As Israeli lawmakers voted from a fortified bunker on Monday morning on the largest budget in the country’s history, one of the main goals of the $271 billion spending bill became clear. It is pouring huge sums of money into a far-right project that analysts say will fundamentally transform the occupied West Bank.
Citing “national security” amid the ongoing war with Iran, analysts said the ruling coalition had bypassed the legal framework to focus billions of dollars on ideological goals, including supporting Israeli settlers building outposts and settlements in the West Bank.
The record-breaking defense allocation of $45.8 billion has grabbed the headlines, but the budget’s fine print also shows calculated changes to entrench the occupation and empower the far-right in Prime Minister Benjamin Netanyahu’s government.
Financing the Far Right and Occupy
A key pillar of this strategy is the allocation of 400 million shekels ($129.5 million) to the Ministry of Settlement and National Missions. This agency is the one that ultimately approves illegal Jewish-only settlements and outposts on Palestinian land.
Far-right Finance Minister Bezalel Smotrich, himself a settler (he and his settler movement believe they have a Biblical entitlement to land in the West Bank), has been granted full administrative powers over the occupied territories in 2023. He recently went public with his opposition to any form of two-state solution, saying: “On the ground, we are preventing the establishment of a Palestinian terrorist state.”
This sentiment was echoed by Prime Minister Netanyahu, who has a long history of breaking up peace agreements by allowing settlement expansion. “There will be no Palestinian state west of the Jordan River,” he said in a recent speech, openly defying the internationally supported two-state solution backed by the United Nations, the International Court of Justice, Britain, France, Australia and others.
Abdel Hakim al-Qarala, a Jordan-based political science professor, argues that the Israeli government has successfully marketed the “Iranian threat” as a strategic smokescreen to promote this budget, including settlement funding. “This is not just a wartime contingency plan, but a tool for applying a permanent reality on the ground,” Alcarara told Al Jazeera.
Ihab Jabareen, a researcher specializing in Israeli affairs, describes the budget as “a design of sovereignty.” The funds would ultimately be used to build a “parallel state” for settlers, which would allow for a transition from temporary military control of the West Bank to day-to-day civilian rule.
This will be achieved through projects detailed in the budget, including building new bypass roads through Palestinian villages and effectively dividing them. Provide official protection to illegal settlement outposts, using an allocation of 50 million shekels ($16 million) for private security equipment, drones and cameras operated directly by settlers. Converting agricultural areas into permanent “tracking zones” to quietly displace Palestinians. This means Palestinians continue to be harassed and forced to leave without formal expulsion orders. and the integration of armed settlers into the country’s official civilian security apparatus.
The budget allocation comes against the backdrop of Israeli military attacks on Palestinian communities across the West Bank and a surge in settler violence since the start of Israel’s genocidal war in the Gaza Strip in October 2023. Attacks against Palestinians in the West Bank have been occurring for decades, but UN data shows that settlers, often protected by Israeli soldiers, have carried out nearly 3,000 attacks on Palestinians in the past two years.
According to the United Nations, Israeli settlement expansion has reached its highest level since 2017. Under the current far-right government, the number of settlements and outposts in the West Bank, including East Jerusalem, has increased by almost 50%, from 141 in 2022 to 210 in 2025. Currently, approximately 700,000 settlers, or nearly 10% of Israel’s Jewish population, live in these illegal settlements.
‘Money for survival’
To ensure the passage of this agenda, the government had to secure its internal wings. According to researcher Jabareen, Netanyahu views the budget as an “insurance policy” for his political survival, trading state funds for these projects in return for continued support from his coalition partners.
Observers say the immediate survival of the current government depends on maintaining the support of ultra-Orthodox, or Haredi, political forces, mainly the Shas and Torah Jewish parties, which hold 11 and 7 seats respectively. Their 18 seats in the 120-seat Knesset make them impossible to ignore. This is because Netanyahu cannot have a majority without them, Jabareen points out.
So, in a move that bypassed the usual legal blocks, the coalition designed Monday’s late-night operation by inserting a final amendment to the “Reconciliation Act” that would redirect about $255 million to haredi yeshivas, traditional Jewish schools.
Jabareen describes these funds as “survival money.” It aims to prevent religious forces from bringing down the government due to the ongoing military conscription crisis.
These specific funds were previously frozen by Attorney General Gali Baharav-Miara following a June 2024 Supreme Court ruling mandating military conscription for ultra-Orthodox men and ending decades of blanket exemptions. By redirecting reserve funds, the freeze could be circumvented, so Netanyahu has successfully protected his government from collapse ahead of scheduled October elections, Jabareen said.
Trading state budgets for Haredi support is not a new trend, dating back to the 1990s, but Jabareen argues that the “scale, timing and political audacity” during the war was unprecedented.
divided opposition
The passage of the budget also highlighted deep divisions within the Israeli opposition.
During a marathon 13-hour session, exhausted opposition lawmakers voted in favor of the coalition’s late-night amendment that would provide $255 million to yeshivas. Jabareen said he believes this happened “by mistake” because “the opposition manages public opinion, while Netanyahu manages the parliamentary arithmetic” and outdoes them by funding last-minute legislative changes.
But ultimately the opposition fails because it acts as a “rejection front rather than a ruling front.” This means they are united against Netanyahu but deeply divided over political alternatives, Jabareen says. He notes that the bloc suffers from personal and political rivalries between leaders such as Yair Lapid, Benny Gantz and Avigdor Liberman.
Since the budget was passed, the anti-Netanyahu bloc has publicly shifted blame and blamed itself, observers said. Yesh Atid party leader Yair Lapid lashed out at rival opposition parties, accusing them of being more eager to “bash Yesh Atid” than unite against the ruling coalition.
In a lengthy statement to Yesh Atid said he had filed an urgent appeal with the Attorney General to stop the transfer of funds. Lapid has insisted that “the ruse has failed and the funds will not pass,” but there has yet to be official confirmation that the funding has been permanently halted and that the broader $271 billion budget has been signed into law.
Analysts warn that the spending bill will have serious long-term consequences by prioritizing settlement expansion and far-right ideological projects.
“Every shekel deployed along this route is withdrawn from a future viable Palestinian state,” Jabareen said. As a result, he warned, the budget proposal would further entrench the rift between the secular public, which demands military service in Israel, and the religious right, which receives state privileges, as well as further destabilize the region.
