{"id":593625,"date":"2026-08-23T15:48:13","date_gmt":"2026-08-23T15:48:13","guid":{"rendered":"https:\/\/www.newsbeep.com\/il\/593625\/"},"modified":"2026-08-23T15:48:13","modified_gmt":"2026-08-23T15:48:13","slug":"israeli-politicians-focus-on-foreign-threats-ignoring-spiralling-debt-israel-palestine-conflict-news","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/il\/593625\/","title":{"rendered":"Israeli politicians focus on foreign threats, ignoring spiralling debt | Israel-Palestine conflict News"},"content":{"rendered":"

Israel\u2019s parliamentary election campaign<\/a> is in full swing, with politicians talking up their ability to defeat the country\u2019s opponents across the region.<\/p>\n

But the focus on war and the perceived existential threat to Israel from those opponents masks that few of the most prominent contenders in October\u2019s election are discussing the astronomical cost of the country\u2019s multiple conflicts, and how they plan to deal with it.<\/p>\n

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Israel\u2019s central bank estimated in its 2025 report that 350bn shekels ($118bn) had been spent on wars in Gaza, Lebanon, Syria and elsewhere between 2023 and 2026, excluding the war on Iran that began in late February. In April, the Finance Ministry said that an extra 35bn shekels ($11.8bn) had been spent on that conflict.<\/p>\n

Israel\u2019s defence spending alone accounted for 249bn shekels ($84bn), according to the Bank of Israel\u2019s report \u2013 and it is swallowing an ever-bigger share of the economy, almost doubling from 5.2 percent of gross domestic product (GDP) in 2023 to more than 8 percent in 2024.<\/p>\n

That has all contributed to Israel\u2019s national debt soaring. The Finance Ministry said it is around 1.4 trillion shekels ($480bn), an increase from 1.07 trillion shekels ($365bn) before October 2023.<\/p>\n

\u201cUnfortunately, there just isn\u2019t any electoral benefit in talking about the economy,\u201d said Yossi Mekelberg, an Associate Fellow at Chatham House. \u201cIt wouldn\u2019t move even a couple of seats. There isn\u2019t really much of an understanding of how debt works, or even the massive costs of servicing that debt. Instead, politicians assume voters are just far more interested in hearing the typical jingoism and deliver that.\u201d<\/p>\n

War strains<\/p>\n

Israel\u2019s debt has been swollen by the government\u2019s military campaigns and is being repaid by a treasury under increasing strain.<\/p>\n

While tax collection hit a record 509.3bn shekels ($172.6bn) in 2025, up 12 percent on 2024, added together, the cost of defence and the cost of servicing Israel\u2019s debt are rising faster still. The IMF warns that the 2026 budget\u2019s deficit ceiling is too high to put debt on a downward path.<\/p>\n

Compounding the strain on the economy is the growing share of Israel\u2019s top earners who are leaving the country, with emigration among the top 10 percent of earners up 80 percent since 2019, according to tax authority data.<\/p>\n

\"Ultra-OrthodoxUltra-Orthodox Jews are a growing segment in Israel\u2019s population [File: Ammar Awad\/Reuters]<\/p>\n

In lockstep with that flight is the intensely controversial issue of Israel\u2019s growing ultra-Orthodox population. Exempt from military service and reliant on a generous state welfare system, ultra-Orthodox, or Haredi, households receive a net average of almost 6,000 shekels ($2,000) a month from the state. Just over half of Haredi men are employed, well below the national average.<\/p>\n

Non-Haredi households pay an estimated average of around 8,800 shekels ($2,980) a month more in taxes than they receive back.<\/p>\n

Israel\u2019s tax revenues must cover the rising cost of servicing the government debt \u2013 a burden governments have been trying to contain for decades. Since the 1973 war, after which debt climbed toward an all-time high of 284 percent of GDP by 1984, successive Israeli governments have striven to maintain a limit on their borrowing, said Michael Ben-Gad, a professor of economics at City St George\u2019s, University of London.<\/p>\n

\u201cThe long term projection for Israel\u2019s debt [to GDP percentage] fluctuates between around 67 percent and 70 percent [compared to around 60 percent before October 2023], which is concerning,\u201d he said. \u201cAs a result of the war it has been climbing, and the higher defence spending that is planned implies it will carry on growing unless we see higher taxes or cuts in civilian spending,\u201d he said, \u201cIt needs to be capped, which it normally would be outside of an emergency,\u201d he said.<\/p>\n

Despite its enormous reserves, the Bank of Israel remained concerned, Ben-Gad continued. \u201cIt\u2019s unsustainable,\u201d the economist said, adding that, despite the overall growth in the economy, politicians would need to increase taxes to meet the cost of maintaining the debt.<\/p>\n

However, few are showing any signs of doing so, Ben-Gad added, referring instead to spiralling defence projections to meet future threats.<\/p>\n

\u201cNo one is really talking about the cost of that,\u201d Ben-Gad said. \u201cThe only one who mentions the economy is [Democrats leader, Yair] Golan, but when he does he\u2019s typically talking about the cost of living and reducing the wealth gap, rather than taxation.\u201d<\/p>\n

\"YairYair Golan, the leader of the left-wing Democrats party [File: Eloisa Lopez\/Reuters]<\/p>\n

Despite the staggering cost of its wars, the Israeli economy is nonetheless expected to grow at 3.5 percent this year, with much of that attributable to Israel\u2019s cutting-edge tech sector, especially investments in cybersecurity and its defence sector, which Ben-Gad described as not only benefitting from generous government contracts \u201cbut is also generating more and more export revenue, especially for anti-missile defence\u201d.<\/p>\n

Paying the bill<\/p>\n

In April, the Israeli business daily Calcalist reported that, despite what appeared to be massive investment on paper, the Israeli government nevertheless owed the country\u2019s private defence contractors $3.5bn.<\/p>\n

\u201cCompanies like [Israeli defence giant] Elbit Systems are very right-wing and nationalistic, but at the end of the day they\u2019re still companies with shareholders and investors,\u201d said political economist Shir Hever, referring to the fall in the defence company\u2019s share price after the scale of the government\u2019s unpaid bills was revealed. \u201cWhen the government starts talking about paying its debts in ten years\u2019 time, that still hurts them.\u201d<\/p>\n

Hever also warned about the risk posed to Israel\u2019s ability to service its debt through the sale of its government bonds in Europe. Given that Israel is outside the European Union<\/a>, that had previously been managed through intermediaries, such as Luxembourg and Ireland. However, there is growing political pressure to stop the assistance due to Israel\u2019s genocide in Gaza.<\/p>\n

\u201cIt may be that another EU state takes over as Israel\u2019s intermediary,\u201d Hever said, suggesting that Germany was most likely to step into the breach. \u201cHowever, it may not, and the consequences of that would be dramatic. Essentially, Israel risks defaulting on its debt, at which point it stops being able to borrow money. Essentially, it would stop being able to pay for its weapons.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"Israel\u2019s parliamentary election campaign is in full swing, with politicians talking up their ability to defeat the country\u2019s…\n","protected":false},"author":2,"featured_media":593626,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[49,2681,184,85,46,44,47,43,238],"class_list":["post-593625","post","type-post","status-publish","format-standard","has-post-thumbnail","category-israel","tag-benjamin-netanyahu","tag-business-and-economy","tag-economy","tag-il","tag-israel","tag-israel-palestine-conflict","tag-middle-east","tag-news","tag-politics"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/593625","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=593625"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/593625\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media\/593626"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media?parent=593625"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/categories?post=593625"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/tags?post=593625"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}