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April 24, 2013 11:08 am

Governor of Bank of Israel Warns Defense Spending is too High

avatar by Zach Pontz

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Stanley Fischer, the Governor of the Bank of Israel, leaves after a meeting at the Prime Minister's Office in Jerusalem, March 17, 2013. Photo: Yonatan Sindel/Flash90.

The Governor of the Bank of Israel, Stanley Fischer, has warned that if Israel continues to spend as it currently does on defense, the country could run into problems in the future.

Speaking at the Institute for National Security Studies Tuesday, Fischer said:”I just want you to look at public spending as a percentage of GDP. The source of the economic problems in the 1980s was the Yom Kippur War. It’s impossible to manage the budget when spending 20% of GDP on defense. Defense spending is now 6.5% of GDP, the lowest level since 1954, and very low in international comparison, which contributes to Israel’s growth. The level is going down, but in real terms, defense spending has actually grown. Defense is still the biggest budget item. Every Israeli who has served in the army can tell you about the waste and inefficiencies in the defense establishment and the IDF.”

Fischer added, “This year there is especially strong pressure on the defense budget. Including salaries, defense accounts for over 8% of GDP. There are good economic reasons to cut the budget. I know that protecting national security is the most important thing in Israel, but there is no need to exaggerate.”

Fischer also warned  that although the Israeli economy is in good shape, if the demographic problems continue more problems will arise, and that Israel must avoid the Dutch disease from gas revenues.

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  • jerry hersch

    The expense is likely to rise further as new situations arise on its borders…the cost of living in a ‘high rent’ district.
    It is said a major factor in the collapse of the USSR was the absorption of wealth by the vast military establishment.
    Investment into the means of defense -allows less to be put into the means of production.A bomb sits.. awaiting use-which may never come.A factory machine produces jobs and goods.
    Israel out of necessity must spend for its defence.This can be somewhat ameliorated by investment from the outside ( thus the point of the divestment groups.
    And by donations made to the socio-economic areas where it is needed. A donation..a gift to an affluent entity or group is not charity.
    It is not a true mitzvah to give where it is is, at best, an ego booster.
    Israel needs true support in many areas for it has unique burdens.