Finance Minister Bezalel Smotrich demands curbs on Israel’s soaring defense budget, warning unchecked spending threatens national growth and citizen welfare.
Israel’s Finance Minister Bezalel Smotrich ignited a fresh political and economic storm Tuesday after calling for a significant reduction in the defense budget, warning that unrestrained military spending could cripple Israel’s post-war recovery and burden taxpayers for years to come.
Speaking at the Finance Ministry during the release of updated economic forecasts for 2025–2026, Smotrich said the defense establishment was “demanding funds without accountability or efficiency checks,” and accused it of exploiting public sympathy following the war.
“In the coming weeks, the IDF Spokesperson will claim more money is needed,” Smotrich told reporters. “I ask you — be critical. The October 7 massacre did not happen because of a budget shortfall.”
War Cost and Economic Reality Check
According to Finance Ministry data presented at the briefing, the total cost of the war to date stands at nearly NIS 250 billion — a sum Smotrich says the state can no longer absorb without tough fiscal discipline.
Senior officials accused the security forces of “inefficiently managing reserve salaries”, leading to the waste of billions of shekels. The Ministry’s Chief Economist Shmuel Avramson confirmed a downward revision of Israel’s 2025 growth forecast from 3.1% to 2.8%, though he predicted a strong rebound to 5.2% in 2026.
“Every unnecessary shekel allocated to the defense budget is another shekel in taxes on Israeli citizens,” Avramson warned.
Defense Ministry Fires Back
Within hours, Defense Ministry Director-General Amir Baram issued a blistering response, accusing Smotrich of “cynically exploiting the reserve system” to score political points while ignoring the real and immediate threats Israel faces.
“We regret that the Finance Minister again uses the IDF’s reservists — whom we all owe a debt — as a smokescreen,” Baram said. “This discussion must remain focused on Israel’s urgent security needs, especially Iran’s accelerated rehabilitation attempts and the rebuilding of enemy capabilities in the north and south.”
Baram stressed that the IDF must continue to invest in readiness, modernization, and deterrence, given the evolving security challenges across multiple fronts — particularly Iran, Hezbollah, and emerging cyber threats.
Fiscal Reform vs. National Defense
Smotrich, leader of the Religious Zionism Party, has long campaigned for fiscal conservatism and structural reform within Israel’s bloated defense bureaucracy. He argues that while the army must remain strong, unchecked defense spending risks collapsing Israel’s economic momentum and alienating middle-class taxpayers already strained by post-war inflation.
The Finance Minister also took aim at Israel’s labor unions, linking their power to broader inefficiencies in the national economy.
“This is not a healthy event,” he said. “The union built the state, but today it protects its own power — not workers’ rights. Israel’s labor laws are outdated and restrain a modern, innovative market.”
Political Undercurrent: The Battle Over Priorities
Smotrich’s remarks mark the sharpest public confrontation between the Finance and Defense Ministries since the Gaza war ended, highlighting an emerging debate over how Israel should balance economic recovery with long-term national security.
While Smotrich champions fiscal restraint, the defense establishment insists that only massive reinvestment can ensure Israel’s qualitative military edge against Iran and its proxies.
Political observers note that this clash reflects Israel’s enduring dilemma: how to remain both militarily invincible and economically resilient in a region still hostile to its existence.
Bottom Line
Smotrich’s blunt warning — “We can’t tax Israel to death to fund inefficiency” — has rekindled a fundamental debate at the heart of the Zionist vision: Can Israel secure its borders and its future prosperity at the same time?
For now, one thing is certain — the battle over Israel’s next budget will be fought not just in the Knesset, but across the ideological fault line between guns and growth.
