An Isolated Israel Doubles Down On War In Gaza — At All Costs

(Bloomberg) -- Viktor Frankl’s 1946 book “Man’s Search for Meaning,” a first-hand account of how prisoners in a Nazi concentration camp found the will to live, has suddenly appeared on Israeli best-seller lists.

A hip-hop duo that made it big last spring rapping about partying with friends in nightclubs now have the most streamed song in Israel — a wartime anthem that celebrates military vengeance in Gaza.

And the latest hit film is a documentary about the music festival where Hamas slaughtered hundreds celebrating peace, love and hedonism. As many in the film are heard to say while taking cover from rockets overhead: the party’s over.

Since the Oct. 7 attacks and the ensuing invasion of Gaza, Israel has undergone a profound transformation, temporarily putting aside its focus on startups and wealth in favor of fostering a wartime culture built on patriotism and unity. Immediately following the massacre, hundreds of thousands of soldiers were sent to the fronts, leaving jobs unfilled and companies unproductive. Growth in the fourth quarter of 2023 is forecast to have plummeted by 19%. In the past several weeks, almost half of deployed reservists have returned home, allowing companies to reboot, but the situation could change in an instant.

For a country that only six months ago saw tens of thousands take to the streets weekly to oppose the populist policies of Prime Minister Benjamin Netanyahu, this national solidarity is striking. Thousands of reservists signed petitions during last year’s protests vowing to boycott the military, but many more reported for duty after Oct. 7 than had been called up. Even some ultra-Orthodox men, who traditionally shun military service, are enlisting.

Despite growing divides over the timing of a future election and whether to pause fighting in favor of a hostage deal, consensus over the justice and necessity of the war itself remains high. Netanyahu’s approval ratings have cratered, yet his most ardent supporters and most fervent critics are for now standing together under the flag. Billboards, bumper stickers and TV shows rally citizens around the prospect of victory. And across nearly all sectors of society, Israelis have accepted that the divisions that until recently threatened to tear the country apart must be set aside to ensure its continued existence.

“It’s become a kind of awakening from several delusions, especially one which says economic relations can win out over religious hatred,” observed Gad Yair, a sociologist who specializes in Israeli culture at Jerusalem’s Hebrew University. “Money won’t buy us peace. We are going to be a more militarized society.”

In the past few decades, Israel has gone from a relatively poor agrarian economy to one of the world’s startup havens, with its GDP per capita now above that of France, the UK and Japan. The number of multinational companies with operations in Israel grew from fewer than 150 to more than 400 in the last 15 years. Many abroad have assumed that this exceptional wealth production, alongside growing diplomatic relations with Arab nations, would mean that Israel’s leadership would seek to resolve the war soon, instead of putting those accomplishments at risk.

But the prime minister’s commitment to “total victory” is overwhelmingly backed by the public. As Netanyahu’s government adds $19 billion to its budget to cover the war while raising taxes and weighing across-the-board spending cuts, Israelis in large numbers tell pollsters that the fighting in Gaza and at the Lebanese border with Hezbollah must carry on for as long as it takes — even if the US objects. 

Yoel Esteron, founder and publisher of Calcalist business daily, recently held a conference in Tel Aviv for tech executives, who were bracing for the conflict to last up to two years. With the start-up sector expected to struggle, some were already seeking new sources of investment.

Even as it affects companies’ bottom lines, Esteron noted, there was little dissent among corporate leaders over the need for continued military activity. “I don’t remember a consensus like this since the 1973 Yom Kippur War,” he said. “The war clearly takes precedence over everything because it is considered existential.”

At the same time, said Erez Shachar, a managing partner at Qumra Capital, the business community has been galvanized by what it sees as a new sense of purpose. “There’s a very clear understanding in our industry that we are an essential part of the security of Israel,” he said. “Israel without its economic force has no chance of survival in this tough neighborhood.”

While the tech sector is rebounding, hospitality and tourism have taken a serious hit. Nearly half of construction sites are still shut as tens of thousands of Palestinian workers haven’t been permitted to return to Israel to work.

Eylon Penchas, who runs a private equity firm near Tel Aviv, is among those adjusting his plans in response to the war. Penchas was due to acquire an industrial company in the southern city of Sderot before it was among those attacked on Oct. 7. Instead of finalizing the term sheet, he brought his son to his army unit and went with his daughter to donate blood. Sderot was evacuated. The acquisition was cancelled.

Penchas says he’s now especially worried about the situation in the north, which is home to some of the roughly 200,000 Israelis who have been living in temporary housing since being displaced following the Oct. 7 attacks. The Israeli-Lebanese border is widely considered the more dangerous front should it explode into all-out combat, and at the moment, things are heating up.

Amid concern that the conflict could spread, the country is also grappling with international public opinion turning against it. As cities across the globe host demonstrations to protest the war — which has killed some 25,000 Palestinians, according to Hamas officials, and forced the vast majority of Gaza’s 2.2 million inhabitants into extended homelessness and put them at risk of starvation — there is an intensifying sense within Israel that the world is more focused on the response to Oct. 7 than on the original act of savagery itself.

Given the country’s military power and the extent of the death and destruction in Gaza, the feeling of victimhood within Israel can be incomprehensible to outsiders. Yet the massacre and ongoing hostage situation fill airwaves and newspapers and dominate dinner conversations. There is a funereal air to life since the attack, a deep sense of vulnerability, and a fear that other anti-Israeli militias in Lebanon and the West Bank are likely to pour into the country at any moment and carry out another set of atrocities.

This, in tandem with what many Israelis see as an international failure to condemn Hamas, is prompting the country to rethink its relationship to the outside world. The perception that American universities and global media outlets are Hamas apologists willing to promote anti-Semitism is now so widespread that it has become a recurring punchline on the popular satirical show “Eretz Nehederet,” Israel’s version of “Saturday Night Live.” South Africa’s accusation of genocide against Israel in the International Court of Justice has further underscored the country’s feeling of isolation.

“War is the great clarifier,” wrote Michael Oren, a former Israeli ambassador to Washington, in a post on center-right outlet The Free Press on the war’s 100th day. The atrocities carried out by Hamas, he added, “have been tolerated, contextualized, and hailed.”

To Israel’s critics, conflating calls for a ceasefire — which the EU, UN, and dozens of countries have issued in recent weeks — with supporting an organization that’s been labeled a terrorist group by the EU and US simply reflects how the country’s bunker mentality has blinded it to Palestinian suffering. The ongoing attacks in Gaza are only minimally covered in the Israeli media, and with international organizations estimating that civilians, particularly women and children, represent the vast majority of all casualties, such arguments have struck some as a fig leaf for justifying mass and indiscriminate violence against a captive population. 

Zehava Galon, a former parliamentarian from the left-leaning Meretz Party and current president of Zulat, a nonprofit focused on equality and human rights, is one of the rare voices to argue that what’s happening in Gaza will not make Israel safer in the long run.

“You can justify the war because of what happened on Oct. 7, but you can’t justify killing so many civilians,” she said. “Not everyone in Gaza is Hamas. When we see the starvation and the destruction of buildings and the fighting in refugee camps, this is not in our interest. The only thing that can bring security to Israel is an agreement for something like a two-state solution.”

Yet even many firm opponents of Netanyahu are convinced that Israel’s survival now depends on the outcome of its war. Eshkol Nevo, one of the country’s best-known fiction writers, was active in last year’s anti-government demonstrations. Since Oct. 7, he’s been visiting the fronts to hold readings for soldiers.

“What you see is people from all parts of Israel supporting each other; the bonds are very strong,” he said by phone from the back of a military jeep after one such trip. “Our soldiers are highly optimistic, more so than civilians. They talk about solidarity all the time.”

Ron Ben-Yishai, a respected commentator on military and political affairs, channelled the feelings of many Israelis when he wrote in the daily Yedioth Ahronoth newspaper that, absent victory, every citizen “will be a potential candidate for kidnapping.” 

Without a win, he argued, “None of us will be able to travel overseas for fear of being kidnapped, a concern that will apply mainly to young Israelis traveling in developing countries. But even worse, we will have a hard time feeling safe spending a weekend in a Galilee bed and breakfast.”

This blend of trauma and fear is apparent in #Nova, a new documentary by filmmaker Dan Pe’er that has racked up millions of views since its debut in December. In the aftermath of the massacre at the Supernova music festival, Pe’er collected hours of video and audio recordings from the phones of victims and their relatives, as well as from attackers’ GoPro cameras. Thousands of half-dressed young Israelis, many tattooed and pierced, laugh and dance freely in the desert night near Gaza, not long before 360 of them are murdered.

“The Nova Festival was a symbol of our naivete,” Pe’er said by phone. “We felt very safe and believed in our country and leadership. On October 7, the ground fell out from under me. I suffered cognitive dissonance. I’d thought those on the other side were like us, they wanted to live in peace and we just needed the right formula. But nobody like me could do what was done that day.”

He said a number of Israeli soldiers had reached out to him on Facebook to tell him that his film had showed them why they needed to fight. 

It remains to be seen how long Israelis will endorse war without end, especially if diminished production, downsized workforces and higher taxes start to bite. The Bank of Israel forecasts that the conflict will cost about 10% of the country’s estimated GDP of $530 billion this year, and that Israel’s revenue will decline by 2% as a result of fewer taxes and licensing fees. 

Another potential fault line is that, although Israelis are exceptionally united behind the country right now, less than 14% support Netanyahyu’s Likkud party. Despite constant calls for the prime minister to step down, he’s made clear that he won’t — in part because the longer the war lasts, the less likely it is that there will be a full inquiry into his government’s disastrous failure on Oct. 7. Yet street demonstrations against Netanyahu are likely to grow and pressure will mount for him to call new elections.

On the international stage, as Israel negotiates with its allies, there is no shared vision of what peace should look like. While US, Arab and European leaders have said that peace should be built around a two-state solution, Israelis, still traumatized by Oct. 7, strongly oppose this. Instead, the government’s plan is to destroy Hamas and spend years demilitarizing and deradicalizing Gaza before even considering the prospect of Palestinian sovereignty. With polls showing that a majority of Palestinians support Hamas, Israelis worry that a Palestinian state could turn into a hostile neighbor that would allow deadly militant groups to rise. 

So in the meantime, the focus is war. There are appeals to wind down the fighting, but they represent a minority. Many people fear that breaking with consensus could invite harassment, or even arrest. This is particularly true for Israeli Arabs, who make up 20% of the population, although nobody is above it. When Yossi Vardi, one of the country’s best-known entrepreneurs and investors, told Bloomberg last week at Davos that he wanted the war to end, he received dozens of harassing emails.

Esteron, the publisher, said that the tech executives he’s spoken with have taken the challenges in stride. Their workers might be on the frontlines in Gaza, but they’re keen to demonstrate that their companies are resilient. “I did sense a hunger to get back to business,” he said, “because high tech is the engine of the Israeli economy and we need to revive the sector to afford the war.”

--With assistance from Galit Altstein.

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