequent invasion of Gaza, among others, have made many Israelis aware that the time has come for changes that will benefit all citizens, especially those at the bottom of the income ladder (let us say, the bottom 10%) in times of peace, as well as all those adversely affected in times of hostility or crisis. The only way to bring about such change is to require the top 10% to contribute more to the general welfare of their countrymen and women.

הפוסט The Bottom 10 Percent Needs the Top 10 Percent: Social Welfare Services in Israel הופיע לראשונה ב-Adva Center.

Yet in most of these areas, Israel lags behind the West: just to take one example, Israel’s social welfare system includes most of the services expected of a Western welfare state, but its level of public funding is such that most beneficiaries live below or barely above the poverty line.

The main reason behind the relatively low social welfare budget has to do with the main competitor for public money:  the military budget, which enjoys the highest priority.  That priority, in turn, derives from the fact that with very few exceptions – the decade after the Sinai War of 1956 and the decade or so after the 1973 Yom Kippur war – Israel has been in constant conflict with varying coalitions of Arab states: in 1948, 1956, 1967 and 1973 – and with the Palestinians: in 1948, 1987, 2000-2005, and 2023-2024. In addition, there have been numerous low-intensity confrontations like the two intifadas and the two invasions of Lebanon (1982-2000 and 2006); and presently (2023-2024), a higher intensity war by proxy – Hamas – with Iran.

The defense budget did not always enjoy top priority:  up to 1967, Israel was mainly occupied with the absorption of huge waves of immigration that necessitated the provision of food, shelter and employment. That is, a civilian agenda. It is told that soon after the war of 1948, Yigal Yadin, the then chief of staff of the IDF, came to Ben Gurion to ask for a larger defense budget, in view of a possible “second round” against the Arab armies. Ben Gurion refused the request, arguing that he needed the money to absorb new immigrants. Yadin resigned, and Ben Gurion proceeded with his civilian agenda.

The war of 1967 turned out to be a watershed: Having occupied the Sinai Desert and Gaza Strip from Egypt, the Golan Heights from Syria and the Palestinian West Bank from Jordan. Israel’s initial decision was to hold on to them all, at least as bargaining chips, a decision that soon turned Israel into a major actor in the Middle East. With a larger standing army and a powerful American-supplied air force, Israel became a different country: If the well-known sociologist Erik Hobsbawm could quip that Zionism took the Jews from Shtetl to Statel, now the Jewish state, though no more than a Statel in size, had become a regional power.

The new geopolitical status did not come for free. It required a huge investment in military personnel, arms and ammunition. As Amir Oren wrote in Haaretz,^[1]

“It took a mere eight companies – paratroopers, Golani and Border Police. They secured the open, fragile borders of Israel…right up to May 1967 … That was the entire ground force the Israel Defense Forces was asked to commit to maintaining security along the confrontation lines with Jordan, Egypt, Syria, and Lebanon. There was no fenced, electronic obstacle line covered by air power…”

That changed as soon as Israel opted to keep the new territories: as Amir Oren stated, the number of companies needed to defend the now longer borders then jumped to 92:

“Ninety-two is more than eleven times eight – and 92 companies is the force the army needed after the Six Day War to guard the new lines and patrol the conquered”[2]

Half a century later, in 2020, the size of Israel’s regular armed forces was much larger, comprising 4.24% of the labor force, a figure that ranked 9th out of 162 countries. No other OECD country ranked this high.[3]

The military budget became the single largest item in the Israel’s annual budget. Impressed by Israel’s military performance in 1967, the US adopted Israel as its major proxy in the Middle East. The adoption came with a large aid package – the largest in the world before the eruption of the Ukrainian war. Most of the aid package came in the form of US dollars for the purchase of US-made armaments. But there was also a cost paid in Israeli shekels: fueling, training, and maintenance of the gift.[4]

Let us look at the numbers. There are two main ways of comparing military budgets: as a percentage of GDP or as a percentage of the total national budget. Israel stood high on both: in 2022, Israel’s military budget amounted to 4.51% of its economy – the highest percentage among OECD countries.[5] That same year, Israel’s military budget stood at 12.2% of its total annual budget.^[6]

And that is not the whole story: Economist Yossi Zeira points out that the above GDP figure is partial, as it does not take into account the loss of GDP caused by the fact that a large number of young men are outside the civilian labor force, a fact that translates into a 5.7% loss of GDP per year.^[7]

Once the defense budget is determined, not much is left for other, non-military civilian budgets. In 2023, while the average civilian public expenditure in OECD countries stood at 42.2% of GDP (not including interest and military expenditure) in Israel it stood at 32.9% – a quarter less. [8]

Biden: We have your back

With all those resources, Israel finds it hard to finance the full costs of maintaining its “imperial” military status without foreign assistance.

Today, foreign financial and non-financial military aid comes mainly from the US. In the past it had more varied sources: In 1956, such aid came from France and Great Britain and from 1967 on, from the US.

According to the US Council on Foreign Relations, US aid accounts for some 15 percent of Israel’s defense budget. [9] At the time of this writing, the US has signed a memorandum of understanding assuring Israel nearly $4 billion a year through 2028.[10]

As for the actual fighting in the present war with Hamas, the US provided Israel with tank and artillery ammunition, bombs, rockets, and small arms, and was considering further supplies, including fifty F-15 fighter aircraft.

Enough to keep the fighting going.

Permanent Wars, Permanent Distantiation from OECD

Wars in our area used to have a beginning and an end.  Even the Yom Kippur war. Certainly the so-called Six Day War. Now it appears that there are wars with no expiration dates.

From the very beginning of the present war, Israel’s prime minister and almost all IDF generals have frequently warned that the war will be long. The Bank of Israel seems to agree, as it recently published a figure of 250 billion Shekels for the total cost of the present war with Hamas – if the war lasts until 2025.[11] Which means a permanent very large military budget. And continuous large aid packages from the US. And growing pressures on the budgets for social services, demands for which increase as a result of the ongoing war and seemingly unending dislocations.[12]

The need for a massive investment in Israel’s social services is well-known. On most socio-economic indicators, Israel is located at the bottom of the OECD scales. The situation is such that even if there are no budget cuts, the services suffer from a lack of man – and mostly woman – power, as a growing number of professionals are no longer willing to work for the low salaries offered by the public sector. Which means that Israel’s chances of reaching the higher echelons of OECD social and economic scales will grow dimmer and dimmer year by year, as the hostilities continue and the military budget maintains its first-priority status.

// This publication was produced with the assistance of the Rosa Luxemburg Stiftung, through support from the German Federal Ministry for Economic Cooperation and Development.

References:

הפוסט A Military Budget for a Permanent War הופיע לראשונה ב-Adva Center.

Rising defense costs

Still, this is not the main problem with the latest budget proposals. The main problem is what appears to be a limitless increase in the total budget for defense. The 2024 defense budget is slated to increase over that of 2023 by NIS 55b. Thus, together with the monies provided by US assistance, this allocation is slated to amount to the considerable sum of NIS 125b.

But that is not all: after the war has been paid for, the talk is of a permanent annual increase to the defense budget of NIS 20b. Indeed, the Finance Ministry mentioned the figure of NIS 20b., while the Defense Ministry demanded an annual increase of NIS 60b.

In light of these amounts, what needs to be said to those who are up in arms – and justly so – against the coalition payments, “It’s the defense budget, stupid.”

The increase to Israel’s defense budget is based on the assumption that the main response to the Israeli-Palestinian confrontation in general and to hostilities originating in Gaza specifically needs to be military. This is the background of the apparent readiness to give the IDF whatever it asks for.

The future of the war in Gaza

However, there are questions that need to be considered, such as does Israel really intend to continue fighting for the next four years? Does Israel really intend to deal with the Palestinians by military means only? Are there really no other options?

These questions are important because they present the size of the defense budget as one horn of a dilemma: Israel does not have the means to provide both a greatly enlarged defense budget and better social services. If the defense budget increases, the budget for social services decreases, and vice versa.

A good example of this dilemma can be seen in the following. According to Finance Ministry figures, in the decade between 2012 and 2022, the budget for social services – health, education, higher education, social security, and social welfare – increased more than the budget for defense.

The relatively slow growth of the defense budget enabled Israel to devote larger sums to its social services. The latter grew from NIS 120.7b. to NIS 210.9b. – an increase of some 70%. In contrast, the defense budget grew by 10% – from NIS 68.2b. to NIS 75b.

In retrospect, it appears that those years represented a period of grace, which began with the 2011 social protest slogan, “The people want social justice,” and ended with the government’s successful handling of the coronavirus pandemic.

The need to invest in Israeli social services

The need for a massive investment in Israel’s social services is well-known. On most socio-economic indicators, Israel is located at the bottom of the OECD scale. The situation is such that even if there are no budget cuts, the services suffer from a lack of man – and mostly woman – power, as relatively few professionals are willing to work for the low salaries offered.

And now the revised budget for fiscal 2024 posits a large increase for the defense budget, thus decreasing the budget for social services. And this is happening during a time when the war itself has been creating new needs every day – assisting hundreds of thousands of displaced persons, hundreds of thousands of unemployed persons, and thousands of small businesses with no way of making a living.

The situation may arise in which when demobilized soldiers ask for assistance and rehabilitation, they are informed that “the money was depleted by the war.” What may happen is that next to all the placards declaring, “Together to Victory,” there will be others lamenting, “No more Together. Everyone for themselves.”

// The article was originally published in English in the Jerusalem Post

הפוסט It’s the Defense Budget, Stupid הופיע לראשונה ב-Adva Center.