The Evolution of Israel's Military Expenditures: 1960-1983

• Date: 01 September 1988
• DOI: 10.1177/106591298804100306
• Author: Alex Mintz,Michael D. Ward
• Published date: 01 September 1988
• Subject Matter: Articles

THE EVOLUTION OF ISRAEL’S MILITARY
EXPENDITURES: 1960-1983
ALEX MINTZ, Texas A&M
University
and
MICHAEL D. WARD, University of Colorado, Boulder
SRAEL
is frequently described as a &dquo;nation in arms,&dquo; characterized
by civilian control over its military as well as fragmented boundaries
between its army and society (Luckham 1971; Ben Dor 1975; Horowitz
1977). Citizens of Israel are often viewed as &dquo;soldiers on eleven months
leave&dquo; and the country’s military budget as the largest (per capita) in the
world. And indeed, the Israeli military budget amounts to more than $5
billion per year (Heller 1984), or about $1400 per capita.
The literature on defense budgeting (see, e.g., Ostrom 1977; 1978;
Hollist 1977; Domke et al. 1983; Fischer and Crecine 1979 and 1981;
Fisher and Kamlet 1984) identifies a number of factors that influence mili-
tary spending and that might be also relevant to the Israeli case. Typi-
cally, four sets of explanations are offered: two are domestic, two
international. The domestic explanations are political (see, e.g., Nincic
and Cusack 1979) and economic (see, e.g., Griffin et al. 1982) while the
international factors are usually related to the arms race (see Richardson
1960) and to involvement in wars (e.g., Russett 1970).
Domestic, political explanations tend to emphasize the role of elec-
toral cycles (see Nincic 1982) and political parties (e.g., Domke et al. 1983)
in shaping military expenditures. Economic explanations often highlight
the impact of inflationary processes (see Griffin et al. 1982) and of declin-
ing corporate profits (see Mintz and Hicks 1984) in influencing military
spending, while the international explanation emphasizes the role of the
superpower arms race (see Ward 1984; Majeski 1983, and Zinnes and
Received: May 5, 1987
First Revision Received: September 22, 1987
Second Revision Received: November 2, 1987
Accepted for Publication: November 5, 1987
NOTE: Mintz’s participation in this project was supported, in part, by the Merriam Labora-
tory for Analytic Political Research and the Program in Arms Control, Disarmament,
and International Security at the University of Illinois. With the support of the Ford
Foundation, interviews were conducted by Mintz with top defense officials in Israel;
data collection in Israel was funded by a grant from the Leonard Davis Institute for
International Relations at the Hebrew University of Jerusalem. Daniel Maman assisted
with data collection. Ward’s participation in this project was supported, in part, by
the National Science Foundation under grant SES-8308687 and by the Program on Po-
litical and Economic change of the Institute of Behavioral Science and the Center for
International Relations in the Department of Political Science at the University of
Colorado, Boulder, U.S.A. Any opinions, findings, and conclusions or recommenda-
tions expressed in this publication are those of the authors, and do not necessarily re-
flect views of the named organizations.

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490
Gillespie 1973) and of the war mobilization factor (e.g., Cusack and Ward
1981) in affecting growing military expenditures.
As far as Israel is concerned, there are three levels of decision-making
regarding defense spending policy: the national, the regional and the in-
ternational. At the national level, military expenditures are influenced
by politico-economic interactions. At the regional level, the Arab-Israeli
arms race and the protracted war are determinant, while at the global,
international level, the superpowers’ competition in arms transfers and
military aid are a strong influence. In contrast to defense budgeting in
other nations, Israel’s defense budget presents, however, a somewhat
unique case in several respects.
First, Israel’s defense budget is characterized by very high growth
rates. It is not unusual for total Israeli military expenditures to grow an-
nually by more than 50 percent in constant prices. Examples of such
yearly increases occurred during 1956, 1967, and 1973, years also charac-
terized by Israeli war involvement.
The military budget also consumes a large portion of the country’s
overall budget. In the mid-1980s, defense items accounted for about 30
percent of the total budget. The ratio of military to total central govern-
ment expenditure in Israel is reported to be the highest in the world (Arms
Control and Disarmament Agency 1984).
Third, the military budget has evolved in an environment of continu-
ous conflict. Israel has been constantly involved in military conflicts in
the Middle East. In the four decades since its independence, Israel en-
gaged in six wars (the War of Independence in 1948, the Sinai campaign
of 1956, the Six Day War of 1967, the War of Attrition in 1969-70, the
Yom Kippur War in 1973, and the Lebanese War in 1982-85) and in
numerous other military campaigns such as preventive strikes and reprisals
against Arab terrorist bases. Israel faces a permanent, declared threat of
physical destruction (Kimmerling 1983) and - according to one estimate
(Barkai 1980: 23) -
a severe quantitative, military inferiority of approx-
imately 1:5 in terms of military personnel and about 1:1.6 in military ex-
penditures.
There is also a substantial gap between Israel’s external defense needs
and its financial ability to pay for them. Consequently, a large compo-
nent of the Israeli military system, almost one-fourth (Kochav 1983: 50),
is financed through a military aid program (grants and loans) which
primarily comes from the United States. Israel is currently the largest re-
cipient of American military aid.
Economically, Israel operates under conditions of three-digit, hyper
inflation (about 400 percent in 1984),’ and its defense budget involves
three different currencies: Israeli shekels, mainly for purchases and serv-
ices in Israel, U.S. dollars for military procurement in the U.S., and a small
1
The inflation rate in Israel has been drastically reduced since July 1985 (when it reached
more than 27 percent per month) to about 30-40 percent in the latter part of the year
and subsequently.

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491
sum
of about $ 150 million typically devoted to weapon systems procure-
ment in Western Europe (Hershko 1985: 4).
Israeli decision-making regarding the military budget is also respon-
sive to so-called bottom up pressures. Due to Israel’s security needs and
the perceived military threat, Israeli decision-makers (at least until recent
years) have been sensitive to pressures by the military establishment to
increase military spending (see Peri 1983: 213-15). Consequently, the Is-
raeli military budget exerts an influence upon the size of the overall na-
tional budget and not vice versa as often characterizes so-called top-down
systems2 such as the United States. These features of the Israeli military
budget that distinguish it from other nation-states make it important to
identify the causal mechanisms that shape the evolution of this budget.
The involvement of Israel in the 40-year Middle Eastern arms race, the
involvement of the superpowers in this race, and Arab-Israeli tensions
have all served to highlight the importance of the Middle Eastern con-
flict in world affairs.
To date, studies of the Israeli military system have concentrated on
such heterogeneous aspects as the Israeli army (Luttwak and Horowitz
1975), Israeli conventional and nuclear dilemmas (e.g., Aronson 1977;
Horowitz 1982; Feldman 1982; Evron 1985), the Israeli military in poli-
tics (e.g., Ben Dor 1975; Perlmutter 1969; Peri 1983), the military-
industrial complex (Klieman 1984; Mintz 1985b), the military and the
economy (see Barkai 1980; Berglas 1983; McGuire 1982; and Zussman
1983), and the military and Israeli society (e.g. Lissak 1984; Kimmerling
1983). Given the centrality and importance of the military budget in Is-
rael’s political, economic and social affairs, it is important to seek an ex-
planation of trends in Israeli military spending as well.
In this article we
present a model of Israel’s military expenditures from
1960, the earliest year for which complete data are available, to 1983.
This model draws on insights from work on defense budgeting in other
countries (see e.g. Hollist 1977; Cusack and Ward 1981; Ward and Ma-
hajan 1984). Its uniqueness is found, however, in an attempt to combine
and integrate the three components of defense spending in Israel: the lo-
cal budget, military aid, and arms imports. The mathematical model is
analyzed, the parameters estimated empirically using data from official
Israeli sources, and the results are evaluated with an eye toward the fu-
ture evolution of Israeli military spending patterns.
THE MODEL
The Israeli military budget is a complex document, consisting of more
than 10,000 line items (see Hershko 1985: 7). While the details of this
budget are secret and are presented for approval only before the impor-
tant Foreign Policy and Security and Finance (Joint) Committee of the
2
In the U.S., in contrast, the defense budget is generally determined in two stages: its ceil-
ing is set first and the total sum is then divided among the various budgeting compo-
nents (Fischer and Crecine 1979).

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492
Israeli Parliament and to the Isareli government, a series of interviews
with top Israeli defense officials have enabled us to examine some im-
portant aspects of the process of defense budgeting, the interrelationships
of the various components of the budget, and to elucidate major deter-
minants of military spending in Israel (Mintz 1985a).
The point of departure in our...