Manuel Trajtenberg

Government spending on defence, particularly defence R&D, can have significant economic spillovers. This column argues that the forthcoming European defence build-up must include a long-term strategy to develop high-quality human capital. Military human capital development serves a dual-purpose role: it is crucial for the modern (largely non-combat) battlefield, and also valuable for long-run productivity growth. Israel provides a good example of how military service can become a driver of innovation, by giving recruits intensive technical training and providing an open intellectual property environment. Economists can contribute by designing effective procurement systems and helping address collective action problems.

What is the required response to the Houthi-Iranian belligerence that disrupts freedom of navigation in key Middle East maritime routes?

As we look back at 2022, we can clearly discern the acceleration of key global and internal trends that pose serious challenges to Israel’s national security and call for a revision of existing policies. Some of these trends reached a clear turning point in the course of past year, while others continued to evolve gradually, making it more difficult to question prevailing strategies, despite the dangers inherent in clinging to them. Among those processes that took a sharp turn, three stand out:

At the outset of 2022, Israel is beset by the incongruity between its military might, economic dynamism, and technological prowess, and the severity of the political, security, and internal challenges that it faces. These challenges pose an exceedingly intricate and worrying strategic threat to Israel, exacerbated by the lack of a comprehensive and farsighted strategic outlook to address them. The key challenges are threefold: First Iran, which relentlessly pursues nuclear capabilities, while steadily strengthening its ability to threaten Israel with massive and precision fire from several fronts at once. Second, significant risks of escalation on the Palestinian front, including the disintegration of the PA, lack of governance in the territories, and dangerous slide into a bi-national state, which would undermine Israel’s identity as a Jewish and democratic state, and its international legitimacy. Third, within Israel, where inter-sectoral rifts, political polarization, and loss of trust in state and democratic institutions pose a serious threat to Israel’s social resilience and long-term security. Tackling this combination of challenges requires abandoning obsolete paradigms from the past decade, and formulating instead an updated and bold strategy that would require mounting initiatives and willingness to make harsh decisions. In doing so, Israel must rely not only on its military might, but also on soft power, using its proven strengths in science and technology, as well as in fields particularly relevant to the region, such as water desalination and smart agriculture. These are particularly valuable assets in the face of seismic changes in the global agenda, such as climate change, the quest for a green economy, and the COVID-19 pandemic. This overview aims to contribute to the public debate of these challenges and their potential resolutions, while helping decision makers formulate a sound and informed strategic approach.

The Israeli economy finally began to recover after a year of restrictions and lockdowns, when it was hit with the military operation in Gaza and the rioting in the Israeli cities with mixed Jewish-Arab populations. How much will the recent operation in Gaza cost the taxpayer? How do the costs of Operation Gaurdian of the Walls differ from the costs of Operation Protective Edge in 2014? And how is the experience of the COVID-19 crisis expected to lower the costs of the operation?

The coronavirus is not about to vanish from our lives, so the quest for a one-shot silver bullet in the form of an “exit strategy” is dangerously misguided. Instead, we will have to learn to manage our lives as individuals, families, and workers under the constraints of the coronavirus; the same applies to running the country, the economy, and other aspects of society. We therefore must build an organizational structure for the sustained management of the crisis, which will include a wide range of governmental, civic, and professional actors.