Based on the current/planned cost of the war, is Israel able to sustain the war in Gaza without extra aid from United States?

Question

I wonder based on the current economic situation of Israel, if it could sustain the war against Hamas by itself without external aid.

It is reported that the United States committed over $3.3 billion in foreign assistance to Israel in 2022, the most recent year for which data exists. About $8.8 million of that went toward the country's economy, while 99.7% of the aid went to the Israeli military.

But on top of this, do they really need extra aid for this budget on top of the $3.3 billion that is already committed? Apparently, the U.S. congress believes so and give them "some $14.1 billion" (compared to "$1 billion for additional humanitarian aid in Gaza"). But at the same time, Israel has a GDP of $564 billion in 2023 and in my opinion, should be able to afford this war by itself. So I am very confused why the aid from U.S. is necessary, especially in this year of election and Ukraine seems to be in a rather difficult situation fighting Russia at the moment and probably needs more aid.

Answer 1

But on top of this, do they really need extra aid for this budget on top of the $3.3 billion that is already committed?

"Need" is a strong word. The Israeli GDP is over $500B, so the $3B, or even $30B, from the US are not critical. They can survive without it. But on the other hand, it definitely helps. Not only economically, but also politically - it's a strong show of support from a powerful ally.

To the US, on the other hand, it allows influence. The aid comes with strings attached. The aid (most of it) will be spent on US weapons (and of that - most in the US), or defensive weapons (like the Iron Dome). For example, look at these provisions in the HR8034:

$4.4B appropriated for spending in the US:

Provided, That the amount provided under this heading in this Act may be may be transferred to accounts under the headings “Operation and Maintenance”, “Procurement”, and “Revolving and Management Funds” for replacement, through new procurement or repair of existing unserviceable equipment, of defense articles from the stocks of the Department of Defense, and for reimbursement for defense services of the Department of Defense and military education and training, provided to the government of Israel

$5.2B appropriated for defense systems:

Provided, That of the total amount provided under this heading in this Act, $4,000,000,000 shall be for the Secretary of Defense to provide to the Government of Israel for the procurement of the Iron Dome and David’s Sling defense systems to counter short-range rocket threats: Provided further, That of the total amount provided under this heading in this Act, $1,200,000,000 shall be for the Secretary of Defense to provide to the Government of Israel for the procurement of the Iron Beam defense system to counter short-range rocket threats

$2.4B appropriated to the US military for its operations in the area:

2,440,000,000, to remain available until September 30, 2024, for transfer to military personnel accounts, operation and maintenance accounts, procurement accounts, research, development, test and evaluation accounts, and the Defense Working Capital Funds, in addition to amounts otherwise made available for such purpose, only for U.S. operations, force protection, deterrence, and the replacement of combat expenditures in the United States Central Command region

Finally, about $3.5B relatively unrestricted, but only $0.8B of it can be spent in Israel:

$3,500,000,000, to remain available until September 30, 2025, for assistance for Israel and for related expenses: Provided, That to the extent that the Government of Israel requests that funds be used for such purposes, grants made available for Israel under this heading in this Act shall, as agreed by the United States and Israel, be available for advanced weapons systems, of which up to $769,300,000 may be available for the procurement in Israel of defense articles and defense service

The influence is not only on how the money is being spent though. It allows the US government to add conditions on how weapons are being used, make decisions on what kind of weapons and ammunition would be provided under these funds, and obviously - allows exerting political influence.

If the Israeli Army is based on US equipment, it would depend on US supplies to maintain and use it, which in turn allows a certain level of "blackmailing" of the government. Not only when it comes to Palestinians, here's one example from a while back. Israel is in fact very technologically advanced, including in its military, and being able to control who can gain access to that technology is important to the US.

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You also mentioned "$1 billion for additional humanitarian aid in Gaza", but that's not entirely true. The same bill includes these:

$9.15B for humanitarian needs:

$5,655,000,000, to remain available until expended, to address humanitarian needs, including the provision of emergency food and shelter, of vulnerable populations and communities

$3,495,000,000, to remain available until expended, to address humanitarian needs of vulnerable populations and communities:

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Re "Ukraine seems to be in a rather difficult situation fighting Russia at the moment and probably needs more aid.":

The aid to Ukraine is very different from the aid to Israel. The type and amounts of weaponry provided to the Ukraine are very different. Ukraine doesn't need the Iron Dome, for example. It would have been very ineffective in that battlefield. It does need Patriot batteries, which Israel doesn't need as much. Ukraine doesn't need air-to-ground bombs and missiles for its barely functioning air force that Israel is getting, but it does need "dumb" artillery munitions and long range ground missiles that Israel doesn't. Ukraine needs tanks - Israel doesn't. Et cetera et cetera. So the aid is not really fungible.

Answer 2

For clarity, the bottom part of this answer addresses revision 1 of the Q. Later edits changed the emphasis from a comparison between Congress preferences for Israel and/or Ukraine to the 'planned cost' for the cost of the war for Israel.

TBH, I'm not sure that 'planned cost' bit is answerable with publicly available data, on anything but a snapshot basis. Back in December 20223, there was this news piece that they were planning to wrap up the war by February, or at least the accountants were. Anyhow, the costs have not been entirely negligible, even in that piece, e.g.

Dec 25

Israel's war with Hamas in Gaza will likely cost it at least another 50 billion shekels ($14 billion) in 2024 and result in a near-tripling of its budget deficit, the Finance Ministry said on Monday, projecting that fighting will last through February. [...]

Total budgetary spending in 2024 would rise to 562.1 billion shekels from a planned 513.7 billion and lead to a budget deficit of 5.9% of gross domestic product, up from a target of 2.25%. [...]

"It is possible that later in the year we will have to come and update it and we will have to come with updates as the war drags on," [Finance ministry's deputy budget commissioner Itai Temkin] said.

I guess the true cost has moved a bit since then.

There is slighly more data in an April piece, in the form of a third-party estimate:

The budget was initially reported as setting a deficit of 6.6% of gross domestic product (GDP) in 2024, up from a pre-war level of 2.25%. However, Benjamin Bental[, professor of economics at the University of Haifa,] says it's already clear that this is a significant underestimate and that a deficit of 8% looks more realistic.

"This is what looks more or less reasonable, assuming that there is no further deterioration of the security situation," he said, referring to current tensions with Iran. [...]

Bental is worried about excessive spending on defense, for example. During the Yom Kippur War of 1973, Israel had dramatically ramped up defense expenditure to the point where it reached a "totally unsustainable" 30% of GDP. Combined with the oil crisis and wider global economic crisis of the time, the conflict "led to a real disaster economically" for Israel, where "you have very high inflation and basically no growth for almost 10 years."

So, from that perspective, Israel has survived worse war/budgetary crunches.

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IDK about Israel not managing the war with Hamas without aid, but a broader war with Hezbollah, Iran, etc. might be more dicey. (E.g. VOA had a piece with FDD quotes after the Iranian [countr-]strike that that reportedly changed the minds of some Congresspersons.)

But avoiding those speculations, simply put it, aid to Israel is more popular with the GOP and vice-versa. We know this from the separate votes in the House.

• H.R. 8034, aid for Israel. Votes: Republican 193 for, 21 against. Democrats: 173 to 37.

• H.R. 8035, aid for Ukraine. Republican: 101 to 112 (fails the Hastert rule.) Democrats: 210 to 0.

Reasons for the unpopularity of aid for Ukraine have been covered here before. And the reasons for the popularity of Israel too.

FWTW, I was able to find this IPSOS poll published on March 1, so before the April flare-up between Israel and Iran. One also has to be a little weary of the wording of these Qs, as they involved the presidential election.

The parliamentary/Congress majorities were somewhat more in excess of the near 'ties' suggested in those polls. Also, those two survey Qs didn't ask if the aid was too much or too little, etc. There were some older polls like that, but I'm not aware right now of a more recent one that had the same Q wording for Ukraine & Israel.

Answer 3

Based on the current/planned cost of the war, is Israel able to sustain the war in Gaza without extra aid from United States?

Frame challenge: as pointed in another answer, Israel is not merely fighting a war with Hamas, but also a war with Hezbollah, Houthis, Iranian agents in Jordan and Iran itself. In other words, this is not a war of choice - Israel would have to fight it to the bitter end with or without the US aid. Of course, without the US aid things would be more difficult, but the Israeli and larger world history is full of the examples of nations fighting war under harder circumstances, requiring full mobilization of human, economic and other resources.

Another aspect is the larger picture: the US is not helping Israel out of charity, but because Israel is the major and most powerful US ally in the Middle East. Fighting Israel is a part of a larger Iranian (and behind it Chinese and Russian) strategy to boot the US from the Middle East. A foretaste of what may come, if the US loses influence, is the massive rerouting of shipping from Suez, and resulting economic damages, price increases, etc. following the Houthis' attacks against the International shipping.

Answer 4

Over the next few years, the war will cost Israel an estimated 255 billion shekels (£56.6 billion) due to reduced economic activity and increased expenses. But the projected rise in national debt from 60% to 67% of GDP by 2025 is manageable, as is the plan to raise annual military spending from 4% of GDP to 6% or 7% by the end of the decade.

Israel entered the war with a relatively low national debt and foreign currency reserves equivalent to about 40% of annual GDP. Its population is young and still growing, and data reveals that Israel has surpassed current military spending levels before. Between 1967 and 1972, military spending averaged 20.3% of GDP, rising to 28.7% from 1973 to 1975 before stabilising at 20.8% between 1976 and 1985.

The years following the Yom Kippur war in 1973 and through the first Lebanon war (1982–85) are often referred to as “lost years” for Israel’s economy. Per-capita GDP growth averaged 4.8% in the 12 years before this period; over the following 12 years it dropped to just 0.8%. Inflation gradually rose, peaking at 445% during 1984.

So the question is not if Israel can weather the current storm, but whether the burden of higher military spending will be offset by budget cuts elsewhere to ensure economic growth resumes and public debt returns to a sustainable trajectory.

https://theconversation.com/why-israels-economy-is-resilient-in-spite-of-the-war-224712

Israel's economy is strong enough and its fiscal situation is good enough to finance the war through debt for many years to come. The question is whether they can sustain this war politically for many years, because the economic costs will be manageable for the foreseeable future.