Why Does Israel Still Occupy the Palestinians?

1. The Cost of the Occupation to Israeli Society

The majority of Israel’s anti-occupation movement, unfortunately, does not focus on the rights of Palestinians to live free, but on the damage that the occupation causes to Israeli society (Sternhell, 2009).

The arguments that the occupation is a major investment of resources that could be useful in alleviating Israel’s many social problems and that the settlements, or colonies, enjoy exorbitant government subsidies (Swirski, 2008) are well known in Israeli society and seldom challenged on a factual basis.

Within Israel, the arguments used to support the occupation on the basis of its purported economic benefits to Israel have gone silent.  Even Marxist economists who effectively demonstrated the profits derived by Israel from the occupation in its first two decades largely abandoned the notion that Israel occupies the Palestinian territories for economic profit after the First Intifada of 1987, since when Palestinian resistance to the occupation has exacted a heavy economic toll on Israel — although clearly Palestinians paid a much heavier price for daring to challenge Israel’s occupation (Swirski, 2005).

The costs of the occupation to Israeli society can be divided into three.  First, the massive subsidies to the illegal colonists in the West Bank are estimated at about US$3 billion annually and growing by 5%-8% annually.  Second, the cost of security for the colonies, and the military expenditure to keep the Palestinians under control (both in the West Bank and Gaza) is about double that — at US$6 billion annually, and growing at about the same rate as the civilian costs (Hever, 2005).  Third, the social costs of the occupation are too numerous and complex to list here, including the collapse of public services, social solidarity and democratic institutions within Israel, and the widening of social gaps to monstrous levels.

Ever since the Israeli economy began to absorb cheap Palestinian labour in 1967, more and more companies adopted a business model dependent upon cheap labour, and so worker’s rights have been eroding, contributing to a spike in inequality (Swirski, 2005).  Meanwhile, the dual legal system for Israeli citizens and for Palestinians has strained Israel’s democratic institutions beyond what they could bear (Kretzmer, 2002).

It would therefore seem that the rational course of action for the Israeli government would be to end the occupation of the Palestinian territories.

2. Policies Defying Rationality?

Instead, it seems that the Israeli government focuses its energies on marketing itself as a legitimate, democratic and respectable country, for instance by setting up propaganda agencies to supplement the efforts of embassies (Ravid, 2010), while not giving up one iota of control over the Palestinians, not ending the siege on the Gaza Strip, and not evacuating colonies in the West Bank.

The colonists in the West Bank are often blamed by critics of the occupation as the main obstacle to Israeli withdrawal.  The argument, according to the Israeli Zionist left, is that colonists are driven by an irrational, messianic ideology, and fail to see that their actions push Israel further and further towards the edge of the abyss (Shenhav, 2010).

However, colonists only constitute about 7% of Israeli citizens.  How have they been able to hijack the government and prevent it from ending the occupation?  Furthermore, it is convenient to forget the massive economic subsidies received by the colonists from the government, subsidies which, if stopped, could slow down the rate of expansion and convince many to relocate back into Israel (Gutwein, 2004).  If the colonists are not serving the interests of the government, why do they receive preferential treatment compared to average Israeli citizens (Zertal & Eldar, 2007)?

The colonists’ power over Israeli society is a mystery that confounds the Zionist left argument about Israel’s unwillingness to act according to its own interests (Kleinman, 2005).  Colonists have indeed been receiving billions of dollars worth of subsidies by the Israeli government and yet most of Israel’s richest capitalists are not colonists.  Colonists have risen to prominent positions within the Israeli military, but the majority of the army’s top brass are not colonists (Zertal & Eldar, 2007).  Furthermore, when the Israeli government was determined to evacuate the settlers from the Gaza Strip, it did so despite the desperate campaign put together by the colonists to try to stop the evacuation.

Although colonists do have a powerful impact on Israeli politics, this is because the majority of the public allows them to.  The religious zeal for the “holy land” is a convenient scapegoat for presenting a hard-line negotiation position, which many Israelis believe gives the Israeli government leverage to secure a better deal during the peace process.  The peace process may be delayed indefinitely as a result of Israelis adopting a non-compromising position, but as long as the costs of the occupation are bearable, why hurry to make any compromises?  Thus, the colonists actually serve a useful function for the Israeli government.  Their seeming irrationality and apparent dangerous messianic politics are used to divert attention from the Israeli public’s reluctance to recognize Palestinian rights.

The mainstream Israeli narrative obviously does not portray the dilemma in terms of economic arguments, but as a strategic issue essential to Israel’s security (Greenberg, 2008).  Despite the fact that modern warfare has made territorial buffers largely irrelevant (especially the West Bank and the Gaza Strip, which buffer Israel from states it has signed peace treaties with), the argument that conceding to Palestinian demands would amount to a “victory for terrorists” is routinely invoked.  Moreover, Israeli generals claim that only by maintaining tight control over the borders of the West Bank and the Gaza Strip can they ensure that no rockets or rocket components are smuggled into these territories and into firing range of Israel (Ministry of Foreign Affairs, 2009).

These arguments inverse cause and effect, as if Palestinians’ desire to attack Israel is inherent, rather than being motivated by decades of repression and military occupation.  Interestingly, there are numerous examples of Israeli senior officers and high-ranking politicians who suddenly “realize” that resistance is the symptom and not the cause of the occupation merely weeks after retiring from their military or political careers.1

3. Reasons for the Continuation of the Occupation

So why do Israelis support the occupation, even though they realize that it is an economic burden?  The answer is complex, as Israelis are not a homogeneous group.

Several elite groups in Israel support the occupation because after decades of occupation and repression, they have become defined by it.

1. The army commanders are trained and educated to see Palestinians as enemies, and have adopted a narrow, mechanistic approach to dealing with them.  Rather than bother with the “why” of Palestinian resistance, they focus only on the “how” of controlling the Palestinians and suppressing their resistance.  As a professional group which specializes in the use of force for problem solving, it is not surprising that soldiers and officers tend to adopt a right-wing perspective on the occupation, many of them strongly empathise with the colonists, and many young Israelis whose beliefs are more leftist find ways to evade military service.  When conscription rates have fallen to about 50%, young Israelis who go to the army do so out of choice (Harel, 2010).

2. Certain business interests, especially in the fields of arms trade, finance and “homeland security,” directly profit from the conflict (Klein, 2007).  Many Israeli millionaires made their fortunes by providing services to the army, or by peddling temporary and ad-hoc “security” solutions to a public that has adopted fear as its main pillar of politics, culture and moral justification.  Israel’s domestic demand for security products is extremely large.  According to OECD publications, Israel spends 8% of its GDP on security (OECD, 2010), which makes it as the most militarized state in the OECD, (most OECD countries spend 1%-2% of their GDP on security).  It also places Israel as one of the biggest spenders on security in the world.  But a recent study found that Israel actually spends a lot more on security than the official figures admit.  A more accurate estimate is that Israel spends 12.3% of its GDP on security (Wolfson, 2009).

Israel has also become one of the world’s largest arms exporters, estimated to be the 4th biggest global exporter (Associated Press, 2007).  Israeli arms companies are able to present themselves as “experts in fighting terrorism,” because of their close ties with the Israeli army and the fact that their equipment is used and tested on Palestinians.  The same logic also made Israel the world’s capital of “homeland security” products (Gordon, 2009).

This reality is clearly the result of decades of conflict, occupation and resistance to occupation.

Financial companies also benefit from the culture of fear and the instability in the capital markets, although their benefits are less direct than those of the arms dealers.

3. Israeli politicians, many of them former military commanders, compete with each other for the image of the “tough guy,” to best assuage the worries of a fear-stricken population, even as they stoke the flames of panic.  Netanyahu is a prime example of this.  On the one hand, he markets himself as Israel’s “strong leader,” and attacks his opponents as “soft.”  On the other hand, he continuously expresses fear of Iran’s possible nuclear weapons.  Such politicians have nothing to gain by making compromises in the framework of negotiations with Palestinian leaders, because were the repression of Palestinians to end and the conflict to subside, the political capital of these politicians would lose its value, and they would quickly be replaced by a new generation of politicians (Ben Meir, 1995).

More significant than these elite groups, however, are lower socioeconomic classes in Israel, which deserve special attention.  Although this group is cut off from the centres of military, economic and political power, it is also the largest group in Israeli society, with massive electoral power.

The Jewish lower classes in Israel, whose members are disproportionately religious, unemployed and poor, and who disproportionately originate from Arab countries, have been largely supportive of Israel’s military adventures and opposed to the establishment of a Palestinian state (Shalev, Peled & Yiftachel, 2000).

The Zionist left is often baffled by this and has tried to launch campaigns targeted at these lower socioeconomic classes.  These campaigns used slogans such as “money for [poor] neighborhoods, not for the settlements.”  The underlying message was that poor people don’t know what’s good for them and have been supporting right-wing parties in Israel at the expense of their own economic interests.  The same parties believe that Palestinians can be cajoled into signing a peace treaty that won’t require overly painful compromises from Israel with offers of free trade and international aid as economic compensation (Elgazi, 2007).

Obviously, the patronizing undertones were not lost on the Israeli public, nor were they lost on the Palestinian public, which refused to give up on its right for sovereignty and self-determination in exchange for the promise of increased standard of living.  The Zionist left’s agenda was exposed with Prime Minister’s Barak’s “generous offer” to the Palestinians, a take-it-or-leave-it offer to end the conflict and the resistance in exchange for a Palestinian “state” in disconnected cantons on most of the area occupied by Israel in 1967.  The Palestinian public rejected that offer, the Second Intifada erupted and the Zionist left has been in steep decline in the decade since (Ackerman, 2002).

The Jewish lower socioeconomic classes are aware that the occupation has turned Israel into a military state and that there is a clear causal connection between the fact that “security” remains the government’s first priority and the fact that welfare mechanisms have been mostly liquidated.

Yet people rarely make their choices in life, and in politics, based on material considerations alone.  A strong national identity, and the celebration of victory over the Palestinians, can sometimes substitute for economic comfort and prosperity.  The soldier at a West Bank checkpoint will often be from the lower classes and considered poorly educated by Israeli social standards.  However, in the checkpoint that soldier’s will is law, and a soldier can build his or her self image at the expense of others with impunity.

4. Is Israel a Pawn of the U.S?

When considering Israeli policies, one cannot ignore the crucial role played by the United States in the Middle East.  Israel could never have sustained its aggressive policies without massive U.S. Support.  The United States’ warmongering in the Middle East needs no introduction, and the reasons and complex political and economic structures in the U.S. that drive it to instigate conflict in the Middle East are beyond the scope of this article.  The fact that the U.S. grants military aid to the most aggressive state in the Middle East — Israel — to the tune of US$3 billion annually (more aid than that received by any other country in the world) should be sufficient evidence of the correlation between U.S. and Israeli strategy in the region (Bowels, 2003).

Some political analysts believe that Israel merely serves as a proxy to U.S. policy, that U.S. decision-makers find it easier to send Israeli soldiers to risk life and limb in war than to send even more U.S. soldiers to the battlefield.  But Israel’s internal politics suggest that the Israeli public does not perceive itself as serving U.S. interests, but its own.  Propaganda and brainwashing cannot explain such a wide rift between the analysis and public opinion.

Other analysts argue that Israel, despite its small size, wields disproportionate influence over U.S. policy, as in John Mearsheimer and Stephen Walt’s book The Israel Lobby and U.S Foreign Policy (Mersheimer & Walt, 2007).  One should remember, however, that much stronger lobbies than the Israeli lobby operate in Washington, such as those of the large weapons companies (Lockheed-Martin, McDonald Douglas), companies that profit directly from U.S. aid to Israel, since Israel is required to use the aid to buy U.S.-made weaponry.  There is no faster way to boost these firms’ arms sales than to ensure continued U.S. support for its “friend and ally” Israel (Yom, 2008).

It seems reasonable to suppose that were Israel to end the occupation and the repression of Palestinian citizens and refugees, and sign a peace treaty with its neighbours, the U.S. would no longer have an urgent incentive to support Israel economically and diplomatically.  Nevertheless, this hypothetical scenario is not part of the Israeli political discourse, and the reasons why Israelis support the continued occupation of the Palestinian territories extend far beyond Israel’s dependency on U.S. support.

5. How to Change the Situation?

But let us be honest, there is one argument that many Israelis make that does make some sense, and that is the “domino theory.”  The argument that if Palestinians have their own, independent state in the West Bank and Gaza, there will still be protests and political struggles to change the nature of the Israeli state is an accurate argument.  Zionists who seek to preserve the “Jewish state,” a state where Jews enjoy preferential status over all others, use the occupation as a buffer to draw attention from the inherently ethnic nature of the state of Israel and its discriminatory laws.  Zionists who fear the day when the Palestinian Naqba of 1948 will become a daily political issue on the government’s agenda, the day when Palestinian refugees will organize behind a unified demand for compensation and repatriation, cling to the occupation of the West Bank and the Gaza Strip.  The occupation helps transform what is essentially a question of civil rights and democracy into a military issue.  In a military conflict, Israel still holds the advantage.

So how can those who hope for a better future deal with an Israeli society that refuses to seriously consider the rights of Palestinians?  The first step is to abandon the notion that Israeli society is an agent of change.  There are no historical precedents of empires willingly giving up their colonies.  Only the subjects of occupation can win their own freedom.  Israeli society is a decadent society in an unstoppable decline, resistant to internal calls for reform and politically paralyzed from within.

Only external pressure can truly bring change to this society, and allow democracy to take hold in the region, not only for the benefit of Palestinians, but for the benefit of Israelis too.  External pressure, by using political and economic tools such as sanctions and boycott, returns the issues of civil rights and democracy to the fore, and deprives Israel of the option to use its military might to make the problem go away.


1  A good example of this was a conference in the Van Leer Institute in February 13th, 2008, where senior officers such as Hagain Alon, Ilan Paz, Shlomo Brom and Amos Ben Avraham expressed the notion that checkpoints and other control mechanisms encourage Palestinian resistance more than they repress it.



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Shir Hever is an economist at the Alternative Information Center.  His new book The Political Economy of Israel’s Occupation has recently been published by Pluto Press.  This essay was first published in New Left Project on 24 September 2010 under a Creative Commons license.

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