Israel’s economy isn’t booming despite the political chaos that devours the headlines but because of it. This phase of development dates back to the mid-90s, when the country was in the vanguard of the information revolution – the most tech-dependent economy in the world. After the dotcom bubble burst in 2000, Israel’s economy was devastated, facing its worst year since 1953. Then came 9/11, and suddenly new profit vistas opened up for any company that claimed it could spot terrorists in crowds, seal borders from attack, and extract confessions from closed-mouthed prisoners.
Within three years, large parts of Israel’s tech economy had been radically repurposed. Put in Friedmanesque terms, Israel went from inventing the networking tools of the “flat world” to selling fences to an apartheid planet. Many of the country’s most successful entrepreneurs are using Israel’s status as a fortressed state, surrounded by furious enemies, as a kind of 24-hour-a-day showroom, a living example of how to enjoy relative safety amid constant war. And the reason Israel is now enjoying supergrowth is that those companies are busily exporting that model to the world.
Discussions of Israel’s military trade usually focus on the flow of weapons into the country – US-made Caterpillar bulldozers used to destroy homes in the West Bank, and British companies supplying parts for F-16s. Overlooked is Israel’s huge and expanding export business. Israel now sends $1.2bn in “defence” products to the United States – up dramatically from $270m in 1999. In 2006, Israel exported $3.4bn in defence products – well over a billion more than it received in American military aid. That makes Israel the fourth largest arms dealer in the world, overtaking Britain.
Much of this growth has been in the so-called homeland security sector. Before 9/11 homeland security barely existed as an industry. By the end of this year, Israeli exports in the sector will reach $1.2bn, an increase of 20%. The key products and services are hi-tech fences, unmanned drones, biometric IDs, video and audio surveillance gear, air passenger profiling and prisoner interrogation systems – precisely the tools and technologies Israel has used to lock in the occupied territories.
And that is why the chaos in Gaza and the rest of the region doesn’t threaten the bottom line in Tel Aviv, and may actually boost it. Israel has learned to turn endless war into a brand asset, pitching its uprooting, occupation and containment of the Palestinian people as a half-century head start in the “global war on terror”.
There is a more sophisticated, highly original version of this thesis in the work of Jonathan Nitzan and Shimshon Bichler, notably in their groundbreaking book The Global Political Economy of Israel.
That is an interesting statistic, the fact that Israel is a net exporter of defence business. You seemed to to suggest that the products may be mostly elctronic, is that correct? I’m sorry I haven’t read the book you suggested.
Israel has become an extremely important military supplier for India in the last several years, particularly for surveillance and anti-infiltration technology along the border with Pakistan and for counterinsurgency technology in Kashmir. It is not as constrained as the US in selling sensitive technology, which helps. A senior Israeli military official is actually about to visit Kashmir and meet with Indian army brass there, which has of course not been well received locally.
So this it is mostly defencive, inteligence, or counterinteligence hardware, is that right? Thank you for the information, I’ll read more aobut it.
After reading the linked article (though not the mentioned book) I think Klein’s got it wrong.
Just because Israel’s finding ways to thrive in its environment doesn’t mean it wouldn’t embrace and couldn’t adapt to positive change. To be totally Friedmanesque: Israel’s techies got lemons, so they’re making lemonade. Give ’em apples and they’ll happily make apple pie.
Isn’t the whole point of a capitalism system is that it’s dynamic and will adapt to any change? Maybe negative change (war on terror; perpetual fear) is easier to adapt to than positive change (cos making peace will be less instantly profitable than perpetuating war), but you can’t use that to knock the system cos it’s a consequence of people being people, not of economics. What system are you gonna devise to keep any people, anywhere, from preying on one another’s fears? So big deal, Israel’s business is booming because of war. What would you rather happen? That its economy be as horrible as the Arab world’s? Then things would be dandy? Then peace would surely be at hand?
Better, of course, that there be no war to begin with, and so no profit to be made from it. But the war comes first, regardless of the economic system, and the profit comes next, also regardless of the system. I think the profit is never going to be so great or tempting that it will stand too firmly in the way of peace, if only because peace is sure to end up being more profitable than war. That is, to channel Friedman again (which is kinda fun actually): one pitcher of lemonade sells ten fifty-cent cups, but one apple pie sells eight four-dollar slices.
Am I *totally* wrong?
A reply to Klein here:
http://bnarchives.yorku.ca/232/
I was reminded of Klein’s essay reading these two articles:
1. http://haaretz.com/hasen/spages/875277.html
“For the first time a miniature robot has been planned and constructed, that has the unique ability to crawl within the human body’s veins and arteries,” said Dr. Nir Shvalb of the College of Judea and Samaria on Monday.
2. http://www.jpost.com/servlet/Satellite?cid=1182409629380&pagename=JPost%2FJPArticle%2FShowFull
A new way to produce electricity using helium balloons coated with solar cells has been devised by researchers at the Technion Israel Institute of Technology in Haifa.
No weapons. No evil. Lots of promise.