Israel will increase its defense budget by more than $700 million in the face of deepening regional instability.

Prime Minister Benjamin Netanyahu said on Sunday that given the recent dramatic changes in the Middle East, including Arab Spring, government changes in Israel's former ally Egypt and growing fears over Iran's nuclear program, “it would be a mistake” to cut the defense budget.

A panel formed last year in response to protests over the cost of living in Israel had recommended that defense spending be cut to finance a series of social programs without increasing the deficit.