How the Occupation Affects our Lives

The word "occupation" brings forth many images: right against left, settlers against the IDF, the Defense budget, boycotts of products from the occupied territories, BDS, the mantra "there is no partner for peace."
But few talk about its impact on Israel's standard of living.

Here's how the Occupation Affects our Lives

The Occupation:
Who Pays the Price

Shlomo Swirski and Noga Dagan-Buzaglo

June 2017

The Occupation Leads to Recessions

Economic recessions that follow every violent confrontation with the Palestinians – these constitute the highest socio-economic price that Israeli society as a whole pays for continuation of the occupation. This economic instability prevents Israel from achieving the same standard of living as Western countries.

The Occupation Requires High Defense Expenditures

During the three decades of the Palestinian resistance to the occupation, between 1988 and 2010, the Defense Ministry received budget supplements for "events in the territories" amounting to NIS 55.6 billion (in 2016 prices). This amount is larger than the 2017 budget of the Ministry of Education – NIS 52.5 billion. And it refers to supplements only – not to the basic cost of military units policing the territories and other expenditures.

The Occupation is Bad for Tourism

Tourism is especially sensitive to political instability, and all the more so to violent confrontations and clashes. The number of tourists visiting Israel in 2015 – 2.8 million – was much lower than the number visiting other countries in the region. The result: unrealized potential for economic growth and income in foreign currency.

Shock Doctrine
The Occupation Brought on Fiscal Austerity

The crisis set off by the second intifada enabled the Israeli government to implement a long-term policy of fiscal austerity. One of the results: Israel's social expenditure, the main ways and means of realizing social goals, is one of the lowest in all OECD countries.

The Occupation Eroded Israel's Social Safety Net

The shock of the second intifada set off a harmful reversal in Israel's social policy, reflected mainly in the erosion of social security. Massive cuts were made to the benefits paid out by the National Insurance Institute, especially income maintenance, child allowances and unemployment compensation.

The Occupation Maintains Inequality at a
High Level that Keeps Getting Higher

Israel "boasts" one of the highest degrees of inequality among OECD countries. The occupation is a contributing factor: it slowed down the growth of GDP per capita, it created a broad stratum of cheap laborers (Palestinians, and later, foreign workers), it led to erosion in the social safety net and it determined a public agenda whose main concern is not inequality but the conflict with the Palestinians.

The Occupation: Who Doesn't Pay the Price

Middle and low-income Israelis are the ones who pay the price of the occupation. As for affluent Israelis, instead of higher taxes to finance high defense outlays, they received an exemption in the form of the tax "reform" program of the Sharon-Netanyahu government, whose effect was to enrich mainly the top income decile.

Some are More Equal than Others

The occupation and the accompanying desire to hold onto the occupied territories led to a new national project – the settlements. The settlements continue to enjoy a clear preference in many areas, prominently among them central government contributions to municipal budgets. This preference enables the settlements to free resources for local development that other localities cannot afford, especially development towns and Arab localities.

The Occupation Begat a Top One Percent of its Own

Like other countries, Israel, too, has a top 1% composed of big business people.
But Israel has another, political top 1%. We are talking about the "ideological" settlers, who strive not only to prevent evacuation of the settlements, but also to stymie any political settlement that would include a Palestinian state.


Israel is a Country with Two Top 1% Groups

Anyone who wishes to understand why the Gini co-efficient of Israel is 0.360 – indicating that it is one of the most unequal countries in the west, needs to take into consideration the activities and impacts of the two top 1% groups, the economic and the political one.

The Day After

 It is pure folly to think that it is possible to rule over millions of Palestinians without this having any effect on Israel. The public discourse on the conflict focuses on issues of morality and democracy. This report attempts to add to the public agenda the fact that the continuing conflict has a negative impact on the standard of living of most Israelis and contributes to inequality among us.

On the day after, many will ask themselves: why did we do this to ourselves?

We are grateful to The New Israel Fund for its ongoing support.
This graphic was produced and distributed in cooperation with
Heinrich-Boll-Stiftung e.V., The New Israel Fund, SISO and "Project 50-Out."




This project is co-funded by
The European Union

The contents of this publication are the sole responsibility of The Adva Center and do not necessarily reflect the views of the European Union

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