Israel plans $12 billion defense boost as officials warn spending is spiraling out of control

The Israeli government is preparing to transfer approximately 40 billion shekels (about $12 billion) in additional funding to the defense establishment. This move, agreed upon by Prime Minister Benjamin Netanyahu and Finance Minister Bezalel Smotrich, would bring the 2026 defense budget to 184 billion shekels, the second-highest in the country's history after the 188 billion shekels spent in 2024. The increase requires breaking the existing state budget framework and securing legislative approval.

Finance Ministry officials have expressed alarm, describing the defense budget as a financial "black hole" that has escaped effective control. They warn that the current trajectory could damage Israel's long-term economic future. Conversely, the military establishment emphasizes the urgent need for funds to replenish weapons stocks depleted during the war and to settle outstanding debts to major defense manufacturers.

The Defense Ministry currently owes approximately 15.5 billion shekels to Israel's three largest defense firms: Israel Aerospace Industries, Rafael, and Elbit Systems. These unpaid bills have caused delays in payments to subcontractors and threaten to slow or halt production lines for critical munitions. A senior defense official noted that in a global market where production slots are booked years in advance, delayed decision-making has made it difficult to recover lost time, regardless of the funding available.

Beyond immediate pressures, the defense establishment is seeking approval for a multiyear budget of 350 to 400 billion shekels to prepare for the period after 2028, when current U.S. military assistance arrangements may be subject to change. Planned procurements include attack helicopters, fighter jets, and advanced naval and border defense systems, which officials argue are essential to maintaining Israel's military edge in an era of global rearmament.