File under: ‘Little Known Facts’

The Cost of Occupation

This 972mag contributor tries to shed some much needed light on a fairly neglected aspect of Israel’s ongoing occupation of Palestinian territory.

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.