The prime minister decided this week: The defense budget for next year will grow by another roughly NIS 2 billion (approximately USD 450 million.) The boost was explained by the high costs of the second Lebanon War.
Indeed, those costs were high. A senior figure in the business sector proposed that I examine the costs according to the accepted financial standards: A cost-benefit analysis. Here is the calculation, using rounded figures:
The 2007 defense budget will total, following the extra boost, roughly NIS 52 billion (about USD 12 billion) – NIS 10 billion more than stipulated by the original Budget Law for 2006. During the year, additional billions of shekels were approved for the war budget, so its overall military cost is estimated at NIS 12 billion at least.
The war's civilian cost, which takes into account the damages to property and losses in national product – but not the human toll – is estimated at NIS 10 billion. Overall, then, the "campaign in Lebanon" cost us NIS 22 billion, which is about USD 5 billion.
And what is the value of the military benefits derived from the war? Israel did not take over enemy territory. Its deterrence power against its enemies has not been increased, or certainly not to a significant extent.
During the battles, the IDF killed about 250 Hizbullah terrorists (according to the organization's latest admission) and destroyed several headquarters buildings at the Shiite quarter in Beirut and in southern Lebanon. We can estimate the damages to property and to Hizbullah's arms stocks at about half a billion dollars.
The Air Force has indeed damaged Lebanon's civilian infrastructure, but we cannot count this as a war benefit. Let's assume that the war had a few other positive results for Israel, such as the wounding of hundreds of terrorists and a temporary, partial removal of Hizbullah from the border fence. We will assume these achievements have the high value of USD 1 billion.
What is left is the following simple calculation: The killing of 250 Hizbullah fighters equals an expenditure of USD 3.5 billion. Or in other words, the killing of one terrorist cost Israel USD 14 million. No, this is not a calculation error.
The State of Israel, which has an army that considers itself as one of the most effective in the world, spent USD 14 million in order to kill one Hizbullah terrorist. This makes the second Lebanon War the most expensive in the country's history considering the results.
Buying out Hizbullah
Israeli intelligence officials estimate that if an international party had offered each Hizbullah fighter USD 500,000 in cash in order to retire from the organization's military wing, hundreds would stand in line for the money.
For a billion dollars, then, we could have bought the retirement of 2,000 Hizbullah fighters – and saved the economy USD 2.5 billion. This would have been done without a war, without Katyusha rockets, without cluster bombs, and without dead and wounded.
What make the war in Lebanon in the summer of 2006 so expensive? The unwise use of the IDF's blatant competitive advantage – technology. Inquiries into the war showed that a whole echelon of officers doesn't know, literally, how to utilize advanced technology and information systems on a real-life battle field.
The Air Force knows how to do this, and a small number of elite units in other army branches know how to do this, but the vast majority of IDF officer course graduates have not been trained to manage hi-tech combat systems.
And so, instead of taking advantage of the investment in innovative military technologies, the IDF went back to using old, cumbersome, and wasteful means that sow needless destruction. They cost plenty of money and achieved poor results.
It would be worthwhile for the government to look into the reasons for the low cost-benefit ratio of the second Lebanon War before it approves the addition of more funds to defense, and calls for more cutbacks to social causes.