The Israeli parliament (Knesset) has approved on the 30th of March Israel’s 2026 state budget in its final reading, a move that prevents the far-right government’s immediate collapse and avoids early elections, locking in the political calendar for a vote expected in October.

 

The vote concluded a tense, hours-long parliamentary session marked by opposition filibusters and repeated interruptions after sirens warned of Iranian ballistic missile fire, forcing lawmakers to evacuate the plenum multiple times.

 

As Israeli lawmakers from a fortified bunker voted on the budget, totaling ($271 billion) 850 billion shekels, the largest budget in their nation’s history, one of the main aims of the spending bill is the massive financial injection into extreme right-wing projects that analysts say will fundamentally alter the occupied West Bank .

 

Citing “national security” amid the ongoing war with Iran, the ruling coalition has bypassed legal frameworks to direct billions towards ideological goals, including supporting Israeli settlers establishing outposts and settlements in the West Bank, analysts say.

 

While the record defense allocation of $45.8bn has dominated headlines, the budget’s fine print also reveals a calculated shift towards entrenching the occupation and empowering the far-right elements of Prime Minister Benjamin Netanyahu’s government.

 

A key pillar of this strategy is the allocation of 400 million shekels ($129.5m) to the Ministry of Settlement and National Missions, which is the body that ultimately authorizes illegal Jewish-only settlements and outposts on Palestinian land.

 

Far-right Finance Minister Bezalel Smotrich, called the defense package the “core” of the wartime budget, adding that it would allow Israel to “dramatically improve our geopolitical and diplomatic standing” and “dismantle and rebuild the Middle East.”

 

Smotrich, who is a settler himself , has been open about his opposition to any form of two-state solution, stating recently: “On the ground, we are blocking the establishment of a Palestinian terror state.”

 

Netanyahu, who has a long history of scuttling peace accords by allowing settlement expansion, has echoed this sentiment.

 

“There will be no Palestinian state to the west of the Jordan River,” he said in a recent address, openly defying the internationally backed two-state solution, which is supported by the United Nations, the International Court of Justice, and a vast majority of nations.

 

Netanyahu sees the budget as an “insurance policy” for his political survival, trading state funds for such projects in return for the continued support of his coalition partners.

 

Observers state that , the immediate survival of the government hinges on maintaining the backing of the ultra-Orthodox, or Haredi, political factions – primarily the Shas and United Torah Judaism parties, which hold 11 and seven seats, respectively.

 

Together, their 18 seats in the 120-seat Knesset make them unignorable as Netanyahu has no governing majority without them.

 

Opposition lawmakers harshly criticized the budget for the allocations to Heredi institutions , West Bank settlements and other priorities of coalition parties.

 

Yesh Atid chair Yair Lapid, the opposition leader, called the budget “the greatest theft in the history of the state”. Addressing the plenum, Lapid said: “This isn’t a budget – it’s a robbery.

 

The Israeli public is not stupid. It understands that this budget is a bonanza for the corrupt and for draft evaders who are celebrating at our expense” .

 

Former prime minister Naftali Bennett described the plan as “the most reckless and anti-Zionist” in the state’s history. “We are at war, and, when cuts are necessary, the people of Israel know how to bear them. But the government is doing something entirely different: looting the public purse,” he said in a video statement .

 

Yair Golan , the leader of the left – wing Democrats party likewise said the “worst government in Israel’s history” was passing a budget that amounted to “a working plan for dismantling the State of Israel,” citing the funding for ultra-Orthodox schools that “refuse to teach core curriculum subjects,” amid cuts to higher education and allocations to West Bank settlements “in amounts exceeding those given to communities inside the Green Line” .

 

Since its establishment, the Netanyahu government has been racing toward the annexation of the West Bank and has implemented far reaching measures such as establishing outposts, including agricultural outposts, constructing roads, and advancing planning and construction.

 

These actions have resulted in the displacement of Palestinians from their land and homes. Simultaneously, the government has allocated substantial public funds to settlements and settlers, often at the expense of broader national interests.

 

In early March 2026, following the war on Iran, the government increased defense spending by approximately NIS 42 billion. To finance this, it reduced budgets across all ministries, increased borrowing, and raised the deficit but settlement funding remained assured and secured .

 

Earlier, on the 4th of December, 2025, the government adopted a far-reaching decision to invest a massive sum of NIS 2.75 billion over the next five years in settlement development.

 

This budget allocation comes against a backdrop of surging violence by settlers as well as Israeli armed forces’ raids on Palestinian communities across the West Bank, which have intensified since the onset of Israel’s genocide al war on Gaza in October 2023.

 

While attacks on Palestinians in the West Bank have occurred for decades, UN data shows that settlers – often protected by Israeli soldiers – attacked Palestinians nearly 3,000 times over the past two years.

 

Besides, according to the UN, Israeli settlement expansions have now reached their highest level since 2017 and under the current far-right government, the number of settlements and outposts in the West Bank, including East Jerusalem, has risen by nearly 50 percent – from 141 in 2022 to 210 in 2025.

 

Approximately 700,000 settlers, making up nearly 10 percent of Israel’s Jewish population, now live in these illegal settlements.

 

The 2026 Israeli budget, poses significant dangers to Palestinians by accelerating West Bank settlement expansion, funding surveillance, and cutting development funds for Arab communities.

 

The budget facilitates infrastructure projects that cut through Palestinian towns and allocates funds for settler security, further complicating the potential for a viable Palestinian state.