Israel plans to cut Arab development funds for ‘classified’ defense purchases

Avi Bar-Eli, Meirav Arlosoroff and The Marker report in Haaretz on 14 October 2026:

Israeli government ministers met Wednesday morning to approve the allocation of 1.03 billion shekels ($335 million) to the Israeli military and defense agencies in the first of two budget cuts amounting to a total of 3.63 billion shekels ($1.18 billion).  The first cut is officially designated for the “advance procurement of classified equipment,” while the second is slated to be designated for another urgent defense need.

A proposal submitted by far-right Finance Minister Bezalel Smotrich says that the additional funding will come from future cuts to the five-year plan for the development of Arab society, spread over three years (2027–2029). Under the proposal, 170 million shekels will be cut from the plan in 2027, 342 million shekels in 2028 and 453 million shekels in 2029.

“It turned out that certain payments to Boeing need to be made upfront,” Smotrich said. “We identified a temporary funding source in the five-year plan for Arab society, which has not yet been approved, and we’ll sort everything out when we prepare the 2027 budget.”

Since the government never approved a new five-year plan for Arab society and the funds were merely earmarked in its multi-year budget projections, the budget cuts remain largely symbolic, serving Smotrich’s campaign ahead of the October 27 election.  “Later today, another government resolution will be submitted for approval, involving an across-the-board budget cut of 2.6 billion shekels for urgent matters that we won’t discuss right now,” Smotrich said.

“There’s a deal to purchase 12 Apache helicopters that needs to be signed today. I think this deal is a mistake,” he added. “Apache helicopters have limited operational capabilities. The same objectives can be achieved using much cheaper means. But the defense establishment was very keen on it, and the prime minister made the decision.”

The Finance Ministry is meanwhile pushing back against the Defense Ministry’s request for additional funding, particularly as it comes just three weeks after the Knesset approved a 15 billion shekel increase to the 2026 defense budget.

In the legal opinion attached to the government resolution, Finance Ministry legal adviser Dudi Koppel noted that although the government is required to exercise restraint in using its powers during an election period, “professional officials at the Defense Ministry have made it clear to us that failing to bring forward the procurement, and therefore to identify budgetary funding sources now, could undermine the necessary defense response.”

Koppel added that although diverting funds from a program planned for 2027–2029 would limit the next government’s flexibility to some extent, it would still technically be possible to make changes as part of the 2027 budget.

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