In a broadside against the Finance Ministry, Defense Minister Moshe Ya’alon announced Wednesday that the Israel Defense Forces will reduce its training exercises due to financial constraints.

Yaalon described the state’s defense fiscal state as a “crisis,” and criticized the finance ministry’s conduct in parsing out the requested funds.

“We are in a crisis, this is a fatal blow to training,” he told the Knesset’s Foreign Affairs and Defense Committee. “We are going to decrease the level of air, sea, and land training even further, and preparedness, readiness and competence will wane.”

“Starting from next month we will be forced to enter a difficult period. This is a harsh blow to the competency of the regular fighters, not to mention the reserves,” he said.

The financial situation does not only damage the army itself, but has ramifications for its suppliers as well, he maintained.

“The picture is grim from every angle,” Ya’alon said. “If there are no new orders from the defense industries, there will be layoffs, and companies in the periphery will be hurt, even though we are holding on [to them] by the skin of our teeth.”

Ya’alon complained that the Defense Ministry was being subjected to increased scrutiny and taxes. “Why do we need to pay excise on the fuel for tanks, and planes, and missile boats, and public transportation is exempt from excise?” he asked. “They impose municipal taxes on IDF bases and facilities that grow each year. It amounts to NIS 700 million today, and there are lawsuits of up to NIS 1.5 billion.” The IDF had already taken measures to face a NIS 3 billion cut (some $870 million) in its budget this year, he said.

Defense Minister Moshe Ya'alon speaks at an economics conference in Tel Aviv on December 30, 2013 (photo credit: Ariel Hermoni/Ministry of Defense/Flash90)

Defense Minister Moshe Ya’alon speaks at an economics conference in Tel Aviv on December 30, 2013 (photo credit: Ariel Hermoni/Ministry of Defense/Flash90)

With regard to the Finance Ministry, Ya’alon maintained that “the discussion on the defense budget is inappropriate.”

“I once called it a Turkish bazaar. It’s not a serious discussion. The treasury must uphold the laws and decisions of the government,” he said.

A statement from the Finance Ministry maintained that “the defense budget was approved by the entire government, including the defense minister who voted for the decision.”

“It’s unfortunate that the Defense Ministry uses intimidation and threats against the citizens of the state instead of treating the essential structural problems in the defense establishment, a process that could turn the budget in favor training and equipment,” it said.

Last May, the government set the IDF budget at NIS 51 billion ($14.5 billion). The military took a cut of NIS 3 billion from its 2014 budget, but argued that the cuts would actually amount to NIS 7.4 billion ($2.1 billion) due to factors beyond the IDF’s control, such as higher electricity costs and taxes, payments for injured soldiers and additional benefits for career soldiers due to the rising retirement age.

Meanwhile, the IDF said it had done its part to live up to its end of the budget, making cuts to its workforce and, in June, halting operational activity for reservist units for the rest of this year.

The standoff between the Finance and Defense Ministries over the 2014 defense budget was thought to have come to an end in late October with the security cabinet approving an infusion of NIS 2.75 billion ($780 million) for the defense establishment.

The cabinet was unanimous in its decision, the Prime Minister’s Office said in a statement, noting that the cash for the budget increase would be drawn from a budget surplus.

The IDF had hoped to secure a NIS 4.5 billion ($1.28 billion) increase.

Lazar Berman contributed to this report.