Many Israelis have difficulty thinking in terms of cost; in other words, in terms of a policy that has alternatives. The majority of Israelis were born or arrived in Israel after 1967. The Green Line holds little meaning for them; they are accustomed to viewing the opposition of the Palestinians as an expression of blind hostility, rather than as an expression of the desire to end the occupation and live in an independent state.
Moreover, there are Israelis for whom the occupation does not exact any personal cost but rather constitutes a definite benefit, even though the benefit may not be direct. Examples: Israelis who purchased homes at bargain prices in neighborhoods and settlements built on Palestinian lands; industrial entrepreneurs and workers in plants that export to the occupied territories without paying customs duties and without having to incur heavy transport costs; land-owners, garage owners, building contractors and others who employ Palestinian workers for low wages.
Even when it is clear that costs are involved, it is not always easy to discern them, especially in cases in which the cost is not personal but macro-economic or macro-social.
But above and beyond all that, it appears that Israelis live in a state of denial – of both the fact of occupation and their control over the fate of an entire people – and of the cost of occupation to Israeli morality, society, economy, and polity. The idea that Israeli policy regarding the Palestinian territory and people may not only be morally wrong but is also economically and socially self-harming is not openly voiced and discussed in Israel. The dominant narrative is one that sidelines the reality of occupation and falls back on the more than century-old Palestinian and Arab opposition to the Zionist project; that is, it is a narrative in which Palestinians are the aggressors and Israelis the victims.
Moreover, public attention, within Israel no less that outside it has over the years focused mainly on the military, political and humanitarian aspects of the Israeli-Palestinian confrontation. In contrast, the social and economic consequences of the conflict are less well known. Any attention given to these aspects is generally limited to the Palestinian side, justifiably, given the fact that the Palestinians are the people living under occupation and given the fact that the occupation is largely responsible for the low level of economic development that has continued to characterize the Palestinian territories.
It is the purpose of this report to show the burden to Israel of the continuing conflict with the Palestinians. The Palestinians, of course, are paying a much heavier social and economic price. However, this fact in no way diminishes the exorbitant cost to Israel – the focus of this report.
The Burden of Occupation is divided into two parts. Part One deals with the period from 1967 to 1987, the first two decades of the occupation, during which the cost to Israel was relatively low and was balanced, to some degree, by the benefits that accrued to Israel from the occupation. Part Two begins with the 1987 Palestinian uprising. Since then, and particularly during the second Intifada, (2000), the cost of occupation has risen dramatically, while the benefits have been diminishing.