The Israeli justifications for the timing of the operation against Iran have ranged from the growing nuclear threat to the weakening of the Islamic Republic’s governing system by preceding protests. However, Benjamin Netanyahu’s government—balancing on the brink of early elections—had at least one domestic political factor that pushed it towards escalation at the end of February this year. The politics of adopting a new budget were among the considerations behind Israel’s decision to initiate a new round of hostilities against Iran, writes Elizaveta Yakimova, research fellow at the Department of Israel and Jewish Communities, IOS RAS.
On the eve of the deadline for adopting the 2026 budget, the Knesset ultimately approved the relevant bill in its final readings. The country’s Finance Minister, Bezalel Smotrich, compared this development to the process of adopting the main financial document in 1999, which, according to him, also coincided with an escalation of regional conflict and preparations for parliamentary elections. These analogies, however, are far from comprehensive, and certainly not unique. Yet they go a long way towards explaining why the budget helped the Israeli Prime Minister not only to stabilise the government temporarily, but also to make another attempt at resolving the so-called Iranian problem by force.
Perhaps the most striking similarity is that now, just like 27 years ago, it was Benjamin Netanyahu who actively lobbied for the advancement of the budget. In doing so, the politician—who has surpassed the legendary first Prime Minister, David Ben-Gurion, in cumulative time spent in office—was making every effort to consolidate his position. At the same time, there is a notable inaccuracy in the Finance Minister’s statement. The essence of it is that the so-called exemplary result of February 1999 was achieved not under conditions of open confrontation, but rather in the context of a stalled, yet still ongoing, peace process. At that stage, the Israel Defense Forces were engaged in a low-intensity conflict in southern Lebanon, which cannot be compared to the scale of Israel’s military campaign in February–March 2026. The key event of that period is considered to be the crisis surrounding the Wye River Memorandum, signed in October 1998. The ratification of this document was accompanied by a split in Benjamin Netanyahu’s coalition, which led to the calling of early Knesset elections.
Thus, 1999—chosen by Bezalel Smotrich as a role model—upon closer examination appears as a cautionary tale of what not to do for the Likud bloc and its closest allies. In this context, the shift to a forceful scenario vis-à-vis Iran created conditions to avoid repeating that undesirable outcome. Moreover, in this case, it may have been an attempt to neutralise negative effects on two fronts at once—namely, to divert attention from the Palestinian–Israeli peace process, which had once again stalled, and to avoid an early vote.
Another parallel seems to be the simultaneous deepening of contradictions with the ultra-Orthodox parties, which occurred both in the context of the adoption of the 2026 budget and 27 years earlier. These political forces, although positioned as the “natural allies” of the Likud bloc, have consistently built this alliance on numerous concessions to ultra-Orthodox parties in exchange for support for the coalition. In 1999, tensions were provoked by the traditional demand for additional funding for the ultra-Orthodox education system and social welfare. At the end of 2025, the essence of the disagreement proved more complex, as the Shas party and United Torah Judaism conditioned their support for the main financial document on a decision in their favour regarding the conscription of ultra-Orthodox Jews into the Israel Defense Forces.
This latter issue became markedly more acute during the “War of Revival” of 2023–2025, due to sharp public dissatisfaction among the majority of citizens over the existence of a special category of the population that effectively remained outside conscription, and thus steered clear of losses on the front lines. Under the influence of public sentiment, the opposition threatened to block the government’s attempts to extend deferments from military service for the ultra-Orthodox camp. Only the start of hostilities against Iran provided a formal pretext for freezing the debate around the legislative initiative. Among the justifications for this step, Benjamin Netanyahu’s cabinet cited the need to consolidate the coalition to pass the budget, which in turn was required for waging the war.
At the same time, additional funds were allocated to the ultra-Orthodox camp to cover the specific needs of its electorate. The role of the opposition in approving such appropriations is noteworthy. In particular, one of the budget amendments in favour of the ultra-Orthodox received 109 votes out of a possible 120. Such a record figure for the Knesset clearly hinted at the presence among those voting “in favour” of the government’s traditional critics. Representatives of the “Anyone but Netanyahu” camp attributed their actions to inattention to certain issues that appeared to them to be technical or procedural, while simultaneously accusing the cabinet of manipulation in order to mislead the Knesset about the true directions of spending.
However, a more plausible explanation for what happened is that neither side appears to welcome the prospect of early elections in the summer. For the opposition—likely planning to base its campaign on criticism of Netanyahu’s cabinet over the failure of 7 October 2023—it is advantageous for the elections to coincide with the anniversary of the Hamas attack. In that case, early dissolution of the Knesset would be expedient 90 days before that date. The coalition, for its part, is currently choosing between two options. The first is to accelerate the electoral race within a timeframe favourable to Likud. At the same time, electoral support for the government camp has previously grown against the backdrop of confrontation with Iran—for example, during the 12-day war of June 2025—while a new round of domestic political crisis would require only the unfreezing of discussions on the conscription of ultra-Orthodox Jews into the Israel Defense Forces. The second option is to remain in power until the scheduled expiry of its term at the end of October. This scenario could be used in Likud’s election campaign as evidence of its ability to govern the country despite numerous domestic and foreign policy challenges.
Military expenditure in the main financial document for the current year amounts to 142 billion shekels (approximately 45 billion US dollars). Of this, 32 billion were allocated by the government on an emergency basis after the start of the operation against Iran. This situation also has an important domestic political dimension.
It is also important to note the reverse influence of the absence of an approved budget for the current year on the launch of the operation against the Islamic Republic of Iran. According to established practice, shaped by regularly recurring domestic political instability, in the absence of the main financial document the country calculates its expenditures, including defence spending, based on the average figures of the previous 12 months. In 2025, the Israel Defense Forces had already conducted an operation against Iran, which formally fit the new round of confrontation into the state’s financial plans. However, the war with the Islamic Republic of Iran in June 2025 lasted 12 days—hence its name—and no one could have predicted in advance the duration of the American–Israeli operation that began on 28 February. Consequently, the government gained the opportunity to take a step that, under other circumstances, would have been far more difficult to justify financially.
Overall, an analysis of the process of approving the 2026 budget significantly broadens the domestic political context of the decision by Benjamin Netanyahu’s government to launch hostilities against Iran, and also makes it possible to assess the plans of both the coalition and the opposition regarding the desirability of early parliamentary elections. At the same time, such a pronounced subordination of the economy to political objectives serves as an additional signal of the protracted recovery that lies ahead for Israel’s economic system after a series of escalations that, in recent years, have involved virtually all of its potential adversaries.
