Director General of the Defense Ministry Maj. Gen. (res.) Amir Baram said that Israel has returned too quickly to pre-October 7 economic and budgetary assumptions, warning that current defense funding does not match ongoing security needs, in a statement on Wednesday.
Speaking at Calcalist’s Forecasts Conference, Baram said Israel is in what he described as a “deep economic depression,” particularly in relation to defense funding and cash flow. He said the current level and pace of financing do not meet the Israel Defense Forces’ requirements and called for changes to be made before a future conflict.
Baram said that although the intensity of the war has decreased and Israeli military and technological capabilities have produced significant results in most arenas, all fronts remain active.
He said the force structure built over many years was designed for short rounds of fighting and not for prolonged wars of attrition across multiple arenas simultaneously.
According to Baram, while the IDF should aim for short wars and rapid decision-making, it must also prepare for extended conflicts. He said this requires agile military and industrial capabilities, including expanded production lines in Israel’s defense industries that can shift output from exports during routine periods to IDF needs in emergencies.
Baram said the budgetary framework agreed upon for 2026 stands at 112 billion shekels, but that the Finance Ministry is aware that the operational demands placed on the IDF will exceed that amount.
He accused the Finance Ministry of consistently underfunding the defense establishment, leading to debt within defense industries, and later blamed the IDF for budget overruns that he said are unavoidable.
'Finance Ministry "plays games" with the defense establishment'
"The Finance Ministry knows that the ‘operational framework’ (the total set of missions the political leadership assigns or is expected to assign to the IDF) will be much larger. What does it do? It ‘plays games’ with the defense establishment and shouts ‘there is no control’ over the IDF budget, consistently underfunds it, drags the industries into debt, and then blames the IDF for alleged overruns, overruns that are clearly bound to occur,” Baram said.
Baram said this approach creates what he described as an artificial deficit in the defense budget and is used to justify transferring authorities to the Finance Ministry. He added that delays and conditions placed on cash flow slow procurement processes that have been approved by law by a ministerial committee.
Baram warned that under the current budgeting method, which he said has not materially changed since before October 7, the defense establishment will not meet the required pace of force buildup.
He also outlined steps taken by the Defense Ministry to strengthen defense exports and force buildup. Baram said he approved a comprehensive reform earlier this month to increase Israeli defense exports while maintaining oversight.
He said major export deals generate additional systems for the IDF, strengthen defense-related foreign relations, and contribute to Israel’s economy.
Baram added that the ministry is investing in expanding the production base of Israel’s defense industries to reduce vulnerability to global embargoes and enable increased exports.
He also said Israel is advancing international partnerships based on joint production with multiple countries, allowing for the transfer of inventories between states during crises or embargoes under confidential bilateral agreements.