Defense cut will cost $1b. in exports

Former Ministry of Defense official says 100 factories could close.

By SHARON WROBEL
April 17, 2006 06:44
1 minute read.
Defense cut will cost $1b. in exports

IDF shells 298. (photo credit: AP)

A NIS 2 billion cut in the defense budget would cost the industry $1b. in lost defense exports, while leading to the closure of 100 factories, warned Major General (reserves) Amos Yaron, former director general of the Ministry of Defense. In a sitting with Manufacturers' Association of Israel President Shraga Brosh and heads of towns from the periphery, Yaron called upon the designated ministers of the Ministry of Finance, the Defense Ministry and the Ministry of Industry, Trade and Labor not to lend a hand to the ruin of Israel's defense industry and the potential damage that can be caused to the country's security.

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Yaron was commenting on budget cuts that have been suggested to be made in ministries such as defense in an effort to offset anticipated increases in social spending. Yaron warned about the "dreadful ramifications" an irresponsible defense budget cut could have on industry and on the unemployment rate in the country. A defense budget cut of NIS 2b., as is being proposed, would lead to the closure of 100 factories located mainly in the periphery, throwing 10,000 families into the unemployment cycle, according to Yaron. In addition, such a measure would cost the economy $1b. annually in lost defense exports and billions of shekels would be lost in private investments into the infrastructure of the defense industry, he estimated Yaron added that in the case of an irresponsible defense cut policy, the government would have to spend billions of shekels to create and develop alternative markets to the defense market involving new investments into research & development, personnel training and international marketing. Today, the Israeli defense industry boasts 350 small and large factories employing some 70,000 people, of which a substantial majority are located in the periphery and in towns with high unemployment such as Kiryat Shmona, Sderot, Ashdod, Maalot, Mizpe Ramon, Nahariya and others. Israel's defense industry is one of the catalysts for economic growth, making up about 17 percent of the country's total export manufacturing sales. Domestic volume of the defense industry is estimated at over $3b., representing 3.5% of global production.


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