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No social justice until Israel curbs exhorbitant cost of occupation

A new Israeli think tank report analyzes the cost of the occupation in terms of government budget allocations, and breaks down damage the conflict causes to the Israeli economy and society.

By Timna Axel

One of the most remarkable aspects of the social protests that began on Rothschild Boulevard and swept through Israel last summer was that they drew Israelis on both the right and the left side of the security divide, a rarity in a country where one’s politics are defined by his or her position on the conflict. It didn’t happen by accident; the leaders of J14 faced intense pressure to avoid vocabulary related to the occupation, fearing that they would be branded as a leftist movement. But as activists prepare for a second round of protests this summer, some are demanding that the Palestinian conflict be re-introduced to the debate over the economy.

In a report released this week, “The Cost of the Occupation,” Dr. Shlomo Swirski of the Adva Center think tank spells out the countless ways in which the occupation has damaged the Israeli economy, drawing a direct relationship between massive national spending on security and the increasingly unaffordable costs of rent and daycare. In fact, the report shows that unless there is a political solution to the conflict, Israel will continue to be plagued with increasing income inequality and education gaps more fitting for a third world country

“Most Israelis define the conflict in terms of an ongoing war,” Swirski told me. “In other words, we aren’t talking about occupation, we are talking about self-defense. So people don’t even think in terms of cost, because they think: To hell with it – I’ll pay whatever it takes! Israelis find it very difficult to make the connection between occupation and their own individual or family well-being.”

So how much has the occupation actually cost? The report points out that it’s impossible to say for sure, because most of the military allocations in the defense budget are kept secret, including the cost of command centers, the use of special forces, and the extensive deployment of reserve units. But there is one helpful figure published every year; the total supplements allocated to the Ministry of Defense specifically for military activity in the Palestinian territories. From the end of the first Intifadah in 1989 until 2010, this figure totaled approximately NIS 48 billion [USD $12.4 billion].

Yet even this number demonstrates only a fraction of the true cost of Israel’s occupation. The report details how time and again, economic slumps triggered by outside events are prolonged by the conflict (for example, the 2000 hi-tech crash was extended by the Second Intifadah, and the 2008 global crisis was reinforced by Operation Cast Lead). Potential growth has been extraordinarily stunted. Professor Zvi Eckstein, former Bank of Israel Deputy Governor, is quoted estimating a loss of 0.25 to 0.75 additional percentage points of economic growth a year. Israeli tourism figures are lower than almost every other country in the region, including Egypt and Tunisia during the Arab Spring, and Israeli international standing has cost dearly in the form of relatively low credit ratings (forcing Israel to depend on the US for loan guarantees during the Second Intifada; also during the second Lebanon war, Israel actually purposely avoided declaring a state of emergency, for fear that this could have further risked its credit).

And then there is the slashing of social expenditures in the budget, which during the second Intifadah totaled NIS 65 billion, while the defense budget increased by NIS 15 billion. Cuts to child allowances and unemployment pay have caused a consistent rise in the poverty rate, and government income transfers designed to combat it make an even smaller dent in poverty now than they did in the 1980s. The report quotes economist Momi Dahan, who writes that “an in-depth analysis of the factors causing Israel to have more poor than any other developed country cannot overlook the fact that Israel spends seven percent of its GDP on defense, compared with 1.5 percent on average in the other developed countries.”

In response to the social protests last summer, the government established the Trajtenberg Committee to investigate the problems and make recommendations. The Committee proposed taking NIS 2.5 billion from the defense budget to fund free public education for all children from the age of three. Even though the government formally adopted this recommendation, it ended up cancelling the defense cut and replacing it with a “horizontal cut” across civilian ministries mostly dealing with social affairs. In the end, the security budget was actually raised.

If the social protest movement is serious about change, it needs to talk about the occupation. On June 4 the Adva Center will be hosting a panel discussion, in Hebrew, at the ZOA House in Tel Aviv with the report’s author Dr. Shlomo Swirski, Professor Yossi Yona of Ben Gurion University – a leading member of the committee established by the social protest as an alternative to Trajtenberg, journalist Meirav Michaeli, Colonel Shaul Arieli and social protest leader Alon-Lee Green. The discussion is called “What is the Cost? The Social Protest and the Israeli-Palestinian Conflict.” Perhaps some of the ideas coming out of their talk will find their way into the second round of protests expected this summer.

Timna Axel is an Israeli-born American university student. She is interning this year with the Adva Center and with Gisha: Center for Freedom of Movement. 

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    1. caden

      No one argues against the idea that peace would be a big economic plus. But tell me how you get there. Seriously.

      Reply to Comment
    2. sh

      Eek!! No h in exorbitant. Could I exhort anyone to remove it?
      I’ve always wondered where all the money plowed into the occupation comes from. Curious too that we are always hearing enthusiastic reports that tourism figures are up on last year
      yet “Israeli tourism figures are lower than almost every other country in the region, including Egypt and Tunisia during the Arab Spring”. Is everything that official sources convey just empty hype?

      Reply to Comment
    3. The most highly decorated US Marine Corps General Smedley Butler explained it all in his excellent book “War is a Racket.”

      Reply to Comment
    4. John Yorke

      That’s a very good question, Caden.

      How exactly do you get from a state of war to something even marginally approaching that of peace?

      The usual method requires one side or the other to prevail upon the field of battle and then the victor dictates terms of surrender to the vanquished. Subsequent to this, peace becomes the norm until it’s time for the next round of hostilities to begin. And there always seems to be a next round if matters are not handled very, very carefully in the interim.

      But this Arab-Israeli conflict has lasted now for three score years and more; no peace, no interim.
      It appears, therefore, that it cannot be concluded by means that are military, diplomatic, monetary or otherwise.
      All versions of these have been tried and miserable failure has consistently been the result. The entrenched position of every combatant is such that, even if each were able to hold a loaded pistol to the head of their opponent, no victory would be gained and no quarter given; just a lot more dead people would be added to an unbroken line stretching back across the generations.

      But what if that pistol were somehow turned round and everyone found themselves looking down the barrel of their own weapon? Would they still continue the fight or, in such changed circumstances, might they then take a far more sanguine approach to the differences between them?
      I rather think the latter option would be the overwhelming choice of all concerned.

      Only by such a strange, unique reversal of the status quo might an end to this conflict ever be managed. Afterwards, some sense out of much that has gone before might also be determined.

      But how to do this? In the often violent contention between life and death, there are times when extreme measures are needed. But then, these are often the ones most likely to succeed.


      After all of 64 years, success, even a qualified one, would be more than welcome.

      Reply to Comment
    5. Kolumn9

      This is pretty silly. Is it not completely obvious that if you throw the occupation into the issue mix you will end up fighting the rainbow of political opinions on the matter and will inevitably shrink the protest down to only the people that agree with you on this issue while the rest dismiss you as a smolani boged?

      Let me rephrase your headline. ‘No social justice until an issue on which we are in a tiny minority gets resolved the way we like’.

      Also, forgive me if I accept a report from a an left-wing think tank with a grain of salt. The problem with the analysis is that it isn’t the occupation that is the cause for the continued high military costs. It is the continuation of the conflict and the regional instability. It is only the extreme left that believes that ‘the occupation’ of 1967 is the fundamental cause of the conflict or that the resolution of the Israeli-Palestinian conflict will remove the need of spending money on defense. Is the expectation that the whole region will turn into Scandinavia? Have you been paying attention? The whole idea as Swirski has done of comparing what Israel spends on defense to what is spent by European countries sitting under an American military umbrella is preposterous. Will a peace agreement with the Palestinians geographically move Israel to somewhere between France and Luxembourg? Then there is the reference to the Second Intifada as being damaging to the Israeli economy. Of course it was damaging, but the implication here is that the ‘occupation’ was the cause of the Second Intifada. Really? Israel made no effort in the months before the intifada broke out to actually resolve the conflict and end the ‘occupation’? What kind of perfect world analysis is this? Is reality hiding somewhere in a basement in Adva Center?

      Yes, in a perfect world there would be peace and there would be 20 million tourists coming in and spending their money while the Arabs connect Israel to an oil pipeline for some free petroleum. In the real world the conflict continues, the Middle East is crumbling and so the expenses related to self-defense will go on as will the ‘occupation’. If you want to resolve some of the other issues plaguing Israel, such as the fact that everything is so damn expensive, you should consider not trying to push a highly divisive issue into the debate that has no chance of achieving any sort of consensus.

      Reply to Comment
    6. “Really? Israel made no effort in the months before the intifada broke out to actually resolve the conflict and end the ‘occupation’?”
      This is the old broken record: Israel offered 999.9997% of the west bank and Arafat pissed on it.
      “Is reality hiding somewhere in a basement in Adva Center?”
      The effectiveness of the blanket right wing control of the media makes it easy to pretend that anything other than the “Israel has no partner for peace” mantra comes from some odd corner of the fifth dimension, and saves looking at the facts. I don’t think I’ve ever seen an interesting comment by you yet,Caden; you’re like a propaganda slot machine.

      Reply to Comment
    7. Shira


      Israel wants to end it unilaterally. The Palestinians are against it. Palestinian supporters are apparently against it ending too.

      You want to complain against the occupation, then don’t oppose Israel trying to end it now unilaterally.

      Reply to Comment
    8. Shira, I assume you are referring to the plan recently floated by Gilad Sher, Orni Petruschka and Ami Ayalon to move everyone behind the fence. If Netanyahu and Mofaz adopt this plan, the country will go up in flames, which will be interesting to watch. But I don’t think he will, I think it is just another exercise in lying bullshit, of the sort one becomes accustomed to with zionists.

      Reply to Comment
    9. caden

      Come on Rowan, stop the zionist stuff. Say what you rally think. JEWS!!!!!!!!!!!!!!!!!!

      Reply to Comment
    10. What I really think, Caden, is not ‘Jews’ but ‘Frankists’. Frankism was all about pretending conversion to other religions for purposes of political intrigue. Initially, at least, other religions: the Frankists used Catholicism, as the Sabbateans had used Islam. It’s a remarkable fact that the majority of major Jewish banking dynasties over the last three hundred years have been of Frankist descent. Perhaps the mature stage of Frankism involved pretending to return to orthodox Judaism, while actually becoming utter nihilists.

      Reply to Comment