Before The
Joint Economic Committee
October 21, 1997
The paper analyzes the growing divergence between Israel's defense expenditures over the last decade, and the potential threat likely to face the country in the foreseeable future. It points to the fact that although there has been an ever-increasing build-up of armaments ranged against her, Israel's policy makers have allocated ever-decreasing resources towards developing an adequate response to contend with it - both in absolute (constant dollar) terms and in relative (proportion of the GDP) terms. Attention is focused on the ongoing deterioration in crucial elements of the Middle Eastern military balance against Israel. Such deterioration has occurred both in terms of quantity and quality of the weapon systems in the hands of the Arab armies likely to take part in future conflicts against the Jewish state. Several policy-oriented implications of the analysis are examined. The resultant challenges and caveats for Israeli policy makers are discussed, as well as some of the possible detriments for the USA which are likely to arise from Israeli under-spending on national defense.
Dr. Sherman acted as a ministerial advisor in the 1991-92 Shamir government. He also served for seven years in various defense related capacities and now teaches political science at Tel Aviv University. He is the author of two forthcoming books on international and Middle Eastern conflicts (Macmillan, UK).
On July 30th, 1997, the Israeli press gave prominent coverage to a report by a Knesset sub-committee which investigated the combat-readiness of the IDF (Israel Defense Forces). The report painted a dismal picture of a military ill-prepared and ill-equipped for the contingency of war. There was a wide-spread consensus across the political spectrum as to the seriousness of the situation. Senior Knesset members from both the Labor-led opposition and the Likud-led coalition concurred as to the accuracy of the findings and the severity of the problem they imply. There also appeared to be wide-spread consensus as to the underlying cause for the disturbing state of affairs. This was diagnosed as the prolonged government policy of defense budget austerity which has precluded the adequate acquisition of resources required to contend with the imminent military challenges of the future.
Precisely this diagnosis was expressed in the Hebrew Daily "Yedi'ot Aharonot" (7. 30. 97), by Israeli defense minister, Yizhak Mordechai, who claimed that over the past years, "gaps" have opened up between the national defense requirements and means allotted to meet them. According to Mordechai, there is now a pressing need to bridge these gaps.
The primary purpose of national defense expenditures is to provide a country with the capacity to contend with potential strategic dangers - preferably by means of deterrence, but if necessary, by the actual use of military force. Accordingly, an increase in the level of such potential danger should induce a commensurate increase in defense expenditures. Conversely, when the danger is perceived to recede, a corresponding decrease in defense expenditures is appropriate.
Thus, for example, this principle manifested itself with the collapse of the Soviet empire and the dismantling of the Warsaw Pact. In the wake of these events, the defense expenditures of most NATO member states dropped significantly over a short period of time, eventually leveling off at 1% to 3% of GDP.
History has shown that leaders have disregarded this principle at their peril. In more than one instance such remissness has undermined their ability to deter aggression, exposing their country and their people to the ravages of war. The most prominent examples of such cases were those of France and Britain prior to the Second World War. While Germany embarked on a program of massive military reconstruction, the British and French defense expenditures diminished to no more than a few percent of the GNP. The result was two years of military defeat in the battlefield. Historian Martin Gilbert writes of the British disregard of the growing German rearmament and the blatant threat it entailed, as "a strange ...example of the power of self-deception that Englishmen could ignore, or try to explain away, the views which Hitler had taken such pains to express".1 The tide of battle began to turn only with the entry of the USSR and the USA into the war, radically tilting the military balance in favor of the Allies and against the Axis powers.
In the context of the Mid-East conflict, the escalation of potential threat to Israel over the last decade, on one hand, and the erosion of the response that Israel has provided to deal with this threat in terms of its defense expenditures, on the other hand, is strongly reminiscent of the ill-considered reaction of France and Britain to German rearmament in the 1930's - although admittedly the disparity has not yet reached the same degree of gravity.
However, in contrast to the Allies in the Second World War, Israel cannot allow itself the "luxury" of prolonged military reverses until salvation by a third party. For it is highly unlikely that any such third party salvation would be forthcoming, at least in terms of active participation in large scale military combat. Thus, in the event of war, Israel must overcome its enemies alone, and as rapidly as possible. Accordingly, her armed forces must maintain maximum ongoing combat readiness at all times. Failure to comply with this prescription might well endanger the very existence of the Jewish state.
In certain respects, present Israeli complacency may be likened to that which prevailed in the country prior to the combined Arab offensive in October 1973. Former president, the late Chaim Herzog, indicted the myopic policies adopted at that time and, in referring to the unmistakable Egyptian preparations for battle under Sadat, he remarked that '[s]eldom has a leader of a country bent on war enunciated so clearly his intentions to the world and to all parties concerned'.2 The Israeli leadership would do well to heed the errors of the past, for the country - and in many respects, its allies - can ill-afford their repetition in the future.
In principle, this study has two major aims:
(a) to highlight the danger immanent in the continuing erosion in the Israeli capacity to respond to the escalating strategic threat;(b) to present several policy-oriented assessments and prescriptions, aimed at charting some general principles of conduct for the enhancement of Israel's capacity to contend with this problem.
Although, in line with the overall trend in the world, arms purchases have been declining over the first half of this decade, the Middle East still "remains by far the largest regional market". 3 In fact the region's imports still constitute of 40% of the world's total arms imports. 4 During the first five years of this decade, the influx of arms into the area totaled almost $ 50 billion, which proportionally to total imports, is 15 times the world average for the same period.5 Particularly menacing is the increased acquisition of weapons of mass destruction, including ballistic missiles for their delivery - especially by regimes whose peace credentials are, to say the least, questionable.
Moreover, in spite of the overall regional decline, several of Israel's major adversaries have continued to maintain the same level of arms purchases as in the previous decade. For example, Egypt's imports continued unabated in real (1994-dollar) terms at a level of approximately US$ 5 - 5.5 billion in both the 1987-90 and the 1991-94 periods. Saudi Arabia's mammoth purchases declined only marginally in real (1994-dollar) terms from a total of just over $ 31.5 billion between 1987-90 to just below $ 30 billion between 1991-94. It is also of interest to note that in the first half of this decade (1990-94), arms imports made up 13% of Egypt's total exports, over 25% of those of Saudi Arabia and over 20% of those of Syria, this compared to 4% for Israel and to a world average of 0.7% .6
These ongoing arms purchases have caused important components of the military balance between Israel and her adversaries to shift against Israel, both quantitatively and qualitatively. This has been due mainly to:
- The huge acquisition of modern Western weapons by Saudi Arabia (approximately $35 billion worth in the last five years);
- The shift of the Egyptian army to a Western military doctrine, while equipping itself with high quality American weapons systems, particularly armor and aircraft;
- The growing cooperation between Syria and Russia, after a period of chilly relations following the break up of the Soviet Union.
The following two tables, together with the complementary accompanying data provided, underscore the ongoing deterioration in important aspects of the military balance against Israel, in terms of both quantity and quality. This trend has continued throughout the 1990's, with the present situation being considerably more unfavorable than that which faced Israel at either the time of the Six Day or the Yom Kippur wars.
Between 1984 and 1995, Egypt reduced the quantitative gap in armor between itself and Israel from a ratio of 1:2.06 in favor of Israel to a ratio of 1:1.11 . If the Egyptian army's procurement plans are realized, quantitative parity in armor will be reached in the year 2000.
In the same years, Egypt radically reduced the qualitative gap in its main battle tank forces relative to those of Israel - as Tables 1 & 2 clearly show. With the completion of the current plan for equipping the army with the American battle tank (the M1 A1 being assembled in Egypt), the gap will have shrunk to about 1:1.5.
In terms of air power, the disturbing erosion of Israel's qualitative edge was succinctly summed up by Israel's deputy chief of staff, Gen. Matan Vilnai, who stated : "What worries me is [the fact] that the Egyptian air force has become a carbon copy of our own air force".7
Table 2 depicts the deteriorating trend in the qualitative balance between Israel and the prospective Arab coalition (as postulated by the Jaffee Center for Strategic Studies) it will be likely to face in the event of a future war.
Table 2:
Note that while the number Israeli tanks has remained almost constant over the last decade, the Arab armor has increased significantly - by almost 30%. Also, the disparity in main battle tanks has increased significantly to Israel's disadvantage, relative to the position that prevailed at the time of the 1967 and 1973 wars. If in the Six Day War, approximately 1.5 Arab tanks faced each Israeli tank, and in the Yom Kippur War approximately 2.1, today the ratio is approaching 3 to 1.
Note that hitherto, this analysis has largely omitted Iran as factor in the military might ranged against Israel, particularly as a prospective participant in active combat. However, as the incumbent Iranian regime is arguably the most vehemently hostile to Israel in the world today, it is doubtful whether such participation can be discounted. In this eventuality, much of Iran's military might including 1400-1500 tanks and 300 combat aircraft,8 could be added to forces which Israel will have to contend - even without addressing the question of the Iranian ballistic missile threat (see below).
At least two other sources of impending future threats have not been factored - or have factored only very partially - into the current Israeli defense expenditures. They are, however, almost certain to have a far-reaching effect on the size of the outlays Israel is likely to be called on to make for her continued security and survival. The one source of threat arises from the purposeful policy of Israel's adversaries; the other, from the purposeful policy of Israel herself.
An additional factor which presents an increase in the potential threat is the growing proliferation of ballistic missiles in the Mid-East theater.9 Western intelligence sources warn that the Moslem states will soon possess a significant stocks of missiles capable of reaching the Israeli coastal metropolis (as well many European capitals).10 According to some estimates, the Arabs will soon have 2,000 missiles with ranges of 300 km (Scud B), 550 km (Scud C), as well as 1100 km, (the No Dong and the Scud D, now operational in North Korea for about a year).
Even now, with the acquisition of Scud C production lines by Syria and Egypt, these states are probably capable of launching missiles attacks on the Israeli home-front from ranges that would make it extremely difficult for the IDF to destroy.
The Israeli response to the threat of ground-to-ground missiles is a defensive anti-missile project, in which the major companion is the Arrow missile. However, not only is this enterprise still in early development stages, but the cost of equipping Israel with this weapon system will be enormous - with Israel having to bear the principal burden thereof. Although estimates as to total outlay required to make the Arrow system fully operational vary, it seems unlikely that it could be less than US $ 10 billion.11 Indeed some experts even see the development as being so costly that it may risk crippling other aspects of Israel's defense capabilities.12
The territorial withdrawals implicit in the agreements already signed by Israel, and those designated to be signed by her in the future, will impose considerable additional expenditures on Israeli defense, not only to facilitate the physical dismantling and re-deployment of existing systems, but to attempt to compensate for the crucial strategic advantages the present topography provides Israel. It is not the purpose of this paper to enter a detailed discussion of the merits of the present territorial lines and the demerits of the proposed future ones, from Israel's point of view. These have been discussed frequently and fully elsewhere. I will therefore restrict myself to citing the words of the late Yigal Allon, former Labor foreign minister and deputy prime minister of Israel:
... the innovation and sophistication in weaponry [including] the appearance of ground to ground missiles, supersonic fighter-bombers... not only fail to weaken the value of strategic depth and natural barriers, but in fact enhance their importance. This is even more true for Israel's difficult geographic position ... One does not have to be a military expert to easily identify the critical defects of the armistice lines that existed until June 4, 1967. [For Israel] a military defeat ... would mean the physical extinction of a large part of its population and the political elimination of the Jewish state. ...To lose a single war is to lose everything...13
In the context of the present analysis, the major issue is the impact of the economic burden implicit in contending with "critical defects" of the new borders to which Israel is being called upon to withdraw - borders which were once described by Shimon Peres as constituting "almost compulsive temptation to attack Israel from all sides".14 Here again estimates vary, however few analysts believe that the total cost would be less than US $15 - 20 billion. Some recent studies see the initial cost of re-deploying existing civilian and military systems running as high as US $30 billion, not including an additional US $5 billion annually, required to maintain the considerably more costly replacement systems.15
Thus while it is difficult to quantify precisely the level of strategic threat confronting Israel, it appears indisputable that this threat is increasing relative to that faced in the past, and likely to do so even more dramatically in the future.
How has Israel responded to the escalation in the potential danger? Examination of defense expenditures in terms of both absolute value, and as a proportion of her GDP, reveals serious doubts as to the country's ability to respond adequately to the level of threat facing her.
Table 3 shows that Israel's constant-dollar defense expenditures fell steeply over the ten year period between 1984 and 1994 - by over 70%. As a proportion of the GNP, the decline has been even steeper, with the relative decrease approaching 300%.
Table 3 :
Admittedly, official figures also point to a significant decline in the defense expenditures of Israel's adversaries. However, several factors imply that caution should be exercised in accepting these at face value. The results of ongoing studies seem to indicate that the official figures given for Egyptian defense expenditure are implausibly low, and that an examination of the minimal cost required to sustain a military of the size of the Egyptian army would necessarily require outlays 3 to 5 times those of the officially published ones.16 Likewise, the official figures released for Syrian defense expenditures are little more than rough estimates and may be grossly inaccurate. Unverifiable deliberate understatements of outlays on the military are far likely to occur in non-democratic (or at least non-libertarian) regimes, such as Egypt and Syria, where the dissemination of information is under highly centralized government control, making both transparency and accountability considerably lower than in open libertarian regimes such as Israel. The continuing high rate of Egyptian arms imports and the growing upgrading of the quality Egyptian weaponry discussed previously, seem to lend weight to the suspicion that the official figures do not reflect the real level of spending and hence do not reflect the real level of threat that Israel may be called upon to contend with.
Moreover, in addition to the diminution of Israel's defense expenditures as a whole relative to the strategic threat, a structural change has taken place within the budget itself. This is a change that has eroded not only the combat readiness of the IDF, but also the purchasing power of those portions of the budget assigned to weapons procurement. Thus the erosion in the defense budget has taken place in two principal areas:
A change in the priorities within the defense budget: About 50% of the budget is presently spent on salaries, social and fringe benefits, and pensions. This structural shift in the budget - which took place over the last decade - comes at the expense of armament acquisitions and training hours. It is thus mainly the combat units that are hit by this trend. For example, the constant decline in the air force budget has taken toll on both equipment and training flying hours, as well as on the number of pilots. Similar conditions prevail in the rest of the combat corps of the IDF. In this regard, it should be noted that the increased outlay on improved remuneration to IDF personnel has been justified by the need to attract, and keep, high quality manpower in an increasingly materialistic and competitive Israeli society. This is a need, the importance of which can hardly be overstated, since a deterioration in the level of those serving in the ranks of the IDF, especially in the technical and senior command echelons, could have disastrous effects on the military capabilities of the country. Accordingly, these expenditures are likely to be very resistant to cut-backs
The sharp rise in weapons costs: This rise has greatly outstripped the decline in the real purchasing power of the dollar by hundreds of percentage points - as illustrated in Table 4.
Table 4:
The above three weapons systems are a representative sample, illustrating a sharp rise in the costs of arms over the last decade which exceeds 300%. It is thus not surprising that the IDF has been forced to forgo quality armaments because of their high price - such as the Soltam gun which was considered among the most advanced of its kind in the world.
It is difficult to quantify precisely by how much the overall capability of the IDF to equip itself with adequate weaponry has been eroded. However, even a very conservative estimate would seem to indicate a rate of tens of percentage points. The decrease in the value of the $1.8 billion annual US aid may serve as an instructive illustration. Of this amount, $1.4 billion is allocated for purchase of weapons in the United States. Nominally, this sum has remained virtually unchanged since 1986. However, because of inflationary devaluation of the dollar, the real purchasing power of every 1986 dollar today is roughly $0.60. If we factor in the rise in the cost of weapons, as shown in Table 4, this would be reduced to no more than $0.30-35. Therefore, according to the cost of weapons (COW) index, the value of American aid has been eroded by nearly 70%. Hence, deflating the nominal value of the 1986 US aid by the "COW index", reveals that the real purchasing power in 1995 has been reduced to an equivalent of $420 million. Accordingly, if in 1986, sixty-four first line aircraft (F-16 fighter jets) could be purchased with this aid, today it would suffice for the purchase of only twenty such first line planes ( F-15I fighter jets).
Even opponents of increased defense expenditures admit that weapons systems of the 1990's are greatly more expensive, in real terms, than the corresponding system of the previous generation. However, they argue that their operational performance stands in direct relation to their cost and that they are thus far more effective than their predecessors. Hence, they allege, commensurately smaller numbers are needed. This argument is of course only valid as long as the opposing side does not upgrade its weapons systems as well. However, as seen previously, Arabs armaments ranged against Israel are not only of much greater quantity but of significantly improved quality, compared to the past. Moreover - and more seriously - Israel's former advantage of having preferential access to Western and, particularly US sources, no longer exists, as today many of her adversaries are equipping themselves with advanced weaponry from these sources.
The preceding data underscore the fact that over the last decade, the IDF's level of equipment procurement (at least with regard to major weapons systems) has been severely eroded. This decline in the purchasing power of the defense budget, combined with the escalating threat reflected in the enhanced quality and quantity of Arab armaments ranged against Israel, paint a somber picture of deterioration in Israel's readiness for the next war. It thus appears difficult to avoid the conclusion that a significant step up in Israel's defense expenditure is called for, if the country is to be adequately prepared to contend with the impending threats immanent in the military build-up of her potential adversaries.
Several significant policy-related aspects emerge from the foregoing discussion, the divergent trends of escalating of potential threat on the one hand and diminishing Israeli response capability on the other, upon which it focuses. In this final section of the present study, some such policy relevant challenges and caveats are analyzed.
The preceding data show that the Israeli leadership has been prepared to invest an ever-decreasing portion of national wealth in the nation's security (Table 3). Not only has it considered it unnecessary to devote any portion of the annual increments in the GDP to bolstering the country's defenses, it has in fact seen fit to apportion less of previous GDP levels for this purpose. In light of the growing threat which appears liable to confront Israel in the future, such policy seems incompatible with prudent regard for the national interest.
The magnitude of the erosion of resources committed to national defense may be gauged from the fact that had the same rate of spending undertaken in the mid-80's been maintained today, the present expenditure would be more than double its current level and amount to approximately US $ 15 billion per annum.
The explanation for this seemingly ill-considered policy appears to lie in the tenor of public mood in present-day Israel. In the prevailing climate of unmitigated materialism and almost hedonistic consumerism, it is becoming increasing difficult for elected leaders to allocate resources for purposes which do not produce short terms dividends in terms of tangible improvements in individual and/or public well-being. In a highly diverse polity, saturated with "special interest" lobbies, concern for the "general interest" tends to be electorally unprofitable and hence put aside - or at least put off. Consequently, making cuts in the defense budget in order to allocate resources to more political rewarding ends is very tempting for those whose tenure in office is contingent upon public approval. Such cuts are easily justified by popular demagoguery. This is especially true in the era of the "peace process" in which it is easy to evoke dramatically emotive imagery such as calculations showing by how much the welfare of underprivileged children could improved by the price of one combat plane. Such arguments, however, always seem to (conveniently) ignore calculations showing by how much the security of the same underprivileged children may be undermined by the forgoing the purchase of the aircraft.
In order to remedy this malady, it has been suggested that a binding constitutional provision be made to link defense expenditure to the GDP.17 The rationale behind such proposal is that because of the susceptibility of elected politicians to the pressures for gratification of short-term partisan demands, they should be divested of their discretionary powers in determining the outlays on national defense. Although this suggestion has some merit, it suffers from several shortcomings. Firstly, in years of crisis, defense expenditure may need to increased by significantly more that the rate of GDP growth. In such cases, constitutional encumberments are liable to be a detrimental hindrance rather than prudent safeguard. Secondly, it suffers from a certain lack of logical consistency. For if the fundamental problem is that politicians cannot be trusted to refrain from politically expedient cuts in the defense budget, because of the pressures to advance more self-seeking and politically rewarding pursuits, it seems highly unlikely that they could be induced to institute legislation (the only way such constitutional linkage could be established), which would totally preclude them from influencing the level of defense spending, and thereby eliminate, by their own hand, access to means of advancing their own special interests. Indeed it would be a little like expecting the cat who could not be trusted to guard the cream, to voluntarily and deliberately take part in erecting barriers to curtail its existing access to the cream, of which it is so eager to partake.
Thus, there seems no escaping the conclusion that the Israel defense expenditures cannot be put on "automatic pilot". Accordingly it would seem improbable that any "once and for all" techno-legalistic solution could be found for the problem of ensuring adequate allocation of resources for national defense in periods of apparent routine calm. Responsible policy has to be made by responsible policy makers. However, given the exigencies of political survival in a democracy such as Israel, it seems responsible leadership can only be exogenously (to the party-political system) induced by a well informed public, mobilized by well-informed, committed and responsible elites, who are motivated by a long term and comprehensive perspective of the national interest, independent of and unsubordinated to the vagaries of electioneering timetables. For it is only such elites who are best positioned to influence public perceptions of the relative importance of the issues on the national agenda. They are thus best positioned to induce a re-structuring of the agenda by which elected politicians determine their actions, and a re-ordering of the priorities by which they determine their cost-benefit calculations.
Such responsible national leadership in Israel faces a (or must be induced to face up to) a number of major challenges:
- Changing Prevailing Perspectives and Priorities: It must to a large degree go against the prevailing propensity to an overriding aspiration for immediate gratification of short-term materialistic needs. It must resist the seductive allure of the currently fashionable Chamberlainian slogans of "peace in our time" by displaying Churchillian resolve to confront the unpalatable realities of "blood, sweat and tears". It must spell them out with unflinching clarity to the voting public. It must impress upon the population the need to curb the rise in level in present living standards - so as to curb a rise in the level of future mortality standards. It must promote the pervasive recognition (and acceptance) of the fact that only by allocating increasing proportions of national wealth to national security today can Israel ensure her ability to withstand the impending perils of tomorrow. It must be steadfastly immune to the criticism which will inevitably result from the adoption of demanding and initially unpopular positions - for only by repulsing such myopic censure can it serve the long-term national interest .
The above should not be dismissed merely as a recipe for some pretentious "pep-talk" or a sanctimonious lament, detached from any practical constraints, pompously admonishing the present Israeli policy-making echelons for the conspicuous lack of several undoubtedly merit worthy, but perhaps unattainable, attributes in their conduct. Quite the opposite. It should be considered a sober diagnosis of crucial policy imperatives, to be pursued by a resolute, carefully crafted program, directed at the local and foreign media, at public opinion at home and abroad, and at the decision-making echelons of her allies, with the express objective of generating a widely pervasive appreciation of the gravity of the current situations, and the even greater gravity of the situation likely to come about if the prevailing trends are not radically altered. For in the democratic context, major political changes can only be effectively instituted by winning over the hearts and minds of the majority, by means of the effective use of well-founded information, well-argued ideas and their persuasive conveyance to public. Thus, the success of such an endeavor would create an atmosphere, in which self-seeking politicians would find advocating or supporting defense cuts electorally inexpedient and even damaging.
However, as argued earlier, an enterprise of this kind, is not likely to be initiated - and certainly not likely to be sustained - from with in the present party-political system, which hitherto seems to lack the will, the foresight and the aptitude necessary for its implementation. It is thus incumbent on extra-party elites to shoulder the burden of responsibility for mobilizing the political forces and resources required to engender the essential restructuring of the prevailing perceptions as to the priorities that should be accorded the various issues on the national agenda.
- Enhanced Security through Enhanced Economic Performance: The preceding call for restraint in raising living standards must be tempered by the cognizance of the fact that only by providing her citizens an overall quality of life which is not vastly inferior to that which skilled, well-trained, and educated individuals can attain elsewhere in the affluent developed countries, can Israel hope to maintain a population endowed with the adequate scientific, technological and organizational capabilities required to overcome the severe challenges which appear likely to face the country in the foreseeable future. For in an era of accentuated materialism and declining idealism, there appear few alternatives for contending with the temptations offered by lucrative opportunities in foreign lands. As a country devoid of any natural riches of significance, Israel is almost entirely dependent on the quality of her human resources for the generation not only of her national prowess but indeed of her very capacity to survive. (To appreciate the veracity of this statement, one need only to imagine how Israel might have fared in contending with the tremendous challenges it faced over the last four decades, had the capabilities of her people not given her a qualitative edge against her adversaries, despite the latter's overwhelming quantitative advantage.) She can thus ill-afford losing significant numbers of highly capable citizens because of an inability to maintain an adequate standard of living, for this is liable to impinge upon the very viability of the Jewish state.
How are we to reconcile the apparent contradiction between the need to temper increases in living standard on the one hand, and the need to maintain and even improve them on the other? The solution resides in engendering improved economic performance of the Israeli economy. For (a) if the external exigencies not only militate against increased allocations of existing national wealth to the civilian sector at the expense of the defense sector, but indeed militate in favor decreasing such allocations; and (b) if the internal exigencies not only militate against decreased allocations of existing national wealth to the civilian sector at the expense of the defense sector, but indeed militate in favor increasing such allocations, the only possible solution is a significant overall increase in the national wealth.
Is the increase in the GDP required to resolve the conflicting demands on it a feasible objective? Initial calculation appears to indicate that it is indeed an eminently attainable target. For instance, in order to compensate for a 100% increase in the defense budget, the GDP would have to grow by approximately $6.5-7.5 billion dollars. This represents roughly a 7-8% increase in the GDP. Although this is not an insignificant rise, such a level of total GDP would still leave the GDP per capita well below that of a considerable number of developed nations. Given the level of scientific, technological, and managerial expertise in Israel, there seems little reason why such levels of GDP could not be achieved, especially in an era in which human capital, rather than other traditional forms, is becoming increasing dominant as the major determinant of national wealth.
This then is the next challenge facing Israeli leadership - to abandon the sterile "zero-sum" approach to defense expenditure issues, and aspire to create a "synergetic" solution to the country's twin needs by working to boost it's overall economic performance. This appears to be the only available method to produce circumstances in which it becomes feasible to maintain acceptable levels of defense expenditure without, inflicting unacceptable level of civilian expenditure.
It is true that even today, Israel's economy vastly outperforms that of its Arab adversaries. At present, the GDP of 5.5 million Israelis is larger in absolute numbers (estimated at $99.3 billion in 1997) than the combined GDP of 86 million Egyptians, Jordanians, Syrians, and Lebanese put together (about $82 billion). Per capita, Israel's product ($17,000) is about 17 times higher than the average in the states mentioned above ($950). Thus, even at present levels of economic output, if Israel were to allocate 15% of her GDP to defense (implying an additional $1200-1400 annual outlay per capita), there would still remain a huge differential in per capita income between her and her Arab neighbors, and still leave Israelis at prosperity levels almost three time higher than the world average.
While this situation would be bearable in the immediate short-run, it would - for the reasons enumerated above - be unsustainably acceptable in the longer term, in which far greater levels of economic achievement are required. Thus it is only by accelerated growth of the Israeli economy that a long term resolution to the conflicting needs of higher defense requirements and improved living standards can be attained.
However such accelerated growth may also constitute a blueprint for bringing about an eventual cessation of the Middle East arms race. For as the cost of modern weaponry spiral, the poorly performing economies of the Arab nations (including oil rich Saudi Arabia) will find it increasing difficult to persevere with their armaments programs.18 Thus, much as the USSR was forced to give up efforts to match the USA militarily because it was a task beyond the capacity of its failing economy, so to the Arabs are likely to find the effort to outstrip Israel in the arms race a venture too exorbitant for their economic capabilities.
Accordingly, while there seems little chance of diplomatic pressures or moralistic arguments persuading the Arab nations to desist from accumulating ever-more expensive weapons systems, economic realities may force this upon them. However for such a fortuitous event to eventually transpire, it is essential for Israel to maintain a credible deterrence posture in order to prevent acts of aggression in the interim, as well as adequate retaliatory capacity to rapidly contain and repulse any attack with minimum casualties, should such aggression materialize.
In summary, to meet this kind of challenge Israeli leadership must mobilize the full potential of the scientific, technological and managerial skills in the country to attain national output levels fully commensurate with those skills. These levels should be considerably higher than the current ones. To accomplish this end, it must enlist all possible means to exploit fully the human potential in the country. While the details of such a program are clearly beyond the scope of this paper, they would undoubtedly include incentives for increased productivity, reduction of obstructive bureaucracy and greater streamlining central economic organs such as the capital markets. Such future economic development is of course only attainable in a climate of stability- stability which is inconceivable without Israel possessing a robust deterrence capacity that in turn is only attainable by significantly increasing current defense expenditures.
The hazards of a policy of under-spending on national defense are liable to extend far beyond the undermining of the physical ability of the military to deal adequately with identifiable threats which appear to be emerging in the region. It is liable to have highly detrimental long-term effects on both national morale and the economic strength of the country - both of which it is presumably designed to promote.
For, if in a climate of unfounded optimism for a harmonious peace, increasingly insufficient spending on defense erodes Israeli deterrence to a degree where aggression becomes a temptingly feasible proposition, vast amounts of resources will have to be drained away from the economy in an effort to ward it off. Such a rapid, disruptive and unplanned diversion of resources is liable to severely cripple, if not totally paralyze, much of the economy for an extended period - even if victory were eventually won. Thus efforts to promote economic growth by cutting back on the accumulation of military might are liable not only to be dangerously short-sighted, but disastrously counter-productive.
Moreover, the effects on national morale in the wake of a second "Yom Kippur" type surprise are liable to be no less debilitating. Much of the population, lulled into a false sense of secure well-being, is likely to feel disillusioned, deceived, and demoralized, alienated from a leadership which, either cynically or naively, lead -or rather misled - the nation headlong into disaster.
The long term ramifications of such results are difficult to over-estimate. For while military prowess may be a necessary condition for the creation and maintenance of credible and durable deterrent ability, it is by no means a sufficient one. Overall deterrence requires a combination of martial competency backed up by a vibrant economy, and cohesive, motivated people. The repeated trauma of a war for which the country is either ill-prepared or unprepared, is liable to shake the very foundations of its society. Thus, the chance of such an eventually occurring must be reduced to the barest minimum. History has show that this will not be achieved by ineffectual gestures of concession and compromise, especially when the adversaries involved are dictatorial regimes,19 but resolute adherence to the ancient Roman adage: SI VIS PACEM, PARA BELLUM.
For several decades, a cornerstone of US policy in the Middle East has been a declared and unswerving commitment to the survival of a secure and prosperous Israel. Thus, should a situation arise which tangibly threatens the survival of Israel and with which Israel seemed incapable of dealing with on her own, the US would be confronted with an unpleasant dilemma of considerable dimensions.
If she were to honor her pledge to Israel's survival, she would be called on to bear the brunt of financing much of the efforts required to withstand the threat. She is thus likely to find that she is required to pour vast sums of US tax payer's money into dealing with a situation created largely by an Israeli decision to conduct a policy of inappropriate thrift with regard to its military expenditure - a situation which may have been averted, or at least had its severity greatly reduced, had larger sums of Israeli tax payers' money been devoted towards this end in a more prudently and timely fashion.
Indeed it is not inconceivable that an even more dire situation may arise as a result of misplaced frugality in Israel's defense expenditure, necessitating more than the dispatch of money and materiel. Given the current trends of inadequate expenditures combined with far-reaching territorial concessions, it is feasible to envisage a scenario in which the US may be called upon to commit troops to active combat in order to prevent Israel suffering military defeat - which as Yigal Allon pointed out "would mean the physical extinction of a large part of its population and the political elimination of the Jewish state".20 The operational difficulties and expense involved in such an enterprise would be immense, especially as unlike the case of Kuwait, no Arab country would be likely to offer its territory as a staging point for US forces rushing to the aid of the Zionist foe.
If, on the other hand, the US decided to forswear her obligation to Israel, the political repercussions are likely to be severe, both domestically and internationally. Although the analysis of these is outside the scope of this study, there seems little doubt that such a decision would carry considerable political costs. On the domestic front, the abandonment of Israel would be strongly reminiscent of the British and French abandonment of Czechoslovakia, and create furor in many circles of influence in the US. On the international front it would be likely to constitute a dramatic blow to US credibility as a reliable ally, and greatly undermine the confidence that any foreign nation could place in her as a dependable partner.
Increased outlays on her own security would significantly reduce the possibility of Israel placing her greatest ally and major source of international support in such an unenviable predicament. Thus it would appear that not only would the Israeli national interest be well served by a considerable boost in defense expenditure, but that of the USA as well.
2 C. Herzog, The War of Atonement: October 1973, London: Weidenfeld & Nicolson, 1975 p. 26.
3 World Military Expenditures and Arms Transfers, the US Agency for Arms Control and Disarmament, Washington, 1995, p. 10.
4 Ibid.
5 In constant 1994-dollars, ibid., p.106
6 Ibid., pp. 103-146. Note the official figures for Syria are highly erratic ranging from almost 40% in 1990 to almost zero in 1994.
7 M. Vilnai, at a discussion of the Six Day War, at the Ben Gurion University, Be'er Sheba, June 5, 1996.
8 According to the IISS data
9 Address by premier Benjamin Netanyahu at inauguration of Center for the Study of Counterterrorist Policy, Herzliya, March 26, 1997.
Endnotes
1 M. Gilbert, Britain and Germany between the Wars, London: Longmans, 1964, p. 95.
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