Israel’s militarised economy: How perpetual conflict drains GDP and deepens structural inequality
Original framing: “Can Israel’s economy sustain conflicts on multiple fronts?” — The Hindu
The original framing omits the historical context of Israel’s militarised economy since 1948, the role of US military aid in sustaining war financing, and the structural violence of the Gaza blockade and West Bank occupation. It ignores the economic drain on Palestinian territories—where GDP has contracted by 40% since 2000—and the disproportionate impact on marginalised groups within Israel, such as Mizrahi Jews and Ethiopian Israelis, who bear the brunt of austerity measures. Indigenous Palestinian economic resistance (e.g., BDS movements) and alternative models like cooperative economies in the West Bank are also erased.
Medium structural omission detected in mainstream coverage.
The narrative is produced by Western financial institutions and pro-Israel think tanks, framing the conflict as a fiscal management challenge rather than a systemic outcome of settler-colonial expansion and US-backed militarisation. The framing serves to legitimise continued military spending by positioning it as an inevitable economic burden, while obscuring the role of US military aid ($3.8 billion annually) in propping up Israel’s war economy. It also centres Israeli state institutions as the primary actors, erasing Palestinian sovereignty and the economic violence of occupation.
Mizrahi Jews, who make up 50% of Israel’s Jewish population, face systemic discrimination in housing, education, and employment, yet their economic struggles are rarely linked to the war economy’s priorities. Ethiopian Israelis, who comprise 2% of the population, experience poverty rates of 40%—double the national average—due to state neglect and militarised employment policies that funnel them into low-wage security roles. Palestinian citizens of Israel, who contribute 20% of the country’s GDP, are systematically excluded from economic planning, with 50% living below the poverty line. Their exclusion from policy discussions ensures that the costs of war are borne disproportionately by the most vulnerable.
Israel’s war economy is not an anomaly but a structural feature of a state built on settler-colonial expansion, where military spending (now 6% of GDP) has become a permanent fixture of economic policy, crowding out social welfare and deepening inequality.