No matter how big, Israel's defense budget alone can't provide security

No matter how much the country increases its defense budget, it will not be enough to bring security to Israel, former Institute for National Security Studies executive director Prof. Manuel Trajtenberg said on Tuesday.

This security is dependent on a diplomatic process, he added.

He was speaking at the Israel Democracy Institute’s Eli Hurvitz Conference about a study on the influence of the Israel-Hamas war on Israel’s security budget, and the budget’s influence on the economy.

The defense budget

This impact can be significant, Trajtenberg explained. While it has been growing in real terms, the security budget’s part of GDP has been shrinking in past years, which has freed up funds for other priorities and allowed Israel to succeed in many ways, he added.

The defense budget’s part of GDP stood at just over 4% on the eve of the war, and if not for the war, the study projected that this part would have continued to shrink, reaching 3.4% of GDP by around 2024.

Following the Israel-Hamas war, this trend is reversing, with the security budget’s part of GDP increasing and expected to be higher than it was before the war for years to come.

The budget’s part of GDP is expected to peak at 9% in 2024, before gradually dropping off, returning to prewar levels of just over 4% in 2033, the study estimated.

This reversed trend could have a significant impact on Israelis, according to Finance Ministry Budget Department Director-General Yogev Gradus, who said that every 1% increase in the security budget as part of GDP could possibly come with a 3% increase in VAT.

It is necessary to form an interdisciplinary committee to determine what Israel’s new security budget should be, said Trajtenberg, who added that if the committee to form the budget does not include a variety of the appropriate experts, it should not be formed at all.

Despite the current spike in the defense budget, long-term economic damage need not be significant, concluded the study. That is if Israel avoids falling into the trap of “Yom Kippur War syndrome.”

This is a trap in which, in an attempt to cover and make up for the security failures revealed on October 7, massive investments are made in security, while focusing on the threats of the past, not the future; and ignoring diplomatic paths to improve security.

Trajtenberg was not the only speaker at the conference to talk about the role of diplomacy and Israel’s relationship with countries around the world in the country’s security and economy.

“I want to be clear and emphasize here: anyone who claims that due to the current situation, Israel should now adopt a “people that dwells alone” stance and isolate itself, is making a grave mistake – especially when it comes to the economic flow that is so important to us,” said President Isaac Herzog.

“The global and regional front is crucial to us and is a central tool for the security of the state,” he added.

US Ambassador Jack Lew also touched on the need to stay involved in global communities, encouraging Jewish students to stay involved on US campuses and not “concede” that arena. He also said that Israel should remain involved in global business and academic ventures so that we can continue to engage on difficult issues.