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Gaza war’s price tag: $2.5 billion

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Now we know how much Israel’s war in Gaza cost — and it’s even more than we expected.

Israeli Defense Minister Moshe Yaalon revealed Tuesday that the total military cost of Israel’s 50-day war in Gaza this summer amounted to $2.5 billion. That number doesn’t include an estimated $1.3 billion hit to Israel’s GDP due to the war, according to an estimate JTA got from a senior official.

The $2.5 billion bill is higher than even the most liberal estimates Israeli media made in early August, about two weeks before the fighting ended. During the war, Yaalon said, Israel hit 6,000 targets — 5,000 of them from the air. The Iron Dome missile defense system also shot down 600 missiles fired from Gaza.

Yaalon’s announcement comes on the heels of a major budget cut to pay for the war. Every government ministry sustained a 2 percent cut in its 2014 budget to transfer more than $400 million to the Defense Ministry to pay for the war. The hardest hit was the Education Ministry, which lost nearly $200 million.

Finance Minister Yair Lapid said most of the total $2.5 billion would come from the 2014 budget, but the war’s cost has prompted a public debate between Lapid and Karnit Flug, governor of the Bank of Israel, over how to pay for the rest. Lapid wants to increase Israel’s budget deficit rather than raise taxes or further cut spending next year.

“The last thing the Israeli economy needs is more taxes and more cuts,” Lapid said in a speech Tuesday. “The experience of the international community from the past years proves that austerity budgets do not help. Austerity budgets choke off growth, hold back entrepreneurship and create an atmosphere of no hope.

Flug said, according to Bloomberg News, that an increased deficit would “serve as a clear signal of a retreat from a commitment to fiscal discipline, and will increase the risk of loss of credibility.”

 

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