An intensifying internal rift has emerged within the Israeli government as the Security and Finance ministries battle over critical defense funding for recent wars on Gaza and Iran that were not included in the 2025 state budget, Israeli media reported.

The Security Ministry has requested an emergency allocation of 60 billion shekels to cover the cost of the unplanned offensives. However, the Finance Ministry has refused to approve the increase, leading to delays in acquiring essential equipment, including Arrow missile interceptors and armored vehicles needed by forces deployed in Gaza.

Finance Ministry withholding funds

Senior security officials said the Finance Ministry is even withholding funds already approved by a joint commission established to manage long-term "defense planning". They highlighted the financial burden of deploying reservists, estimated at 1.2 billion shekels per month, as a key point of contention.

“The ground offensive on Gaza was not part of the budget. The reserve force had to be called up more than expected,” said one security official. “The Home Front Command alone needed tens of thousands of reservists.”

Despite the dispute, Finance Minister Bezalel Smotrich was reportedly briefed in advance about the planned strike on Iran and its economic implications.

Funding delays affect Gaza operations

The Israeli occupation forces have urgently requested the procurement of at least 500 new Hummer vehicles, citing the deteriorating condition of older jeeps, many of which have logged over one million kilometers and have sustained damage from anti-tank attacks and explosives.

Although 632 new vehicles are already in production, the Finance Ministry’s delay in approving payments threatens their delivery. Security sources warn the vehicles may be sold to other foreign armies if funding isn't secured promptly.

Arrow missile shortage and strategic risks

The Air Force is also struggling to replenish stockpiles of critical munitions. Supplies of Arrow missile interceptors were significantly depleted during the 12-day confrontation with Iran and remain vital to ongoing operations, particularly against missile threats from Ansar Allah in Yemen and the potential for renewed aggression on Iran.

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Finance officials argue that the Israeli military’s reliance on reserve forces has become excessive, calling many of the deployments unnecessary and urging the military to scale back. They also point to "Israel’s" growing security export revenues as a possible buffer against additional internal military spending.

As the standoff escalates, military officials say they are awaiting direct intervention from Prime Minister Benjamin Netanyahu to break the deadlock. Without immediate resolution, they warn, the army’s readiness and strategic capabilities could be significantly compromised.

'Israel' burning $200 mln daily in costly Iran response: WSJ

The Wall Street Journal on June 20 reported that "Israel" is facing a mounting financial burden as a result of its military confrontation with Iran, with estimates suggesting the cost of the war is draining the Israeli economy by hundreds of millions of dollars per day. The staggering expenses are raising doubts about "Israel's" ability to sustain a prolonged offensive.

Central to the cost is the deployment of high-end missile defense systems used to counter Iranian retaliatory strikes. According to experts, the daily price of launching interceptors alone may reach up to $200 million. Added to this are expenditures on munitions, aerial missions, and the extensive damage caused by Iranian missile strikes on Israeli infrastructure. Preliminary figures place the cost of reconstruction at no less than $400 million.

Though Israeli officials claim their military campaign may last two weeks, Prime Minister Benjamin Netanyahu has shown no sign of retreating before achieving long-standing political goals, such as dismantling Iran's defensive capabilities and its sovereign nuclear program, which is internationally monitored, with Iran repeatedly asserting its peaceful nature.

But economic realities may force a rethink, according to WSJ. "The main factor which will really determine the cost of the war will be the duration," said Karnit Flug, former Bank of Israel governor. "If it is a week, it is one thing. If it is two weeks or a month, it is a very different story."

Deterrence costs rise

Iran's missile response, logging over 400 missiles launched in recent days, has exposed the immense cost of attempting to neutralize such deterrent power. Each interception using the David's Sling system costs around $700,000, and the Arrow 3, meant to intercept ballistic missiles in space, runs up to $4 million per launch. Even older Arrow 2 interceptors cost roughly $3 million.

Beyond security matters, "Israel's" offensive operations come with their own price tag. Keeping advanced F-35 jets in the air for long-distance missions, targeting Iranian territory over 1,600 km away, costs about $10,000 per hour per jet, according to security analyst Yehoshua Kalisky. The cost of fuel, precision bombs, and support operations only amplifies the daily burden.

Read more: Did 'Israel' modify F-35 jets to strike Iran without re-fueling?

"Per day it is much more expensive than the war in Gaza or with Hezbollah. And it all comes from the ammunition. That's the big expense," noted Zvi Eckstein of Reichman University. His institute estimates a one-month war with Iran would cost "Israel" approximately $12 billion.

Despite this massive outlay, analysts say "Israel's" economy remains vulnerable. Many sectors have been paralyzed by the Iranian response: the main airport was shut down, businesses shuttered, and only essential services permitted to function. Meanwhile, global credit rating agency S&P issued a warning, though it stopped short of revising "Israel's" credit outlook. Investors, for now, appear to be betting on a short war, an assumption that may prove misguided.

Illusion of invincibility

On the ground, Iranian precision strikes have shattered the illusion of Israeli invulnerability. Engineers and first responders describe destruction not seen in decades. "It would cost at least tens of millions of dollars to repair a single newly-built skyscraper in central Tel Aviv," said structural engineer Eyal Shalev.

More than 5,000 Israelis have been evacuated from missile-damaged neighborhoods and are now temporarily housed in hotels funded by the government. Iranian targeting of critical infrastructure has been effective, including two strikes on "Israel's" largest oil refinery in the north, which forced a shutdown and left three settlers dead. Workers in key sectors have been instructed to remain at home amid growing instability.

Iran's response has not only shifted the military balance but also exposed the deep vulnerability of "Israel's" economy and civil infrastructure. With growing costs, damaged public morale, and uncertainty mounting, the war's continuation may prove more costly to Tel Aviv than it anticipated. 

Read more: Iran missile hits Beer al-Sabe', injures settlers as defenses fail