The 18 June issue of Ha'aretz newspaper reported that the Israeli defense establishment slashed dozens of millions shekels from their future Merkava IV main battle tank, in a wave of budget cuts. The annual budget for the Merkava project amounts to many hundreds of millions of shekels, some of which is paid for by the US financial aid ($200 million, according to a 6 May 2002 World Policy Institute report). The Merkava IV costs hundreds of thousands of dollars more per tank than the Merkava III.

The Merkava IV project has suffered other setbacks this year. A prototype was to have come off the assembly line late-February/early-March, but its arrival may have been delayed as Israeli defence planners attempted to correct the tank's weak points after a successful Palestinian command detonated mine attack on a Merkava III. 
As a result of political differences, Germany delayed spare parts for the Merkava tank 1,500 HP engine and gear box in April for more than three months. The Merkava IV was slated to enter mass production in early 2003 but the tank's rate of production will now be slowed down, although it has still not been decided how many tanks will be produced each year. 

In addition to the cuts already decided in the Merkava IV project, additional cuts in R&D projects and in the number of tanks may be made toward the end of the year. According to the annual military balance report published by Tel Aviv University's Jaffee Center for Strategic Studies, approximately 50 Merkava III tanks are manufactured in Israel every year. This is the first time within the last decade that the Merkava project budget has been slashed. - Adam Geibel