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Posted: June 14, 2025
Note: This post was written the week prior to the June 12 unprovoked 'Israeli' attack on Iran. The choice has been made to post it as originally written (including with reference to a potential escalation with Iran that has since materialized), with more posts in the coming weeks analyzing the economic effects of rapidly developing American-'Israeli' imperialist war on Iran.
In 20 months of genocide, the ‘Israeli’ Zionist settler colonial project has failed to achieve its military goals, despite tens of billions of dollars in Western Imperialist genocide funding, and thousands of plane/boatloads of weaponry from the USA and other genocide facilitators. The Palestinian armed resistance retains operational control of Gaza, and the ‘Israeli’ Occupation Force (IOF) continues to face defeat after defeat whenever they attempt to enter Gaza on the ground. That is why the IOF has resorted to deadly but militarily ineffective air power, the cowardly imperialist retreat, bombing then fleeing.
Like other European crusades before the Zionist settler colonial project, the failure to translate conquest into a sustainable economic project will end in the European (and increasingly North American) conquerors fleeing back to the safety of their real homelands. While the pipeline of American money that ‘Israel’ relies on means that its military failures don’t deter its existence, there are structural factors in its society and economy driving a deepening economic crisis that could ultimately prove existential.
No mention of the ‘Israeli’ economy can leave out the unconditional and unlimited cash flow from the USA to ‘Israel.’ According to Brown University’s Costs of War project, from October 2023 - October 2024, the US government sent $17.9B (~$1.5B/month) in military grants and loans to ‘Israel,’ to purchase American weapons. For reference, this amount is equivalent to ~13% of Israel’s total state budget projection for 2024. A small price for the USA’s unsinkable aircraft carrier, but an existential amount of money for the Zionist settler colonial project.
Along with reliance on American money, there are several glaring, long term financial concerns for the ‘Israeli’ economy. The Ministry of ‘Defence’ (Occupation) budget for 2025 is expected to be nearly double that of 2023, with the cost of every genocidal day (equipment, ammunition, and reservists), topping $286M USD. External debt to GDP has risen to nearly 70%, 10% higher than recent years, with government debt rising ~25% from the end of 2022 to late 2024 due to massive borrowing. The Zionist entity’s credit rating was also downgraded by Moody’s, Standard & Poor’s, and Fitch for the first time in 2024. Inflation also continues to rise (currently around 3%), only restrained from ballooning by a decline in public consumption and a looming ‘post-war’ (genocide) recession.
However, despite all of these negative signs, the IMF still projects the ‘Israeli’ economy to grow by 3.2% in 2025. This is primarily thanks to exports from the intertwined destruction of the technology and weapons industries, which drives ‘Israeli’ foreign trade despite their inability to turn technological genocide into military victory. Any SEWP reader at this point will understand that our socialist definition of economic strength and health goes far beyond these financial factors, to address broad structural and social concerns. In few regions, if any, do present-day political dynamics and social relations expand the volatility of future predictions, and prevent the type of typical economic foresight in which the IMF is engaging here.
We must talk about the demographic and class dynamics of the ‘Israeli’/Palestinian conflict. All settler colonial states are shaped around a simple premise: migrant settlers will receive better economic opportunities than wherever they come from, at the expense of the Indigenous population of the colony. Does this ‘better’ future (whatever that means to one who has watched the genocide ‘Israel’ has committed in Gaza and still chooses to settle there) seem likely to materialize?
Notable corporations, financial institutions, and investment funds have divested from ‘Israel’ (for both moral and business reasons), including Intel, Barclays, Samsung’s VC arm, the Ireland Strategic Investment Fund, Norway’s Sovereign Wealth Fund, and several major European pension funds. Colombia stopped sending ‘Israel’ coal, an enormous disruption as the Colombians are the top supplier of the Zionist entity’s most important fuel source. This has created a population dynamic that will only increase, replacing higher paying, more comfortable, white collar jobs in cities, only with opportunities to settle a dangerous frontier in the West Bank and Gaza (at least in ‘Israeli’ leadership’s dreams). This is not a promising trend either for the stability global capital seeks, or for potential settlers looking to profit at Palestinians’ expense.
Furthermore, with the failure of the IOF to defeat the Palestinian resistance in Gaza, and morale and reenlistment in the IOF plummeting, the Zionist entity has resorted to its age-old strategy of trying to ignite an even bigger war (especially with Iran) to draw the USA into direct participation. Why would anyone choose to migrate to ‘Israel’ under these circumstances? Why would they risk being killed in an Al-Qassam ambush or by Iranian hypersonic missiles, when these settlers could simply stay in the other settler colonies they mostly migrate from, like the USA, Canada, France, UK, Argentina, South Africa (the #2 - #7 most popular homelands for historical settlers to ‘Israel.’
What will the state of the civilian economy be, with 46,000 businesses having closed since Oct. 7, 2023, because of cratering consumer demand and economic instability? All that will remain is a state centered solely on war, yet unable to militarily succeed. Not an easy sales pitch, to anyone other than the most fundamentalist Zionist elements attempting to settle the supposed ‘Wild West’ Bank frontier (i.e. steal even more Palestinian land). The imperial character of this project has been laid bare to the whole world, and will never regain the veneer of morality it retained for so long thanks to the imperialist backers of the ‘Israeli’ cause.
As Western imperialism continues to weaken, Palestine is one of the places where it will continue to lash out most brutally, mistaking its violent death knell for a show of strength. Replacing the economic incentives of settler colonialism with this sheer death drive will only further hollow out the core of the Zionist entity. The ‘Israeli’ economy may recover, if only to enable future inhumane but ultimately futile efforts at a total genocide of the Palestinian people from their homeland. Despite the impossibly cruel violence since October 7, the material realities of the sustained existence of ‘Israel’ are in fact weaker than ever, and they know it.
In our next post, we will look at the role the valiant Yemeni resistance has played in altering (possibly permanently) the economic capabilities and future of ‘Israel,’ in solidarity with the Palestinian resistance. If you're interested in these ideas, don't hesitate to reach out. This project is a conversation, not a lecture, so all good faith feedback is encouraged, especially from trained economists.
References
https://arabcenterdc.org/resource/the-estimated-cost-of-the-gaza-war-on-the-israeli-economy/
https://greatreporter.com/2024/12/06/israels-economy-is-looking-into-the-abyss/
https://www.jewishvirtuallibrary.org/total-immigration-to-israel-by-country-per-year