Keep US aid and wartime replenishment off Israel’s 2026 base budget

Finance Minister Smotrich has stated lately that the 2026 defense budget will be about 100 billion ILS. That is much less than the actual 2025 budget, which reflected high wartime costs and implementation of the “Nagel Committee” recommendations, including an agreement between the Finance and Defense ministries on the funding sources. It is also much higher than the pre-war planned budget, and very close to the budget the “Nagel Committee” recommended for 2026 (96 billion ILS) – but that is before one gets into the details.

Focusing on numbers alone can be misleading, especially without knowing all the details. It is important to understand what the budget includes, especially what it does not, alongside the updated security baseline scenario. Only based on this scenario is it appropriate to build the defense budget, while also taking macroeconomic constraints into account, as the “Nagel Committee” did.

There is no doubt that the main issues that should influence the structure and size of the budget are readiness for contingencies, readiness to continue the war with Iran, completing the work in Gaza, and attention to the situation on the fronts around Israel, near and far.

One of the committee’s central insights was that the October 7 massacre was not caused because of the size of the IDF or by levels of stockpiles and readiness. Nevertheless, the unequivocal conclusion was that what happened after 7/10 proved that the IDF’s structure, force levels, and the levels of stockpiles and munitions, in the air, on land, and at sea, were not fully suited to the threat against Israel. The concept of a “small, smart army”, based mainly on early warning air force and technology, completely collapsed. Technology proved to be very important, but not as a replacement for the size of the army, manpower, and stockpiles.

Another committee’s insight was that Israel cannot take risks anymore; it must manage them, without neglecting any arena. Israel must build its capability for multi-front warfare, even if it appears our enemies have been significantly weakened. They indeed have been weakened as a result of the capabilities of the IDF and the defense establishment, but those capabilities must be preserved and strengthened.

A new and important chapter was written in Israel’s strategic doctrine vis-à-vis Iran and other adversaries in the “12-Day War,” and it is exactly in line with the recommendations of the “Nagel Committee”. Israel moved from a policy of “defense and containment” to a policy of “prevention and offense”, a change that was already successfully implemented in the northern arena and was incorporated into the ceasefire agreement and subsequent operations.

Israel initiated a preemptive operation against Iran, which caused severe damage and prevented the advancement of the nuclear program in all its components, together with our great ally, the United States. Israel’s early strike was precise and calculated, and hit most of the nuclear assets, senior figures in the Revolutionary Guards, military, and regime.

Iran’s infrastructure was damaged

Israel damaged Iran’s infrastructure and critical facilities, with emphasis on missiles and UAVs production sites and on strategic air defense. This historic event is not disconnected from the broader context of Iran’s responsibility for terrorism in the Middle East and represents the practical implementation of a deep conceptual shift developed by a team of security experts and also formally recommended in the Nagel Committee report.

On the other hand, it is important to understand that Iran, severely damaged, is a “wounded beast” that has not abandoned its original ambitions to eliminate Israel and pursue regional hegemony. Iran still retains many capabilities even after the Israeli American campaign, which destroyed large portions of Iran’s nuclear, ballistic missile, Air defense, and UAV infrastructure, and it is attempting to rebuild parts of the damaged capabilities.

There is a deep internal debate in Iran, even among regime supporters, about whether the decisions to develop a nuclear capability and to build a “ring of fire” around Israel were correct. These two goals cost the Iranian budget hundreds of billions of dollars at the expense of its citizens and did not produce the promised gains. The current leader’s decision is to continue on the old path, and at present, no one appears to publicly challenge it.

The recommendations written in the report before the war remain valid and even gain additional strength. “Israel must prepare for a prolonged, multi-year campaign against Iran. Building reliable deterrence is not self-evident and is achieved only through credible and overt actions, and by maintaining the concept of an early strike and continuing to build capabilities based on deep strategic intelligence and appropriate armaments.”

Ideas for negotiations with Iran are being raised lately in the US It is important to understand that, since there is no chance Iran would agree to the minimum the US and the West must demand, including zero enrichment, there is no point in entering talks in which there would be only one winner, as always, Iran.

There is also no point in agreeing to any concessions to the Iranians to get IAEA inspectors back, because that would have no real meaning. We saw what the superpowers did with the violations discovered following the “unprecedented” monitoring regime of the terrible 2015 agreement: nothing.

Against Iran, it should be one objective: full dismantlement of all nuclear capabilities and appropriate treatment of the highly enriched uranium (HEU) that survived the strikes, under the ruins of Fordow, by diplomatic or military means, alongside handling the ballistic missiles and air defense.

A united Israeli American front will strengthen deterrence, and together, the work can be completed. There is no longer room for reconciliation, enrichment, ballistic missiles, or support for terrorism; the only path is total dismantlement, anything less will not be enough.

In the other arenas, “peace has not broken out yet”. In Gaza, the situation remains fragile and the destruction of Hamas and full demilitarization have not been completed, including the return of all the missing. In Lebanon, Hezbollah took a severe blow but preserved enough of its capabilities and, despite its withdrawal to the agreed line, is seeking ways to rearm. In Syria, al-Julani still needs to demonstrate that he has changed his terrorist worldview, and based on the massacre carried out against the Druze with his support, he is not there yet.

Beyond Israel’s usual enemies, to which the Houthis can be added, Israel must be prepared for strategic contingencies, even if the budget does not allow building the full force required against them. As the committee report mentioned, and was blown out of proportion, Turkey is entering the vacuum in Syria and is trying to become a leading actor in the Gaza arena, and Egypt is re-emerging and becoming a central player. Israeli eastern border remains largely porous, and the situation in Jordan requires an open eye to prevent surprises.

The analysis indicates that budgets are needed at a scale not smaller than what was recommended by the committee; on the contrary. The defense budget presented by the Finance Minister at the scale of 100 billion ILS appears reasonable, given other economic constraints, but only if it does not include the compensation for wartime expenditures, the replenishment of stockpiles, the additional budget required for defense/security and reservists beyond what the committee recommended (mainly for Gaza deployments), and the budget coming from the American assistance.

Brig. Gen. (res.) Jacob Nagel is a senior fellow at the Foundation for Defense of Democracies (FDD) and a professor at Technion. He served as National Security Advisor to Prime Minister Netanyahu and as the head of the National Security Council (acting). He chaired the “Nagel Committee to Review Israel Defense Budget and Force Structure for the next decade”.