Budgeting for defense in Israel

Abstract

Abstract

This article examines the evolution, composition, and institutional foundations of Israel’s defense budget and develops a framework for defense budgeting under persistent uncertainty, systemic risk, and exposure to low-probability/high-impact events. Effective national security requires a multi-year budgeting framework anchored in a clearly articulated and government-approved national security doctrine—an institutional foundation that Israel currently lacks. This institutional gap has contributed to the persistent underfunding of Israel’s defense budget over the past several decades. The analysis shows that long-term defense planning must be grounded in a formally approved national security doctrine. Defense budgeting, in turn, requires an integrated understanding of the military production function, technological change, geopolitical constraints, and the economic and social characteristics of both Israel and its adversaries. It must also explicitly account for preparedness for extreme scenarios and tail-risk events. More broadly, effective defense budgeting requires balancing security needs against economic, social, and institutional constraints while preserving sufficient flexibility, adaptability, and redundancy.