From a purely budgetary perspective, Israel would probably be better off not responding at all to the current Hamas attacks.
The Israel Defense Forces, IDF, is admired by many for its operational wiliness, and for its resilience in maintaining the country’s security against unending threats. But over the past few decades, the same beloved IDF has been accused by many Israelis, across the political landscape, of being less than thrifty, to put it mildly, when it came to operating within its budget.
Virtually every budget year includes the part where the Ministry of Finance is recommending severe cuts in the military part of Israel’s budget, which in turn raises extreme reactions from the Ministry of Defense and, occasionally, from the military brass. This year, for instance, has seen a demand for an additional NIS 5 billion ($1, 456, 000, 000) on the part of the IDF, for the 2015 budget, and a public war of words between Defense and Finance over the former’s ability to keep its ledgers straight.
Back in 2007, the IDF received a devastating blow to its pride as a well managed organization, from a report by a government appointed committee, headed by economist David Brodet. The Brodet Committee ordered the IDF to streamline its operations and shed at least NIS 30 billion ($8.7 billion) over the following decade. The military complied, to the best of its ability, an earnest effort that met many challenges along the way, including several confrontations up north with Hezbollah and down south with Hamas, as well as maintaining law and order in the West Bank. The committee had thought about that, and allowed the military a planned, gradual increase over the following decade, and an annual reserve of about $250 million.
From a purely budgetary perspective, Israel would probably be better off not responding at all to the current Hamas attacks, which, so far, have caused only minor damage, a mere few thousand dollars, from daily barrages of about 100 rockets each. Of course, this is an absurd observation, because unanswered attacks have a tendency to increase, and rockets eventually hit a valuable target. Also, as the civilian population in the south, and, as of last night, in many urban centers, is forced to stay in or near bomb shelters, the economic toll starts rising alarmingly even without actual rocket damage. And so, naturally, the IDF has to respond, and the results, budget-wise, are catastrophic.
But, again, from a purely budgetary perspective, using artillery, tanks and infantry would be a lot cheaper than maintaining the hundreds of daily attacks from the air. The drones, which Israel has been using frequently, and with satisfying results, are estimated to cost about $1, 500 an hour. A helicopter’s operational hour costs $5, 000. And an hour a fighter aircraft spends attacking targets on the ground comes at about $15, 000.
But those figures are dwarfed by the costs of the much admired Iron Dome defense system: each downing of an incoming Qassam rocket (costing the other side a few hundred dollars) costs the Israeli taxpayer between $40 and $50 thousand. This is why the army is applying economics to its decisions in acquiring targets for the Iron Dome, which analyzes the trajectory of each incoming missile to decide whether or not it’s worth the investment involved in hitting it.
In comparison, the cost of activating one infantry, armored units, or artillery soldier is roughly NIS 450 per day ($130), and that’s just what it costs the state to compensate him or her, and what it costs the overall economy to continue functioning without him. In addition, these soldiers are also fed, clothed, lodged and transported, all of which comes out of the IDF budget. (source: Motti Bassok, The Marker).
Israel’s most recent confrontation in Gaza, Pillar of Defense, in the winter of 2012, lasted eight days and cost NIS 2 billion ($580 million) in additional military expenditure, and NIS 1 billion ($290 million) in civilian economic damages, mostly because production was halted in many places, and shoppers stayed in bomb shelters in the south.
Remember that $250 million annual reserve the IDF was allowed by the Brodet Committee? It came with an incentive: each year the IDF does not touch the reserve, it is accumulated and remains available for future use. Of course, was policy is not decided by the military, but it should be noted that the two straight years of quiet Israel has enjoyed along its border with Gaza have yielded the IDF a whopping half a billion dollars. That’s some peace dividend.
Right now, while Hamas is trying to gain sympathy for its losses for a war it launched with a cold calculation toward restarting the flow of funds from Arab countries which have written it off recently, Israel is entering the third day of war, with both its financial and military leaders watching with an anguish the running digits on their budgetary meter. Once again, Israel is being forced to take money away from civilian services such as healthcare, education, roads and care for its poor, and invest it in defense, and in maintaining its war-stressed industry and commerce.