Israel Has Built an Economy Fueled by Genocide at Home and Abroad

As Israel tightens its siege, medical supplies in the Gaza Strip are running out, and doctors confront patients with unimaginable injuries.

The orthopedist Hani Bseso operated on his niece Ahed’s leg, after a shell plowed through their home. Bleeding profusely, Ahed remained in an agonizing daze, as relatives carried her downstairs. Reaching a hospital was impossible. So Bseso amputated her leg on the kitchen table where her mother had made bread that morning.

While Gaza’s health system implodes, disease and famine are spreading like wildfire. After 25 years, polio has returned to the strip, and Israeli operations are forcing patients to evacuate Al-Aqsa Martyrs Hospital, one of the last functioning medical facilities. Elsewhere, the scent of uncollected garbage hangs in the air, and water from blasted sewer lines forms pools reflecting the skyline as it turns to rubble. This summer, United Nations experts concluded that Israel’s “intentional and targeted starvation campaign” is “a form of genocidal violence.” Only bombs and bullets enter Gaza in abundance.

That is no coincidence. Between 2018 and 2022, Israel boasted the world’s second-largest military budget in per capita terms, boosting spending by 24 percent in 2023. The Defense Ministry emphasizes that the security sector plays “a monumental role” in the economy, spurring industrial innovation and representing about 10 percent of national exports. As Gaza burns, arms makers report “growing demand” for Israeli weapons “all around the world.”

Israel’s war footing reflects an entrenched pattern of militarism. Over the past 50 years, Israeli leaders have exploited the Occupied Territories and U.S. technical assistance to build an imposing military-industrial complex. Palestinian victims like Ahed are part of this broader process, as Israel exports the violent technologies and expertise that it perfects in Gaza to countries across the globe.

Exporting the Occupation

During the Cold War, U.S. military and technical cooperation helped Israel become the largest per capita exporter of arms. Struggling with foreign debt, Israeli leaders promoted weapons sales to alleviate financial imbalances and fund industrial development. The defense sector became the bedrock of the economy, and the Occupied Territories offered a laboratory for lethal experimentation. “Today, it can be said that no country in the world is as dependent on arms sales as Israel,” the political scientist Bishara Bahbah concluded in 1986.

In particular, Latin American dictators such as Chile’s Gen. Augusto Pinochet became enthusiastic clients. After the October War in 1973, Israeli firms mailed advertisements to his junta, and the Chilean embassy in Tel Aviv drafted reports about the performance of their weapons. Officers regarded Israel as a model, suggesting that military rule secured “conditions of tranquility” in Palestine. Eventually, Israeli leaders helped General Pinochet develop Chile’s aerospace industry, even transferring technology to produce cluster bombs.

Increasingly, U.S. officials encouraged Israel to stifle leftist movements by arming authoritarian regimes aligned with Washington. Facing human rights legislation, President Jimmy Carter and his successors circumvented restraints on national power by outsourcing repression to Israeli leaders. “Israel is the ‘dirty work’ contractor,” Gen. Mattityahu Peled mused. “Israel is acting as an accomplice and an arm of the United States.”

This was brutally clear in Central America. Before his fall in July 1979, Nicaraguan President Anastasio Somoza Debayle relied on Israeli arms shipments to suppress a popular revolution. “The streets of Managua resemble those of Jerusalem,” El País observed. “Israeli materiel is everywhere.” Nicaraguans claimed that Somoza’s forces were “genocidal” because they leveled villages, slaughtered entire families and raped women in front of their husbands.

Their Israeli-made Galil assault rifles became symbols of oppression. Upon liberating Managua, Sandinista rebels confiscated the guns, before expending their ammunition in long volleys — as if purging the country of the past in each burst. Fearing the revolution’s spread, the CIA then encouraged Israeli leaders to arm the remnant of the Somoza regime, while isolating the progressive Sandinista government. Throughout the 1980s, Israel remained a major actor in the region, supplying arms to the Nicaraguan Contras and exacerbating a civil war that killed 30,000 people.

But Israel’s heaviest footprint was in Guatemala, where Gen. Efraín Ríos Montt claimed that his 1982 coup succeeded partly “because many of our soldiers were trained by Israelis.” Over the following year, Ríos Montt escalated a genocidal war against Indigenous communities that claimed more than 200,000 victims. Officers regarded Israeli strategy as a model, pursuing the “Palestinianization” of rural zones. At Dos Erres, Guatemalan forces sprayed villagers with Galil rifles, before splitting the skulls of survivors with sledgehammers.

Journalists Andrew and Leslie Cockburn found that Israeli leaders had few reservations about weapons sales. “I don’t care what the Gentiles do with the arms,” Lt. Col. Amatzia Shuali scoffed at them. “The main thing” was that Israeli firms “profit.”

By the end of the Cold War, U.S. financial and military aid had allowed Israel to develop a formidable arms industry. In his landmark study, Bahbah noted that, at times, 40 percent of the country’s industrial workforce labored in the defense sector, and weapons exports were a leading source of foreign exchange. Arms production accelerated a drift toward militarism, turning the occupation of Palestine into an economically sustainable and profit-making enterprise. In essence, Israeli leaders funded aggression against Palestinians by dispossessing others in Latin America and elsewhere.

Choosing Terror

As the Soviet Union imploded, Israel reinvented the prevailing discourse justifying its military occupation. For decades, Israeli officers had claimed that Palestinian fighters and their socialist allies — like the Sandinistas — were vengeful “terrorists,” dismissing their political grievances and ideals. Yet Zionist leaders now claimed that “terrorism” posed the greatest threat to world peace, while stretching the elastic term to demonize all Palestinian resistance. Depicting mass protests as terror, Israeli officers distributed truncheons in 1988, ordering troops to break demonstrators’ bones. Within two years, the London-based nonprofit organization Save the Children calculated that more than 23,600 Palestinian children required medical attention for beatings. Almost one-third of the victims were 10 or younger.

At this juncture, Benjamin Netanyahu emerged as a conservative firebrand and self-proclaimed expert on global terror, while leading the Likud party. Previously, Netanyahu founded the Jonathan Institute to convince Western policy makers that “international terrorism” posed an existential threat to liberal democracy, while framing Palestinian resistance as evil, irrational and antisemitic. His political agenda celebrated colonial expansion and raw force.

In October 1995, Netanyahu denounced Prime Minister Yitzhak Rabin for negotiating the Oslo Accords, inciting rabid protests and appearing at a rally with an effigy of Rabin in a Nazi SS uniform. One month later, a right-wing gunman murdered the prime minister.

Following the 9/11 attacks, Netanyahu and other Israeli leaders leveraged their counterinsurgency expertise to strengthen relations with Washington and shape the “global war on terror.” Conveniently, many advocates of the invasion of Iraq were hardcore Zionists. Vice President Dick Cheney was a former board member of the Jewish Institute for National Security of America, which promotes weapons sales to Israel. Previously, Defense Adviser Dick Perle represented Israeli arms makers, and Under Secretary of Defense for Policy Douglas Feith was an adviser to Netanyahu. The Jerusalem Post emphasized that a leading war architect Paul Wolfowitz was “devoutly pro-Israel,” naming him “Man of the Year” months after the invasion.

Israeli officials hoped U.S. intervention would topple hostile regimes and dash Palestinian dreams of self-governance. On the eve of the Iraq invasion, Haaretz announced that the Israeli “military and political leadership yearns for war.” Netanyahu himself published, “The Case for Toppling Saddam,” in The Wall Street Journal, echoing false claims about an Iraqi nuclear arsenal.

As the war on terror expanded, U.S. and Israeli officers shared counterinsurgency tactics, rubbing shoulders in the Negev desert. “Senior US military delegations came … to learn from Israel’s experiences in hunting terrorists in the Gaza Strip,” defense experts relayed. Foreign aid and demand for security services also fostered a sort of start-up colonialism, as Israeli veterans founded firms such as the NSO Group and Smart Shooter, which develop the latest spyware and gun targeting systems — capitalizing on the occupation to develop new technologies of social control.

Secretly, the U.S. embassy recognized that the country’s war footing propelled its economic growth. “Government investment,” Ambassador James Cunningham marveled, “is strikingly demonstrated in Israel’s military training programs.” Israeli Army engineering students developed “better missile guidance systems,” “drone aircraft,” and other deadly innovations. “After finishing military service,” he explained, graduates were “snapped up by technology firms” like Elbit Systems and Gilat Satellite Networks.

U.S. officials portrayed Israel as a start-up paradise, while isolating the Palestinian victims of its militarized economy. In 2007, U.S. diplomats locked Hamas leaders out of the Annapolis peace talks, despite acknowledging its “sweep in the local-level Gazan elections.” After vetting Palestine’s own delegates, Secretary of State Condoleezza Rice bluntly told them to forget about the ethnic cleansing of Palestinians (the “Nakba”) during the creation of Israel in 1948. “Bad things happen to people all around the world all the time,” Rice lectured them. “You need to look forward.”

Ultimately, the war on terror justified soaring levels of military aid and cooperation while offering an ideological framework that discredited Palestinian dissent at the outset. For policy makers, the concept of “terrorism” inverted inconvenient truths: turning the resistance of the weak into “irrational violence” and colonial assertion into “self-defense.” Flush with foreign aid, the Israeli economy militarized further. The “peace process” became a tool of aggression, as the U.S. served as “Israel’s lawyer,” according to a U.S. negotiator.

Testing Armageddon

While negotiations sputtered, government and corporate officials continued to embrace the “comparative advantage” of endless war. Citing Hamas rocket attacks, Israel launched Operation Cast Lead in December 2008, portraying the Gaza Strip as a “terrorist nest.” The strip became an arms laboratory with neighborhoods dissolving into rubble and columns of smoke gushing over the horizon. Invading forces showcased new equipment such as the Merkava IV tank and Tavor TAR-21 assault rifle, while reportedly testing the Dense Inert Metal Explosive, an experimental weapon developed by the U.S. Air Force.

“Homes, schools, medical facilities, and UN buildings — all civilian objects — took direct hits from Israeli artillery,” Amnesty International stressed. Soldiers pumped “precision munitions” into children’s bedrooms. Evidence also suggests they tested “a new type of missile” on civilians: killing students waiting for a school bus and an entire family in their home. They even pounded UN buildings with white phosphorus. Human rights experts found shells made in Pine Bluff, Arkansas, still smoldering three weeks after the ceasefire.

Yet U.S. policy remained in lockstep with Israel. Days after the offensive began, the Pentagon planned to ship 1 million pounds of explosives to Israeli forces, including white phosphorus bombs.

Operation Cast Lead deepened a historic pattern with Gaza serving as a testing ground for Israeli and U.S. weapons, while U.S. officials justified operations by referencing anonymous “terrorists.”

But Israel’s violent incursions were often unprovoked. In March 2018, Palestinians organized the Great March of Return, a peaceful movement demanding political and civil rights. Israeli officers responded with a hail of tear gas and bullets — killing 214 civilians and injuring more than 36,100. Chief of Staff Gadi Eisenkot admitted that he authorized “live fire,” explaining, “The orders are to use a lot of force.”

Health workers claimed that soldiers tested illegal “butterfly bullets” on demonstrators, which pulverized organs and compelled doctors to amputate limbs. Al Jazeera also reported that Israeli forces “experimented with ‘crowd control’ methods,” using drones to spray tear gas and whipping up chemical clouds that sent protesters “thrashing violently” on the ground.

Rather than freeze aid, the Trump administration celebrated the opening of the U.S. embassy in Jerusalem, as Israel massacred 58 Palestinians. The smug backslapping reinforced a cycle of impunity and victimhood; the next year, Israeli forces intentionally leveled the General Union of Disabled Palestinians, eliminating health services for amputees.

Building the Brand

Abroad, military offensives continued to serve as sales pitches. Ironically, Arab states became leading clients. Following the Arab Spring, a symbiotic relationship formed, as Gulf states imported security technology to crush dissent, and Israeli firms gained access to the largest arms export market in the world. Verint Systems shipped surveillance equipment to Bahrain, and the NSO Group sold Pegasus spyware to Saudi Arabia, helping authorities crack down on human rights activists. In 2023, Elbit Systems unrolled plans to build factories in Morocco, while Israeli drones prowled the Western Sahara and struck Sahrawi civilians.

Formalizing this shift, President Donald Trump negotiated the Abraham Accords, which normalized relations between Israel, Bahrain and the United Arab Emirates in September 2020. Within two years, Arab states absorbed nearly 25 percent of Israeli military exports.

The European Union also sought Israel’s violent expertise, while importing security hardware to crack down on immigration. By 2017, Israeli institutions were receiving €170 million each year in EU research funds. In 2021, Israel joined the Horizon Europe initiative, prompting Foreign Minister Yair Lapid to exclaim that his country was “a central player in the largest and most important [research and development] program in the world.” Horizon finances the development of surveillance and intelligence technology, interrogation tactics, and other projects with a clear military edge. The defense contractors Thales, Safran and MBDA have pursued joint ventures with Israel firms to produce weapons — especially drones. Israeli military experts Yaakov Katz and Amir Bohbot emphasize that the “Gaza Strip is ground zero for Israel’s drone revolution.”

Following a historical trend, Israel has secured clients by refusing to respect human rights law or weapons embargoes. Katz and Bohbot observe that “not attaching strings to arms sales” is “a key principle,” allowing firms to become “a dominant player in markets.” Over a decade after Cast Lead, Gaza remained a battered arms laboratory. Israel’s military occupation was not only a human catastrophe but a national export: a brand to build.

Accumulation by Extermination

Yet the conflict itself reflected an irrepressible contradiction: Israeli arms promised total mastery yet made resistance inevitable. By 2018, the UN warned that Israel’s siege was making Gaza “unlivable.” The U.S. embassy confided that at times occupying forces prevented even “children’s toys” and “school supplies” from entering. To unsettle the status quo, Palestinian combatants attacked Israel last October, penetrating borders ringed with blast walls and advanced surveillance equipment, capturing more than 240 people, and dealing a blow to the country’s façade of invincibility.

Their operation provoked a furious response, as Prime Minister Netanyahu exploited the war to showcase the country’s technological prowess. Days into the fighting, a military spokesman announced the combat debut of the Iron Sting mortar, while the local press registered “sharp share price rises” for arms makers and boasted that the new Barak tank “proves itself in Gaza.”

Above all, Israeli leaders suggest that cutting-edge artificial intelligence technology makes strikes precise and humane. But privately, intelligence officers deny that the Israel Defense Forces (IDF) exercise constraint. “On the contrary, the IDF bombed … [combatants] in homes without hesitation,” one recalls. “It’s much easier to bomb a family’s home.” Another officer admits that, “We bombed just for ‘deterrence’” — toppling high-rises “just to cause destruction.”

UN investigators conclude that Israeli leaders have sought the “extermination” of Palestinians, “razing entire residential blocks and neighborhoods to rubble,” while displacing more than 1.7 million victims. Authorities describe soldiers gunning down refugees with flags, “ransacking homes” and using “starvation as a method of war.”

Their violence remains willfully gratuitous: This July, Israel hit four schools in four days, sending refugees flying through the air in a flood of shrapnel and fire. Amid relentless bombing runs, Human Rights Watch recently published a study demonstrating that Israeli soldiers systematically torture Palestinian prisoners, outlining evidence of burnings with cigarettes and lighters, brutal beatings, electrocutions and “sexual abuse” — including an account of IDF members raping a detainee with an M16 rifle.

Authors stress that Israel is targeting medical personnel, further contributing to the collapse of Gaza’s healthcare system. The paramedic Walid Khalili informed investigators that his captors suspended Palestinians by their handcuffs, hanging dozens from the ceiling like bloody fruit. One IDF doctor notes that such handcuffing practices frequently impede blood circulation, prompting his colleagues to amputate the limbs of prisoners.

Despite such human rights violations, the Biden administration approved an $18 billion fighter package this August and Israeli arms makers are upbeat. “This is the finest hour of the defense industries,” Smart Shooter CEO Michal Mor insists.

For decades, the dispossession of Palestinians has propelled a cycle of accumulation, as Israel not only builds settlements but arms in the Occupied Territories. Ultimately, U.S. aid has helped turn the country into a techno-dystopia that exports instruments of oppression abroad, while testing them against the refugees along its moving borders. To a disturbing degree, the ongoing genocidal war reflects this ruthless yet impersonal logic: Israel and the U.S. are plunging Palestinians into hunger and desolation, pursuing the next phase in a cycle of accumulation by extermination.