The price of Israel's security push

Published 7 June 2026 · politics

Live Events 'Trauma economy' 'Super-Sparta' as a Reliable and Trusted News Source Addas a Reliable and Trusted News Source Add Now! (You can now subscribe

Live Events 'Trauma economy' 'Super-Sparta' as a Reliable and Trusted News Source Addas a Reliable and Trusted News Source Add Now! (You can now subscribe to our (You can now subscribe to our Economic Times WhatsApp channel Jerusalem: The enormous costs of Israel's multi-front war and Prime Minister Benjamin Netanyahu's determination to turn his country into a "super-Sparta" of the Middle East are driving up the defence budget and raising fears of cutbacks in education and healthcare.The total cost of the series of interconnected regional conflicts that began with Hamas's attack on Israel on October 7, 2023 stood at 405 billion shekels ($138 billion) as of late April, according to the governor of the Bank of Israel, Amir Yaron."That's a huge figure, more than 17 percent of GDP," he said during a recent economic conference in Herzliya, north of Tel Aviv.Just the military campaign against Iran, which began with a wave of US-Israeli strikes on February 28, incurred an additional cost of 35 billion shekels ($12 billion) for the state up until a ceasefire took effect on April 8, according to an initial estimate by the finance ministry.Following the adoption of the 2026 budget in late March, the government noted the defence ministry's budget had more than doubled since October 2023.To support the war effort, the government borrowed heavily on international markets in 2024 and 2025.It has reached the point where public debt now accounts for more than 69 percent of GDP, compared to 60 percent before the war, according to the Treasury.Taxes and social security contributions have also increased.Israelis are "paying twice" for the war, said Esteban Klor, an economics professor at Jerusalem's Hebrew University.The first cost, he told AFP, is via the decline in government social spending and reduced investment in public services resulting from several successive "across-the-board" budget cuts, even as "we are...

increasing the debt"."Education will suffer, the quality of infrastructure will decline, as will the performance of the healthcare system," he said.The second cost is to economic growth, though this has been less visible as the Israeli economy quickly overcame the initial shock of the war. GDP had returned to its 2022 level by 2024 and is continuing to grow at an enviable rate.But the ongoing mobilisation of tens of thousands of reservists since October 2023 is also taking a toll."Since... many of our workers are in the army rather than at their jobs, this affects production," Klor explained.According to a survey published on June 1 by the Israel Democracy Institute (IDI) think tank, 31 percent of respondents said they had experienced a decline in their wages or income since October 7,