The enormous costs of Israel\u2019s multi-front war and Prime Minister Benjamin Netanyahu\u2019s determination to turn his country into a \u201csuper-Sparta\u201d of the Middle East are driving up the defence budget and raising fears of cutbacks in education and healthcare.<\/p>\n
The total cost of the series of interconnected regional conflicts that began with Hamas\u2019s attack on Israel on October 7, 2023 stood at 405 billion shekels ($138 billion) as of late April, according to the governor of the Bank of Israel, Amir Yaron.<\/p>\n
\u201cThat\u2019s a huge figure, more than 17 percent of GDP,\u201d he said during a recent economic conference in Herzliya, north of Tel Aviv.<\/p>\n
Just the military campaign against Iran, which began with a wave of US-Israeli strikes on February 28, incurred an additional cost of 35 billion shekels ($12 billion) for the state up until a ceasefire took effect on April 8, according to an initial estimate by the finance ministry.<\/p>\n
Following the adoption of the 2026 budget in late March, the government noted the defence ministry\u2019s budget had more than doubled since October 2023.<\/p>\n
To support the war effort, the government borrowed heavily on international markets in 2024 and 2025.<\/p>\n
It has reached the point where public debt now accounts for more than 69 percent of GDP, compared to 60 percent before the war, according to the Treasury.<\/p>\n
Taxes and social security contributions have also increased.<\/p>\n
\u2013 \u2018Trauma economy\u2019 \u2013<\/p>\n
Israelis are \u201cpaying twice\u201d for the war, said Esteban Klor, an economics professor at Jerusalem\u2019s Hebrew University.<\/p>\n
The first cost, he told AFP, is via the decline in government social spending and reduced investment in public services resulting from several successive \u201cacross-the-board\u201d budget cuts, even as \u201cwe are\u2026 increasing the debt\u201d.<\/p>\n
\u201cEducation will suffer, the quality of infrastructure will decline, as will the performance of the healthcare system,\u201d he said.<\/p>\n
The second cost is to economic growth, though this has been less visible as the Israeli economy quickly overcame the initial shock of the war. GDP had returned to its 2022 level by 2024 and is continuing to grow at an enviable rate.<\/p>\n
But the ongoing mobilisation of tens of thousands of reservists since October 2023 is also taking a toll.<\/p>\n
\u201cSince\u2026 many of our workers are in the army rather than at their jobs, this affects production,\u201d Klor explained.<\/p>\n
According to a survey published on June 1 by the Israel Democracy Institute (IDI) think tank, 31 percent of respondents said they had experienced a decline in their wages or income since October 7, 2023.<\/p>\n
The phenomenon is hitting the self-employed and lowest-income workers the hardest.<\/p>\n
At the Herzliya conference, the deputy head of budgets at the finance ministry, Tamar Levy-Boneh, warned against a \u201ctrauma economy\u201d \u2014 in which the sense of shock and failure from October 7 lead the military to constantly demand more funding to ensure the country\u2019s security.<\/p>\n
\u201cThe security establishment must learn to meet its needs in a way that does not undermine the standard of living and must assume its share of responsibility,\u201d Levy-Boneh said.<\/p>\n
\u2013 \u2018Super-Sparta\u2019 \u2013<\/p>\n
But Netanyahu advocates the opposite view.<\/p>\n
In September 2025, he said Israel had no choice but to become a \u201csuper-Sparta\u201d, a reference to the ancient Greek city-state devoted entirely to war.<\/p>\n
As divergences emerge between Netanyahu and US President Donald Trump regarding Israel\u2019s offensive against Hezbollah in Lebanon and how to end the war with Iran, the Israeli premier is pushing for greater self-sufficiency.<\/p>\n
Under his vision, Israel would gradually wean itself off its reliance on the massive military aid it receives from the United States.<\/p>\n
He confirmed as such on May 3, vowing to invest 350 billion shekels over the next decade in the national defence industry to ensure \u201coverwhelming aerial superiority\u201d.<\/p>\n
Economics professor Klor warned that the defence budget could exceed 10 percent of GDP and called for a swift return to a \u201cmore reasonable\u201d level.<\/p>\n
Israel is one of the developed countries where inequality is most glaring, and the dragging war is not helping.<\/p>\n
According to the latest available study by the Israeli National Insurance Institute, the proportion of children living below the poverty line rose from 27.6 percent to 28 percent between 2023 and 2024.<\/p>\n","protected":false},"excerpt":{"rendered":"The enormous costs of Israel\u2019s multi-front war and Prime Minister Benjamin Netanyahu\u2019s determination to turn his country into…\n","protected":false},"author":2,"featured_media":191232,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[85,399,46,100524,43],"class_list":["post-480411","post","type-post","status-publish","format-standard","has-post-thumbnail","category-israel","tag-il","tag-international","tag-israel","tag-mna","tag-news"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/480411","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/comments?post=480411"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/480411\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media\/191232"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media?parent=480411"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/categories?post=480411"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/tags?post=480411"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}