As the war with Iran makes Defense more expensive and squeezes the rest of the State, the Israeli Government is trying to close the budget with negotiated funds for its most sensitive allies
The final vote on the 2026 budget, scheduled for this Sunday night in the Knesset, the Israeli parliament, became a test of survival for Benjamin Netanyahu.
The revised budget foresees a total expenditure of 699 billion shekels (192.4 billion euros), excluding debt service, and raises the target deficit to 5.1% of GDP. The war with Iran forced the executive to add 32 billion shekels (8.8 billion euros) to Defense, bringing the total military bill to 143 billion shekels (39.4 billion euros), while at the same time imposing a 3% cross-cut on civilian spending.
If the budget is not approved by March 31, the Knesset automatically dissolves and Israel enters the electoral process. It was in this context that the opposition raised its tone.
Naftali Bennett, former Prime Minister of Israel and today one of Netanyahu’s main opponents, accused the Government of “plundering” the public coffers with seven billion shekels (1.93 billion euros) in “political bribery” to preserve the coalition. Yair Golan, former deputy chief of staff of the Armed Forces and leader of the Israeli left-wing party The Democrats, spoke of a budget that favors allies in power while the rest of the country bears the brunt of the war, the cost of living and mobilizations.
The target of criticism is the so-called discretionary coalition funds: money entered in the budget to respond to specific demands from the parties that support the executive. This is not a criminal accusation formulated in court, but a political denunciation of the selective use of public money to maintain a fragile majority.
These funds total more than five billion shekels (1.38 billion euros) and are mainly directed to haredi institutions, that is, ultra-Orthodox ones, yeshivas, Jewish religious seminaries, and Israeli settlements in the occupied West Bank. Bennett highlighted one number in particular: two billion shekels (550.5 million euros) for yeshivas “who educate people not to enlist,” in his words, while Chief of Staff Eyal Zamir warns of staff shortages. Yair Golan also attacked increased funding for ultra-Orthodox schools that refuse to teach core curriculum subjects and for settlements that, he said, receive more than locations within the Green Line — the 1949 armistice border that serves as an international reference to distinguish Israel from the territory occupied in 1967.
This is where the budget news intersects with the Government’s political fragility. Netanyahu depends, for a majority, on the ultra-Orthodox parties Shas and United Torah Judaism, in addition to the national-religious right linked to the colonization movement. It is precisely these allies who are pushing most for funding for their education system and for projects in the West Bank. They are also the most adamant in defending military exemptions for religious seminary students.
In June 2024, the Israeli Supreme Court determined that the State had to start recruiting these students, putting an end to a practice maintained for decades without a new legal basis. Since then, the dispute over who should serve in the army has become one of the biggest points of tension in Netanyahu’s coalition.
The sensitivity of the topic increased with the war. Israel comes to this vote after almost two years of conflict in Gaza, prolonged clashes in the north with Hezbollah and, now, a month of war with Iran. The army needs more men, more rotation of forces and more budget; Haredi parties insist on preserving an exceptional regime for their social base.
It was in this precarious balance that the budget began to function as political currency. Reuters reported that ultra-Orthodox parties had threatened to vote against the document if legislation on exemptions was not finalized first, but backed off after the government allocated them around five billion shekels (1.38 billion euros) for ultra-Orthodox schools. An opposition deputy on the Finance committee summarized the executive’s choice as “coalition survival above a fair distribution of resources”.
The war also weighs on the political calendar. Formally, nothing prevents elections in times of war; if the budget falls, the law does the rest. But the conflict has made going to the polls now less electorally attractive.
In the first days of the campaign against Iran, elements of Netanyahu’s camp even admitted an early vote in the summer, betting that the war would give him a boost. This gain did not appear. According to Reuters, polls continue to show around 40% of voters with the coalition and 40% with the opposition, with no clear deviation from the floating electorate. A survey cited by the agency gave Likud 28 seats and the current government bloc only 51, far from the 61 needed for a majority in the Knesset. The strategy therefore became another: buy time.
Tonight’s vote therefore decides two things at the same time. He decides how Israel finances a war that already costs it five billion shekels a week (1.38 billion euros), with conditioned economic activity and more pressure on public accounts. And it also decides whether Netanyahu can keep together the majority on which he depends so as not to be pushed into early elections.
It is at this point that the opposition focuses the accusation of “looting” and “bribes”. At a time of cuts in other ministries and increased military spending, the government set aside more than five billion shekels (1.38 billion euros) for funds claimed by coalition parties, especially ultra-Orthodox institutions and settlements in the West Bank.
For Netanyahu’s opponents, it is public money used to buy political survival. For the Government, it is the price of approving the budget and continuing to govern.
