The War With Iran Will Make The Israelis Poorer

Saednews: Bezalel Smotrich, the Israeli regime’s Minister of Finance at the time of approving the 2025 budget in the Knesset, spoke about allocating 18.8 billion shekels (about 5 billion dollars) to the military budget and announced that this budget was not sufficient at all.

After the start of the war against Iran, he revealed:
“When the 2025 budget was being approved, only a few of us, including myself, knew about the planned war with Iran. Therefore, through our insistence, a special budget was allocated to the Prime Minister’s Office so that the army could cover some of its needs for preparing the war against Iran from there.”

Smotrich’s statements sparked a wave of criticism in economic circles.
Adrian Pailot, an economic writer for Calcalist, considered the increase in the military budget and the allocation of surplus funds to the Prime Minister’s Office account a dangerous move for Israel’s economy. He emphasized:
“Such a military budget will expose Israel’s economy to increased debts, budget deficits, reduced revenues, and place it on an irreversible path to economic collapse.”

Shlomo Titelbaum, a prominent Israeli economist, also reported that public services have been further reduced due to cuts in the non-military budget and stated:
“The war with Iran does not only affect the 2025 budget but also impacts the 2026 budget.”

He cited as an example the daily cost of the Israeli army for recruiting soldiers and reservists for the Iran war and said:
“The numbers say the daily cost of tens of thousands of soldiers is 600 million shekels, and each reservist costs 300 shekels daily.”

Titelbaum described these expenses as the beginning of Netanyahu’s adventures and told Israelis to expect further economic consequences, the most important of which is the downgrade of Israel’s credit rating.

For Israelis who do not know what a credit rating downgrade means, he explained:
“A downgrade means increasing difficulty in repaying debts, meaning higher taxes against a backdrop of reduced non-military expenditures, which include public services.”

This prominent Israeli economist summed up the difficult conditions ahead for Israelis after the war with Iran in one sentence:
“The shrinking of the Israeli household budget.”

The shrinking household budget of Israelis had started on October 7, although even before the war, Israel was not in a good position in terms of the non-military budget. Prior to the Gaza war, Israel’s non-military budget was at least 5% lower than the average of the countries in the Organization for Economic Cooperation and Development (OECD), of which Israel is a member. Data indicates that this budget was further reduced after the start of the Gaza war and is expected to decline again due to the Iran war.

If each Arrow 3 interceptor missile costs 10 million shekels, considering Israeli army data showing that over a thousand Arrow interceptors were fired at Iranian targets within the first five days of the war, this means the Arrow missiles alone have cost Israel 100 million shekels daily. This is apart from the costs of missile launches, system operations, operator recruitment, and damage caused by missile impacts on areas, including residential zones, as well as indirect damages, all of which individually cost the Israeli army.

Added to the missile defense are the flights of Israeli fighter jets, which cost the Israeli army $25,000 per hour, with the fuel reserves used in each jet averaging half a million dollars.

Now add to these the costs of Israel’s wars in Gaza and other areas like Syria, which, although not directly related to the Iran war, still impose costs that must be covered by increasing the military budget and reducing the non-military budget.

Last Tuesday, Yedioth Ahronoth wrote, simultaneously with the ceasefire between Iran and Israel:
“The 2025 military budget, which had been previously approved by the Knesset, is not the final budget due to the ongoing wars in Gaza and with Iran,” meaning Israelis’ household budgets will shrink further.

Yedioth Ahronoth added:
“It appears that the Gaza war has cost Israel 141.6 billion shekels, while the Ministry of Economy refrains from releasing war cost details out of fear of protests from Israelis.”

According to this newspaper, the Israeli security apparatus — a broad term including the Ministry of War, intelligence, espionage, and security agencies — spent more than 67 billion shekels alone in the first five months of 2025, which equals half of the total public budget.

Now add the costs of the Gaza war and the Iran war. Worse still, so far, the U.S. has withheld any financial aid to Israel, meaning that the costs of Netanyahu’s wars must be paid by Israelis themselves through reduced purchasing power and increased taxes.

According to 2023 statistics, out of the 9.75 million population of the Israeli regime, about 2 million people — one-fifth — live below the poverty line. Israel’s poverty rate is among the highest in developed countries, with most of the poor being elderly and children. After Costa Rica, Israel has the second-highest rate of child poverty.

For years, the reduction in the non-military budget and public services has intensified poverty among Israelis, and it is expected that this phenomenon will increase in the coming years.