The Israeli Economy-Security Dialectic

A few years back, I put together this piece which looked at hard numbers regarding the growth of the Israeli economy and exports, both of which doubled during the BDS decade.  And while I don’t have the time to update that analysis for 2014, it is worth looking at an aspect of the Startup Nation story that demonstrates an interesting dialectic regarding Israel’s economy and its security situation.

One would think that a nation routinely subjected to heavy missile bombardment would be the very place investors would flee, given the instability such a military situation implies.  But in the case of Israel, the opposite seems to be the case as investment continues to pour into the country as if months of attacks from Gaza never took place.

The best example of this phenomenon is Intel’s decision to invest six billion dollars (that’s “billion” with a “B”) into updating its Israeli chip plant – the biggest investment ever made into the Jewish state – a decision which was announced in September, that is AFTER the country spent the summer on the receiving end of endless rocket fire.

Intel plays a key role in unlocking the reason behind such an unprecedented (and counter-intuitive) business dynamic.  For it was in 1991, well before Israel became the Startup Nation darling of the international M&A and investment communities, that keeping promises while under fire first demonstrated the mettle of Israel and the people who live and work there.

If you recall, that was the year Israel was first subjected to random missile fire, this time from Saddam Hussein’s Iraq which hoped to provoke Israel into joining (and thus “Zionizing”) a conflict begun when Iraq invaded, annexed and looted Kuwait.  As American and allied forces began shoving Iraqi troops back across their own border, Saddam decided to point his Scuds towards one of the few nations not arrayed against him, socking Israel with waves of rockets that many feared were armed with the same chemical weapons the ex (as in now ex-ecuted) Iraqi dictator used against his own people in the 1980s.

Israel never rose to that bait, but while coalition forces were demonstrating the paper nature of the Iraqi tiger, executives at the Intel Corporation who managed a plant in Israel that was turning out the company’s most valuable chips had different concerns: how to get their Israeli employees to stay home and safe, rather than show up for work.

Apparently, the Israelis who worked the chip factory had no intention of letting a tyrant living (and killing) miles away to disrupt their lives.  And if they had to defy their own government (which was urging people to stay indoors near shelters until the threat lifted), they certainly weren’t going to let some distant executives tell them what to do.

And so they showed up to work, keeping the factory firing on all cylinders, and delivering on every promise made to those Intel executives with regard to deliveries and deadlines.

It was this incident, more than any other, which demonstrated that the Jewish economy included something more than innovative inventors and programmers and a budding entrepreneurial culture that was shaking loose the vestiges of a planned economy.  For those Intel-employed Israelis were demonstrating tenacity, nerve, defiance and an unwillingness to not keep to their word even (or, should I say, especially) under fire.

So the minor impact of the Gaza campaign on the Israeli economy followed by a seemingly positive impact it had on that economy once the guns fell silent has an explanation: the continued demonstration of Israel’s ability to do remarkable work and get the job done, regardless of how harrowing the circumstances might be.

This should come as no surprise to those who understand that a citizenry brought up to defend itself, one which has lived on the precipice for  most of its existence, is not about to let a little thing like rocket fire from death-worshiping maniacs get in the way of carrying on a normal life.  And those who recognize this reality are ready to vote for Israel with their wallets, which is why Israel continues to receive the highest grade for investment – even as the rest of the region tumbles into self-imposed chaos.

This should provide another bit of perspective with regard to our old friends in the Boycott, Divestment and Sanctions “movement.”  For the BDS project is predicated on the notion that economic pressure deriving from their activities will so weaken the Jewish state that it will agree to capitulate to demands of those seeking its ultimate destruction.  But if weeks of direct military attack has only increased the nation’s defiant resolve, resolve rewarded by the very people the BDSers are asking to shun the Jewish state, then what is BDS left as other than a transmission belt for propaganda dedicated to ensuring that the millions of corpses being generated by #AlHamIsis across the Middle East never get noticed, much less mentioned.

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5 Responses to The Israeli Economy-Security Dialectic

  1. Nevet October 9, 2014 at 10:27 pm #

    It’s called “grit,” and is a defining characteristic of Israeli society, culture, and collective identity. Great post!

  2. Michael Lumish October 10, 2014 at 8:47 pm #

    Hi Jon,

    I am very happy to see that you have come out of blogging retirement.

    I have to say, though, I find much of your material vaguely disquieting and I’ve been struggling with myself a bit to understand just why.

    It has something to do with the differences in our focus. You are focused on BDS, while my approach is more toward the larger meta-conversation around the Arab-Israel conflict and what it means to Jewish / Left western relations.

    I’ve mentioned this to you before, but I still don’t quite get why, if BDS is almost constantly failing, that we should therefore concern ourselves with it?

    Please understand, of course, that I do not mean this as some sort-of highly negative put-down, or anything like that.

    Editors have told me that they consider my focus too narrow, yet yours is even more tightly focused than is my own. It leads me to wonder if you are not giving short-shrift to related broader criticisms of the Obama administration and the Democratic Party?

    In any case, I am very happy to see you writing and you always give me good food for thought.

    • DivestThis October 11, 2014 at 12:49 pm #

      Hi Mike – I can summarize previous responses to your first concern, although I find myself in full agreement with your second.

      You’re not the first person to ask why we should concerns ourselves with BDS given that, as you point out, I spend so much time documenting is failures. To which I’ve responded:

      (1) BDS (as we’ve seen) can make progress if enough good people don’t stand up to fight against it (which is why I spend time helping those engaged with this fight);
      (2) The goal of the BDS propaganda campaign is to convince others that the Israel = Apartheid propaganda message is embraced by broad swaths of society (especially progressive society) rather than being the opinion of a tiny, unrepresentative fringe. So, by that very formula, highlighting when they get rejected by progressive individuals and organizations diminishes their message and effectiveness; and
      (3) Of all the de-legitimization activity going on in the world, BDS is one of the few areas we civilians can have an impact. Most of us are not in the position to affect how nation states or international organizations behave (even if we can communicate their failings). But we can protect the civil society in which we live from being infected by the BDS virus. And any failure BDS experiences rebounds against the anti-Israel de-legitimization project as a whole.

      Regarding your second critique that my work might be kind of narrow, not only do I agree with you but I’d also add that much of it probably seems to abstract and academic to be of much use to people (like you) doing work on the ground.

      But as I pointed out in that longish “Big Picture” series I ran before going into hiatus, focusing on a tiny aspect of a larger system is often a better way to understand that bigger system than is tackling the whole. And given how many people (including you) are critiquing things like the media or Obama administration for their lapses and shortcomings, I prefer to continue building some of the scaffolding that I hope others can use to hang their critiques.

      I’m guessing that you find this response a perfect example of the maddeningly abstract approach I’ve taken to the debate as a whole. If so, it might be worth it for us to carry on a correspondence (either public – via a dialog between our blogs, or private) where we can hash out these ideas in more detail.

      • Michael Lumish October 11, 2014 at 7:18 pm #

        “Scaffolding.”

        That is an excellent way of putting it.

        The people that I have relied upon most have provided excellent scaffolding. Some of these people are noted scholars, but others are just people in the world with something to say. I relied on the late, great Barry Rubin, but I also relied on people like Matt and Zach of the now more-or-less defunct Huffington Post Monitor or, say, Dusty at Pro-Israel Bay Bloggers for covering related local issues.

        btw, if you have a blogging account with TOI perhaps we can arrange something with David Horovitz.

        I imagine an online conversation between us might be very interesting, but what would be the specific topic?

        We need to narrow it down to a workable question.

        In any case, let me chew on this a bit. What I imagine is a scenario wherein you and I respond to another on a weekly basis on a given day of the week, either on our own blogs or neutral ground like TOI or elsewhere, if you wish.

        I only mention TOI because you have a former association with Horovitz and he can, if he wishes, see to it that any such conversation gets a reasonable number of eyeballs.

        I will email you at your aol account sometime over the next few days and feel free to email me if you wish to kick off the discussion sooner.

      • fizziks October 12, 2014 at 2:24 pm #

        I like the focus on opposing and exposing BDS because:

        1) Many of us are in a position, as part of institutions such as universities, unions, city councils, and so on, to actually effectively oppose BDS, or may someday be. BDS is a concrete manifestation of the Israeli-Arab conflict that may actually enter our lives soon. This is something different than general political theorizing, which is also important, but which is different. An analogy is the difference between a book by Michael Pollan and a cookbook. Both are needed, but sometimes you need the cookbook more.

        2) Opposing BDS is a topic that all of us can agree on, as opposed to how much we should hate or love Obama, Hillary, and so on. Not everything should be about alienating as many people as possible.

        Jon, stick to BDS! You are doing a great thing here.

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