Israeli defense ministry demands $2 billion boost to counter Iran’s rapid military buildup

The defense establishment is demanding 7 billion shekels (approximately $2.2 billion) in additional funding to bolster Israel’s preparedness against growing threats from Iran, which is accelerating its military buildup, expanding purchases from China and other countries, conducting extensive exercises, and increasing its ballistic missile production. The request comes roughly six months after the 12-Day War, during which Israel and the U.S. attacked Iran’s nuclear facilities and damaged its ballistic missile production and launch infrastructure.

In total, the defense establishment’s proposed budget for 2026 amounts to 144 billion shekels ($44.7B). According to the Defense Ministry, approximately 100 billion shekels ($32B) of that total represents a “hard budget,” covering commitments already initiated and approved by the Finance Ministry.

The Defense Ministry is seeking an additional 37 billion shekels ($11.5B) for an “expanded reserve budget,” which includes the recruitment of tens of thousands of reservists across all sectors next year. According to the ministry, about 60,000 reservists are expected to be called up, although earlier this week, representatives from the IDF Personnel Division told a Knesset committee that the figure could reach 70,000.

The defense establishment says the increased reliance on reservists stems partly from the failure to extend compulsory service in the IDF, resulting in an annual shortfall of around 12,000 soldiers, most of them in combat roles, against the backdrop of continued draft exemptions for yeshiva students.

Amid reports of Iran’s accelerated armament ahead of a possible renewed confrontation with Israel, the Director General of the Defense Ministry, Maj. Gen. (res.) Amir Baram, warned that the Ministry of Finance is blocking dozens of critical procurement deals worth billions of shekels. These include contracts to supply the IDF with essential armaments, tank spare parts, drones for maneuvering units, and defense systems for communities near the Gaza and Lebanon borders.

His comments follow a directive from the Accountant General, Yali Rothenberg, stipulating that as of this week, non-essential Defense Ministry contracts exceeding approved budgetary frameworks will not be authorized. On Tuesday morning, at a meeting of the ministry’s management forum, Baram reviewed Israel’s current threat landscape after two years of regional conflict on seven fronts. Yesterday, Calcalist revealed that major procurement deals with U.S. defense industries are stalled due to insufficient budget allocations.

Baram accused the Treasury of diverting public attention from urgent security needs by emphasizing minor issues such as alleged waste and irregularities in reserve operations during the war, while ignoring severe emerging threats from Iran and other arenas. “The focus of our enemies’ efforts requires Israel to invest now in massive resupply under an emergency format,” he said. “We must restore the combat forces that were worn out during the war to full capacity. Instead, the Treasury is delaying the signing of dozens of critical deals.”

He added that among the blocked projects is a contract to construct a new security barrier along the Jordanian border, “contrary to the decision of the Ministerial Committee for Equipping, and despite the clear emergence of new threats.”

The Finance Ministry, for its part, accuses the IDF of wasteful spending. Last week, Director General Ilan Rom warned of irregularities in the reserve system “bordering on criminal offenses.” Treasury officials argue that the defense establishment’s current “spending fever” could push Israel into a “lost decade” similar to the economic stagnation that followed the 1973 Yom Kippur War.

Responding to those claims, Baram said: “The defense establishment must indeed learn lessons and improve efficiency. However, after the Yom Kippur War, the defense budget accounted for 35% of Israel’s GDP, compared with just 6.7% today. Even with the current budget request, that share will rise only to about 5% within two years.”

The Finance Ministry said in response: “The Ministry of Finance has fully supported, and continues to support, the defense establishment’s efforts over the past two years, and will ensure a full response to Israel’s security challenges. Recently, a significant deviation from the approved 2025 budget framework was recorded. Consequently, the Accountant General, who is responsible for maintaining proper fiscal management, ordered a halt to new commitments not backed by approved funding, pending a professional review and the determination of budgetary priorities. The Ministry of Finance calls on the Defense Ministry to finalize an agreed-upon mechanism for engagements and fiscal oversight to ensure responsible management of the defense budget and the continued ability to meet security needs.”