Analysts and observers within Israel and in the diaspora have warned that if Israel maintains its current course, it will decline and will no longer be a secure regional hegemon.
They say all signs, including a gradual increase in the level of domestic political polarization, a loss of investor confidence at home and abroad, and fundamental demographic changes, make the collapse of the current iteration of the Israeli state in the coming decades all but inevitable.
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Political economist Seal Heber explained, “When we say the state of Israel will cease to exist, that’s more of a starting point.” “What we’re really talking about is whether Africa will continue to be the same entity that it is today. For example, apartheid South Africa was not the same entity after 1994, or East Germany was the same entity after reunification.” [in 1990]”
The argument is that Israel as it stands is unsustainable. And it is less about how Israel treats Palestinians than it is about divisions within Israel. Many secular Israelis are leaving the country, including the entrepreneurs who have made Israel’s technology industry one of the best in the world. At the same time, the religious Zionist and ultra-Orthodox social strata are growing rapidly, despite bringing relatively little money into the economy.
The loss of Israelis could therefore deprive far-right governments of much of the revenue and investment needed to sustain their expansionist objectives while subsidizing the ultra-Orthodox communities that rely on handouts.
One of the main factors pushing up secular Israelis is the country’s deep political polarization, exacerbated by wars, attempts to weaken the judiciary, and Prime Minister Benjamin Netanyahu’s endless machinations.
Heber is not alone in making the diagnosis. Perhaps most notable was the statement in 2024 by Eugene Kandel, former head of Israel’s National Economic Council and ally of Prime Minister Netanyahu, and Ron Tzur, director of the Israel Institute for Strategic Futures, that Israel is unlikely to reach its 1948 centenary if it continues on the same path.
They based their conclusions on the divisions within Israeli society, outlining three groups: liberal Jewish secular groups, those who want a religious Jewish state, and those who advocate a state with equal rights for Jews and Palestinians.
Kandel and Toole believe that the main divide is between the first two groups. “Wars over families, wars over everyone’s identity and values, pose an existential threat to a nation, because such wars cannot be stopped without a dramatic change in the sentiments of all parties,” they write.
For people like American political scientist Ian Rustic, that goal has already been achieved.
“[Israel] “Israel is no longer a ‘Jewish state’ in the sense of most Israeli Jews; that is, a state that successfully projects itself as a liberal democracy while privileging Jews over non-Jews,” he told Al Jazeera. [Jordan] with the river [Mediterranean] sea. “
According to Heber, Israel cannot afford what he calls “the luxury of decline.” In other words, if Israel is to stay that way, it must maintain its core workforce of educated, middle-class innovators, such as those currently responsible for driving the technology sector and maintaining the health care system.
Similarly, to facilitate continued expansion into the Palestinian territories, Israel must maintain its industry, infrastructure, and technology to sustain its military power, and its standard of living to prevent an exodus of its population.
Analysts say none of these indicators are in good shape at the moment.
immigration
Israeli leaders have long viewed population growth as a strategic priority. From the moment the state was established with the expulsion of some 750,000 Palestinians in 1948, maintaining a clear demographic advantage over the Palestinians was considered crucial to the Zionist project and to the new state’s ability to send sufficient troops to protect its borders.
But even before Netanyahu’s government introduced reforms to weaken the judicial independence in early 2023, analysts say the era of political polarization that preceded Israel’s genocidal war on Gaza had already led to the departure of many of the young graduate students Israel needs to secure its future.
At the time, Prime Minister Netanyahu’s plan to strip much of the government’s oversight powers from the Supreme Court divided Israel to a lesser degree than the ensuing genocide in Gaza. More than 200,000 people, about 2 percent of the country’s population, took to the streets to protest what they saw as a government power grab.
The results were grim. While government legislation blurs the distinction between legal and physical residence, making precise numbers difficult to measure, the Israeli parliament’s own figures and those of think tanks show that increased immigration, particularly among secular Israelis, is significantly slowing Israel’s population growth. A total of more than 150,000 people have left Israel in the past two years amidst increasing war and social polarization, and more than 200,000 people have left Israel since the current government took office in December 2022.
“The educated upper class is also able to leave the country in greater numbers,” Heber says. “They’re educated, so they can find jobs, they speak English, and because they’re exposed to international media rather than Hebrew, they have a better understanding of what’s going on and how Israel is viewed. But more families with children are leaving their homes, which suggests a more fundamental change.”
“[Israeli economist] “Dan Ben-David estimates that Israel relies on a core elite of about 300,000 people to sustain itself. So if a significant number of them leave, it would cease to be a developed economy and become a developing one…We really can’t afford that,” Heber added. They cannot afford to lose their economic power or standard of living. Colonial states depend on the occupation of land to survive, and that is expensive. ”
economic burden
Investor confidence has also been eroded as a result of both the judicial reforms and the war, undermining the economic growth that Israel relies on to support its growing ultra-Orthodox population, which often relies on state handouts to support military spending, expansion, and religious study.
In 2018, the average Israeli family paid about 20,000 shekels ($6,450) to support Israel’s ultra-Orthodox community, according to Kandel and Zur. But demographers predict that the size of that community will triple by 2065, costing non-Orthodox Israeli households the equivalent of 60,000 shekels ($19,370) a year.
Add to this the expected increase in defense spending if Israel continues on its current warpath, with analysts warning that the burden on Israel’s main tax-paying sector could become unsustainable, with investors also fleeing money out of the country.
“Institutional investors have been moving money out of the country even before judicial reform and have been doing so since the 2008 financial crisis,” Heber said. “Currently, about 50 percent of our internal investments are directed overseas.”
“Foreign investment is also decreasing. Israel typically invests in the high-tech sector, but that sector is mainly military. Elbit, for example, is currently under pressure from BDS.” [the Boycott, Divest and Sanctions movement]“Also, since the 2023 judicial reform, investors have no idea whether disputes over things like copyright or taxes will be decided by nationalist or extremist government-appointed judges, and the number has declined significantly,” Heber added.
What kind of future?
Currently, Israel remains relatively safe.
The 10-year, $38 billion arms deal signed by the United States in 2016 continues to support much of the country’s arms and technology industries, although its renewal remains uncertain. The country’s economy continues to grow, and some of the more optimistic forecasters are hoping for a full year free of external shocks for the first time since the coronavirus pandemic in 2019.
But even though the economy is growing, few can escape the fact that its growth rate is lower than that of other developed countries.
Similarly, predictions that the economy might make it through 2026 unscathed may be wishful thinking, given the United States’ threat of war with regional archrival Iran, a political impasse over the recruitment of ultra-Orthodox at home, and a clear dominance of the far right.
Meanwhile, the long and slow exodus of young people and talent continues, and with it, prospects for a secure future are deflating.
Some observers, such as Chatham House’s Yossi Mekelberg, have been gaudy about the country’s future and its potential for collapse: “When dictatorships end, they fall apart. Democracies are chipped away until they are transformed beyond recognition.”
“If Prime Minister Netanyahu and the far-right and ultra-Orthodox remain in power, there will be an exodus of more liberal-minded and socially mobile people,” he said.
