The Israeli Defense Establishment’s Budget Accountability Problem
The IDF had all its financial demands met when the Israeli government passed a new NIS 58 billion (net) defense budget at the beginning of August.
The fact that the prime minister and the finance minister have both held the role of defense minister was helpful to the IDF’s case. The same goes with regard to the government’s approval of IDF Chief of Staff Lt. Gen. Aviv Kochavi’s request for an increase in the pensions of career personnel, as part of the military’s bid to improve their competitiveness, so as not to lose their officers and staff to the private sector.
Yet military budgets touch on questions that go far beyond the military. They have repercussions on national solidarity. The way that sections of the public and the media criticized the approval of the pension changes shows that there is a disconnect between the general public and the defense establishment.
It’s no secret that in the aftermath of the COVID-19 pandemic, the state had to fork out hundreds of billions of shekels in unforeseen expenses to rescue the economy. The private sector had to navigate through this unprecedented challenge, sustaining considerable damage. In the public sector, meanwhile, all government ministries got a flat, uniform cut — except the Defense Ministry.
It was against this backdrop that the government passed the military pensions increase.
With the economic fallout from the pandemic ongoing, and businesses continuing to struggle, questions must be asked about the timing of the move. In addition, decision-makers should have anticipated the pushback, and could have offered to examine the salaries of conscripted soldiers
With tens of thousands of businesses having to shut down as a result of the coronavirus crisis, and with public hospitals on strike due to lack of funds and no extra money available for doctors, who are sometimes working 24 hours a day, much of the public feels discontent over growing defense budgets and pension increases.
When it comes to the defense budget, the approach of the Israeli defense establishment can be summed up with the words “don’t touch it.” This view of the defense budget as a “holy grail” is amplified by the difficulties most people have in quantifying the budget, understanding how it is constructed, and how much money goes where.
To be sure, the IDF is able to explain to the government why it needs all of the money, but civilians are not privy to these explanations — often for good reason, as they are classified — and find the “don’t touch” approach difficult to accept. There is no disputing the axiom that without adequate defense, there simply is no state. On the other hand, the current situation resembles a bottomless cash pit.
The state armies of Egypt and Jordan no longer pose a threat, but Iran, its nuclear program, and its axis of proxies have replaced old threats with new ones. The same is true for terrorist armies. Meanwhile, defense budgets keep growing.
The real question is, how much of the budget is invested in dealing with these new threats?
For example, how much money has been allocated to improving the home front against the threat of mass projectile attack, including the threat to infrastructure serving the control centers of the IDF and Defense Ministry?
What has been allocated to where in regards to the ground army’s capabilities? Hasn’t the time arrived to examine how many tanks the IDF needs, in light of the fact that Egypt and the Sinai Peninsula are not a threat at this time?
Due to these considerations and more, it is essential to start seeing supervision on how the IDF manages its money, particularly for the thousands of projects being managed simultaneously in the IDF. It is no secret that many funds are allocated to development projects, which by nature go beyond their allocated budgets, and extend beyond their planned deadlines. Hence, these projects increasingly impact budgets, and what is left in the end for force build up is relatively small compared to the money that has been earmarked for salaries, for treating disabled IDF veterans, for projects, and more.
All of this requires improved control and supervision. It is difficult to recall the last time that the IDF held an inquiry about project management and shared conclusions where needed.
There are many examples of this. The decision to purchase four Magen ships from Germany’s ThyssenKrupp Marine Systems started out with budget allocations for a product that does not resemble the one that eventually reached Israel. At first, the project spoke of 1,200-ton ships with a corresponding budget, but in the end, Israel received 2,000-ton ships with corresponding weapons systems, including electronic warfare systems, and operating costs far higher than those originally planned.
This will impact the next IDF multi-year working plan and future defense budgets, and is just one example of many. The funding of F-35 planes, secured through loans, will also affect future budgets, and therefore, each year the budget is going to increase, irrespective of the strategic situation in the region.
Once platforms have been purchased, the state is forever obligated to maintenance, installation of on-board combat systems, and additional costs that were not factored into the original calculations.
All of this adds up to deficits created by past obligations that bite into every fresh budget. Add to this the salary payments for the professional military personnel, and the question of how much money is left over for force build up becomes acute. The need for the IDF to get project managers to explain the gap between final costs and initial cost estimations has never been more critical. The same is true for the need for better training and guidelines for the military’s in-house project managers.
In this difficult era, the time has come for the IDF to begin showing the Israeli public how it is improving transparency and accountability.
This can start with small changes that would still go a long way to improving accountability, such as creating teams that would only look at projects worth 100 million shekels and above, and noting — every quarter — those projects that surpass initial costs by 40 percent. These projects could then be the subject of an inquiry, and the lessons shared with other project managers, who will be able to avoid future mistakes.
These mistakes are not intentional. Nor are they the product of corruption. They are, however, the product of a budgetary culture that is too forgiving of runaway costs. Now is the time for change, which will in turn boost national solidarity during these trying times.
Brigadier General Shmuel Tzuker (IDF, Ret.) is a publishing Expert at The MirYam Institute. He is the former Deputy Director General of the Directorate of Production and Procurement in the Ministry of Defense, Israel.
The MirYam Institute is the leading international forum for Israel focused discussion, dialogue, and debate, focused on campus presentations, engagement with international legislators, and gold-standard trips to the State of Israel. Follow their work at www.MirYamInstitute.org.