Article Posted on : - Jan 09, 2012

JERUSALEM (AFP): Israeli premier Benjamin Netanyahu announced Sunday an increase of nearly USD 700 million in the defence budget, after saying last year that he would cut military spending to finance social reforms.

"We are going to add three million shekels to the defence budget," Netanyahu told a news conference.

Netanyahu had in October supported the recommendations of a report he commissioned, by respected economist Manuel Trajtenberg, which were intended to address rising frustrations about the cost of living and income disparity in the Jewish state that triggered mass protests last year.

One of the Trajtenberg report's proposals was to cut a defence budget that amounts to around 14 billion, of which 3 billion comes in annual US military aid, to finance a series of social initiatives without increasing the deficit.

"I have reflected on this question, but in view of what has happened in the region, I have reached the conclusion that cutting the defence budget would be a mistake, even a big mistake," Netanyahu said.

"Any sensible person can see what is happening around us... All these changes have strategic implications for the national security of the state of Israel, for our ability to face the new challenges and instability," he told a weekly cabinet meeting, according to a statement from his office.

The Israeli army "is the shield of the country, which is why we must increase its means," he added.

The prime minister said that in return for the spending increase, the defence ministry would have to respect the principle of transparency, which would allow the government to monitor the management of the budget.

"In the past, we discovered things late, whereas now we will become aware of them in real time."

Israel's cabinet in October approved the recommended economic reforms outlined by the 267-page Trajtenberg report, which covered housing, competitiveness, social services, education and taxation.