Global Conflicts Boost Israel's Economy While Domestic War Drains It

Global conflicts are significantly boosting Israel's economy, particularly in the energy, high-tech, and defense sectors, while the ongoing domestic conflict in Gaza is creating substantial, yet-to-be-fully-realized expenses. The article argues that the current geopolitical instability, including tensions in the Persian Gulf and the Eastern Mediterranean, has driven up energy prices and increased demand for Israeli defense and cyber technologies. Countries like Germany, the Netherlands, Finland, and Poland have doubled their defense budgets, while nations such as Greece and Cyprus are seeking Israeli security solutions due to regional fears. The high-tech industry, especially in cybersecurity, is also thriving, partly due to economic crime and the acquisition of Israeli companies, such as Google's record purchase of Wiz for $32 billion, which helped delay a planned VAT increase.

However, the domestic conflict presents a significant financial burden. The article criticizes the government's handling of the gas framework, suggesting it could have been more beneficial for Israeli citizens, but emphasizes the necessity of extracting the gas rather than leaving it in the ground. A major concern is the decline in science and math education within the Israeli school system, which threatens the future of the high-tech sector, as the military's role as a technological incubator is not being matched by educational output. The article suggests a potential solution could emerge from the Haredi community, where the intense study habits of Torah scholars could be channeled into science education.

The substantial increase in the defense budget, largely financed by a "post-dated check" from the current administration to the next government, poses a significant financial challenge. Without considerable budget cuts, including the cessation of funding for anti-Zionist entities, and facing a weakened international credit rating, the state may be forced to raise taxes, such as increasing VAT or fuel levies. The article concludes that the next government, regardless of its composition, must prioritize de-escalation to allow citizens to benefit from the country's healthy economy, rather than pursuing costly, absolute victory narratives.