ABSTRACT
This chapter analyzes the ways in which Israel has handled its 70-year security burden, made especially acute by the need to confront continuous threats from enemies both near and far. It discusses role of United States military aid in Israel's defense budgeting during that period. The chapter explores defense budget's positive "spillover" effects. Prime Minister Ben-Gurion remained adamant on the need to shift resources from military expenditures to immigrant absorption and economic development. The year 1985 had meanwhile constituted a turning point in Israel's economic history. Since the Ministry of Defense and Ministry of Finance usually fail to iron out their differences over budgetary priorities, the Prime Minister is invariably constrained to negotiate a compromise between their rival positions. Enormous though Israel's domestic expenditures on defense undoubtedly are, in some cases they take the form of investments which produce economic returns.
