Why Is Israel Paying $473 Million for Gaza Aid?!

In a stunning decision that has ignited fierce debate, Israel’s government voted yesterday (Tuesday) to allocate $473 million (1.6 billion shekels) for humanitarian aid to Gaza as part of a $9 billion (31 billion shekels) increase to the 2025 state budget.

The move, approved despite opposition from key cabinet members and coalition partners, comes amid Israel’s ongoing military operations against Hamas in the war-torn enclave, raising eyebrows and questions: Why is Israel funding aid for a region it’s fighting in, and what’s driving this controversial decision?

A Budget Under Fire

The $473 million allocation, reported by The Times of Israel, is designated to support humanitarian efforts in Gaza, where over 61,000 Palestinians have died in the conflict, according to the Hamas-run Gaza Health Ministry, and the UN warns of a “worst-case scenario” famine. The funds are part of a broader budget hike primarily aimed at bolstering defense spending, accompanied by 3.35% cuts to all ministerial budgets except defense, effective next year. However, the decision has drawn sharp criticism from within Prime Minister Benjamin Netanyahu’s coalition and beyond.

National Security Minister Itamar Ben-Gvir and Education Minister Yoav Kisch fiercely opposed the plan, with Kisch accusing Finance Minister Bezalel Smotrich of prioritizing “the children of Gaza over the children of Israel.” Opposition leader Avigdor Liberman went further, claiming the government is effectively “paying taxes to Hamas.” On X, users expressed disbelief, arguing that accusations of Israel starving Gazans are “Hamas propaganda,” and lamenting that the world will still claim Israel isn’t doing enough.

Why Fund Gaza Aid?

1. The immediate context: controlling the humanitarian situation

Preventing collapse: Israel doesn’t want Gaza to completely implode, because that would create uncontrollable chaos, disease outbreaks, famine, refugee flows toward Egypt or even Israel’s border.

Global optics: A humanitarian catastrophe in Gaza would massively increase international pressure on Israel, including sanctions or arms-sales freezes. Funding aid (even indirectly) is a way to demonstrate responsibility.

2. It’s not just “charity”, it’s leverage

Aid as a pressure valve: By controlling or funding humanitarian aid, Israel keeps a degree of oversight over what goes into Gaza, rather than letting Iran, Qatar, or other actors fill the gap unconditionally.

Diplomatic currency: This decision helps Israel show the U.S., EU, and Arab states that it’s not indifferent to civilians, which strengthens its position in other negotiations (hostage talks, ceasefire terms, Hezbollah deterrence).

3. It’s about separating civilians from Hamas

Psychological warfare: Israel wants to show Gazans, “We are fighting Hamas, not you.” This is strategic messaging, even if Hamas steals some (most of the) aid.

Weakening Hamas’ narrative: If Israel can visibly feed or supply civilians, it undercuts Hamas’ claim that “Israel wants all Gazans dead.”

4. How this usually works in practice

The $473 million isn’t literally cash handed to Hamas. It’s typically routed through Israeli agencies, the UN, or vetted contractors, often in-kind (food shipments, fuel under monitoring, medical goods). Israel decides what comes in, where it goes, and under what security oversight, so it’s not simply a blank check.

The $473 million appears linked to initiatives like the Gaza Humanitarian Foundation (GHF), a U.S.- and Israel-backed group launched in May 2025 to bypass Hamas-controlled aid channels. The GHF, which has delivered over 51 million meals, operates secure distribution hubs with IDF protection to prevent Hamas from looting aid, a persistent issue costing the group an estimated $1 billion. A June report by Kan revealed Israel quietly transferred $280 million to the GHF, despite official denials, suggesting the new funds may expand this model.

Additionally, the UAE’s new water pipeline project, set to supply 15 liters daily to 600,000 Gazans in Al-Mawasi, operates with Israel’s approval, indicating a broader strategy to stabilize Gaza’s humanitarian situation without empowering Hamas.

The budget decision has fractured Netanyahu’s coalition. Ultra-Orthodox parties, now outside the government, oppose the cuts, while Ben-Gvir and Kisch demand more focus on domestic security, especially for schools. Smotrich defended the budget, dismissing critics as “populist ministers” chasing headlines, and argued it balances national security with humanitarian duties.

What it means in practice is Israel has less money to spend its on its needs because it is now funding Gazans, who firstly elected Hamas and then rejoiced on and after the horrific assault of October 7th.

A key concern is also Hamas’s history of diverting aid. The group, which collects millions in taxes and import duties, has stockpiled $700 million in cash, partly from looted aid, to fund its operations, according to a senior Hamas official cited by the BBC. Former hostage Eli Sharabi testified at the UN that Hamas “eats like kings” while civilians and hostages starve. Israel’s facilitation of over 66,000 aid trucks since October 2023, carrying 1.3 million tons of food, water, and medical supplies, has been marred by Hamas’s theft, with armed operatives seizing trucks and selling goods on the black market.

The GHF’s model, backed by the $473 million, aims to counter this by delivering aid directly to civilians, but Hamas has retaliated, placing bounties on GHF staff and inciting riots at distribution sites.

What’s at Stake?

Israel’s $473 million commitment reflects a delicate balancing act: meeting international legal obligations, countering accusations of starvation policies, and weakening Hamas’s grip without compromising its military campaign. However, the move risks alienating hard-right supporters who see it as rewarding an enemy, while failing to silence critics who argue aid remains insufficient.

Can this aid strategy stabilize Gaza without strengthening Hamas, or is it a costly gamble in a no-win war (and why should Israel pay to feed its enemies?)?