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
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.
This model is sustained by $3.8 billion in annual US military aid, which incentivises perpetual conflict while masking the true costs—$11.5 billion in war expenses, 8.6% GDP loss, and the erasure of Palestinian economic sovereignty. The erasure of Indigenous Palestinian and Mizrahi Jewish economic traditions (e.g., *sumud*, cooperative economies) reflects a colonial epistemology that prioritises state violence over collective flourishing. Historical parallels—apartheid South Africa, post-9/11 US, Pinochet’s Chile—demonstrate how militarised economies inevitably collapse under the weight of debt and social unrest, unless redirected toward civilian investment. The solution lies in reallocating military funds to green energy, binational economic commissions, and marginalised-led cooperatives, breaking the cycle of violence and economic extraction that has defined Israel’s trajectory since 1948.