As tanks push deeper into Gaza City and global outrage grows, Israel is at a crossroads where its booming high-tech industry thrives in the shadow of war, on the expense of the innocent lives. Is war good for economy in Israel? Or is the war needed for Israel’s tech-based economic growth?
This week Prime Minister Benjamin Netanyahu admittedly revealed that Israel faces economic consequences of war due “a kind of isolation” by various countries – including EU’s Spain and the boycott movement – to avoid complicity in Israel’s war on Palestinians.
It is worth noting that on September 16, on the very same day of Netanyahu’s admission of economic turmoil, the UN Independent International Commission of Inquiry on the Occupied Palestinian Territory officially said Israel is committing genocide against Palestinians in Gaza, further cementing its failing international standing.
“There’s no choice; in the coming years, at least, we will have to deal with these attempts to isolate us,” Netanyahu said at a conference in Jerusalem. Critics in Jerusalem quickly attacked, calling his remarks “harmful” and a sign of failed leadership.
Markets reacted to the inflation in war immediately, with the Tel Aviv Stock Exchange down up to 2.2% on Tuesday’s opening. This, as a mere response to Netanyahu’s ‘super-Sparta’ warning of diplomatic isolation.
“Israel isn’t isolated, but it is on a very negative course,” said president of the Israeli Federation of Bi-National Chambers of Commerce and Industry, Dani Catarivas.
“There are worrying signs. If in the past it was non-state actors and fringe groups that were promoting moves against Israel, we are now seeing increasing statements from countries.”
High-Tech Success Amid Human Cost
Is war good for economy in Israel?
Despite the devastation of nearly two years of war, high tech companies in Israel are enjoying record-breaking financial gains.
According to the Israel Innovation Authority’s “Status Report on Israeli High-Tech 2025,” more than 1,500 Deep-Tech companies are active in the country, raising $28 billion since 2019.
Yet as boycotts spread and diplomatic downgrades intensify, Israel’s dependence on global partners could quickly turn from war for profit to war inflation. European states such as Spain, Ireland, and Norway have already announced recognition of a Palestinian state, while others like Belgium and France are pressing for tougher measures.
On the other hand, arms restrictions from Canada, South Africa, and several Latin American countries highlight a broader trend. With US support under political analysis and Gulf nations scaling back cooperation, Israel’s tech sector risks losing the very global networks it relies on to maintain dominance.
The cumulative valuation of these firms now exceeds $177 billion, fifteen times higher than a decade ago. Israel dominates global fundraising outside the US in sectors such as AI, semiconductors, cybersecurity, and medical devices.
The world has the see any actions taken to reduce war profiteering from Israel, US, UK, alongside other allied countries from the European Union (EU).
In US and Israel’s Case, War Is Good for Economy
The contradiction is clear, Israel is accused of genocide, facing boycotts and global condemnation, yet its tech sector thrives on foreign capital and landmark deals, such as Google’s $32 billion acquisition of cybersecurity giant Wiz.
“Israel’s high-tech sector is at an inflection point,” said IIA Chair Alon Stopel.
“We see extraordinary resilience and recovery in later-stage fundraising. But we also see a slowdown in employment and entrepreneurship. To maintain our edge, we must act decisively, combining public policy with private investment, and deepening ties with allies.”
This boils down to the question, is war good for economy in Israel?
With war serving as a home for record exits, the evidence suggests that military war and global uncertainty are not barriers but drivers of economic gain for Israel’s tech sector. For critics, this raises an important question, when innovation thrives Palestine turns to ashes, can Israel’s nonexistent ethics of profits in war tech truly be seen as the force for good it claims to be?
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