+972 Magazine / February 9, 2023
High-tech workers say the new government’s plans could harm their sector. But history shows the industry actually thrives off of volatility and violence.
Of the many protests that have erupted across Israel since the new government was sworn in over a month ago, few have been more unexpected than the mobilization of Israeli high-tech workers. Since mid-January, many among this demographic — which is often typecast as inured to the economic and political constraints of life in Israel — have been walking off the job in protest of the coalition’s proposed judicial reforms, which would give unprecedented power to the ultra-nationalist and ultra-religious government. Every Tuesday, these tech employees descend from sprawling co-working spaces tucked away in high-rises to gather just outside the Kirya, the military’s headquarters in central Tel Aviv, waving signs that read “Save the Start-Up Nation” and “No Democracy Without High Tech.”
Such walk-outs and coordinated strikes are unheard of in Israel’s high-tech sector. Like their Silicon Valley counterparts, many Israeli tech workers enjoy cushioned lives subsidized by exorbitant salaries and benefits that have insulated their day-to-day life from the realities of political instability and regional violence. Nonetheless, the “pro-democracy” protests that have engulfed Israeli cities these past weeks have drawn the support of Israel’s most elite socioeconomic class, together with much of the Israeli center and center left, and even disaffected segments of the right.
However, the mainstream protests in general, and those staged by tech workers in particular, have failed to offer a deeper critique that opposes the Israeli occupation and denial of Palestinian rights — a deliberate omission that reveals an uncomfortable truth.
Tech industry leaders say the judicial reforms could have potentially cataclysmic effects on the Israeli economy by deterring investors and causing skilled workers to flee Israeli cities. But it is unlikely that any fallout over the new government will truly cripple the country’s technology sectors. In fact, Israel’s high-tech economy has not simply withstood decades of unending war and political volatility; it has flourished because of it. Close ties to military technocrats allowed Israel’s technology industries to explode amidst the Second Intifada, six wars on the blockaded Gaza Strip, and escalating incursions in the occupied West Bank. Today’s protests thus crystalize both the unused potential and inherent limitations of pro-democratic political action by an industry that thrives off of warfare.
‘Emergence of a technocracy’
The tech sector’s insulation from Israeli politics derives largely from the enormous wealth gap between its workers and the rest of the population. While they make up only 10 percent of the country’s labor force, employees of technology firms rake in average salaries that are at least twice as high as those not working in high tech. The industry’s explosion has transformed Tel Aviv into “Silicon Wadi,” contributing to make it 2021’s most expensive city in the world, where nearly one in ten residents are millionaires. Tel Aviv is thus colloquially called the “bubble,” evoking a space isolated from Israel’s intractable military rule over Palestinians and the country’s political bent towards a Jewish supremacist theocracy.
For this reason, press coverage of the high-tech workers’ protests is punctuated with awe. Headlines broadcast surprise that “the high-tech sector has only just woken up,” a message echoed by leaders of the wider anti-government movement. As Amir Mizroch, a former tech reporter who is now a tech industry consultant, said, “For years, tech never got involved in politics — it was a complete bubble. No matter the wars, the money kept coming in, the companies kept growing, and the government left the industry alone,” a relationship which the industry now feared was threatened by the current coalition.
But this narrative is not true. Israeli governments have never “left the industry alone;” politics, war, and occupation have consistently fueled the growth of the technology sector.
In 1971, four years after Israel captured the West Bank from Jordan, a widely circulated pamphlet by Israeli political economists lamented the “emergence of a technocracy consisting of army officers who have entered the economy as administrators and specialists,” and who were eager to capitalize on the “technical skills” they learned in the intelligence units that were expanding across the Palestinian territories. From the 1970s onward, these military-technicians-turned-business-administrators worked closely with politicians, to push the government to adopt policies they favored, including subsidies for high-tech companies, looser regulations for foreign investors, and lenient export controls.
By the 1990s, Israel’s technology industry was rapidly growing thanks to investment from Silicon Valley-based conglomerates and venture capital. Geopolitical instability had warded off foreign investors for decades, but the Oslo Accords’ promise of peace quickly attracted foreign capital. International firms gradually swallowed up Israeli start-ups specializing in civilian tech, and Israeli political leaders boasted a new era of regional cooperation and profit-making.
However, when the U.S. tech market crashed in 2000, Israel’s high-tech sector sank as well. A mass flight of foreign investors and international firms threw the sector into a crisis. The Israeli economy entered the worst recession in its history just as the Second Intifada erupted. News of Palestinian suicide bombings on buses and at trendy cafés brought tourism in Israel to a standstill. Tel Aviv’s beachfront hotels, filled with leisure and business travelers for much of the 1990s, were empty. Israeli unemployment rates skyrocketed.
The only Israeli industry that wasn’t crippled during this time, though, was the security sector. War was good for business, and following the 9/11 terrorist attacks and the advent of the Global War on Terror, Israeli tech companies saw this as a new era for profit and growth. Leaders of Israel’s technology sector — many of whom were military-trained technicians or retired generals — soon rebranded the country as a “homeland security capital,” playing on the name of a new U.S. government department and legislative act established in the wake of 9/11.
‘Maintain the mask’
As the Israeli technology sector met a global demand for innovations in counterterrorism and national security, Israel’s economy rebounded into a period of unprecedented growth. Military-trained engineers and developers circulated en masse between the army and the private sector, using their skills and knowledge to create surveillance and security products like remote sensing, biometric surveillance, and cyber-hacking technologies.
“The slogan ‘battle proven’ was key for this technology,” Dr. Shir Hever, the military embargo coordinator for the Boycott National Committee and author of “The Privatization of Israeli Security,” told +972. “By proving Israeli tech was used on Palestinians before it was exported to other customers,” the occupied territories became a testing ground to showcase the efficacy of these products, he said.
Israel’s reputation as an innovative start-up nation was thus consolidated during the Second Intifada, a volatile five years characterized by frequent military raids on Palestinian cities and refugee camps, as well as Palestinian suicide bombings in major Israeli cities within the Green Line. Even after the Second Intifada ended, Israel’s high-tech economy continued to grow amidst regular and bloody bombardments on Gaza and the expansion of Jewish settlement infrastructure across the West Bank throughout the 2010s.
By 2014, commentators were openly discussing how a volatile political landscape was in fact a good thing for the Israeli economy. During the 2014 war on Gaza — a two-month Israeli offensive that left 2,251 Palestinians and 73 Israelis dead — some predicted the government would expand the defense budget and pump money into the increasingly technologized arms industry. Maj. General Danny Yotam, for example, told Haaretz that the siege on Gaza would “promote Israeli defense exports” and that many industries “would benefit from the defense system’s demand to replenish stocks.”
Paradoxically, as this flourishing high-tech sector helped catapult Israel’s economy into the 21st century, the military occupation became easier for tech workers to ignore in their daily life. Tel Aviv became known not for its centrality in global circuits of military technology, but rather for its culture of fun and innovation. So even as the conflict laid the foundation for Israel’s digital economy, it receded further from many high-tech workers’ views.
Hever, of the Boycott National Committee, explained that Israel’s political elite helped shape the false notion that the technology sector is cut off from politics. “Israeli governments have traditionally looked to technology to achieve political goals,” he said, typically framing technology as “objective and rational” rather than as an inherently “political tool.”
“Instead of acknowledging the invasion of privacy and blackmail, they discuss ‘intelligence gathering,’” he explained. “Instead of acknowledging that weapons are developed to commit war crimes, they discuss developments in AI, optical systems, and robotics.” The policies of tech CEO-turned-prime-minister Naftali Bennett exemplified this trend: framing the dehumanizing impact of occupation as something that could be scientifically “shrunk” with better algorithms and cutting-edge software.
Hever frames the high-tech sectors’ current “awakening” as a response to the end of an era: instead of politicians who pledge to professionally manage Israel’s intractable military rule, the new coalition has pushed the ideological ambitions of Jewish supremacist lawmakers into the limelight. In Hever’s words, “Israeli high-tech employees don’t expect the government to end apartheid and the other daily violations of international law. They expect the government to maintain the mask, pretend to be a liberal democracy, and have photo opportunities with Western world leaders. This is what the new ultra-right-wing government refuses to do.”
Will there be divestment?
As the new government threatens to erode the judiciary’s power, major financial institutions and ex-finance ministers have offered sobering predictions about a potential economic downturn. The ascent of politicians like Itamar Ben Gvir and Bezalel Smotrich, who have unabashedly pushed for the expansion of settlements and unrestrained use of military force, has motivated some foreign investors like the Norwegian Sovereign Wealth Fund to reconsider their ties to Israel’s West Bank settlements.
But these moves are peripheral and seem, for now, unlikely to turn into a major divestment. Israel’s tech sector attracted USD $42 billion in foreign investments in the last two years — despite the domestic political instability that led to five back-to-back elections, and despite escalated violence in the West Bank in 2022. Technology products also account for more than half of Israeli exports, a large portion of which are security and surveillance systems.
Indeed, this sector has only spiked in recent years: Israeli defense and security exports rose by 30 percent in 2021 alone, spurred by Russia’s invasion of Ukraine and the Abraham Accords. In many ways, Israeli tech firms’ sales of security and surveillance systems to authoritarian regimes with sordid human rights records paved the way for Israel to normalize diplomatic relations across the Arab world. Just this past year, new reports surfaced of Israeli firms selling cyber-weapons to Sudan well before diplomatic relations were established last month, and to Myanmar, which has yet to recognize Israel.
“Tech entrepreneurs and investors claiming that the judicial reforms will have a detrimental impact on the economy, and will ward off investors and lead transnational firms to relocate — it’s less a concern than a threat,” Dr. Erez Maggor, a sociologist at Hebrew University who studies the history of Israel’s technology sectors, told +972. Rather, Maggor continued, their fear derives from “what business could see as a significant overreach of government, which could take various forms: increased taxation on profits, heavy regulations, even nationalization [of companies].”
But these fears from the industry appear to be unfounded. Israel’s new finance minister Bezalel Smotrich — a populist, religious Jewish settler whose electoral base is composed of young religious and ultra-nationalists — has made overtures to gain support from other parts of Israeli society and promises to promote a market-based modern economy. Last week, he took to Twitter to assure concerned high-tech investors they had nothing to worry about.
Tech workers still disagree. As Maggor put it, “I think there is a genuine concern regarding the detrimental effects of the reforms on Israel’s liberal democracy. This is in line with what we’ve seen around the world in the past decade, as tech employees have not been shy about voicing their concerns about a host of social, economic, and even ethical issues.” For example, Google, Amazon, and Microsoft employees in the United States have similarly staged walkouts and circulated petitions protesting their employers’ deals with the U.S. Department of Defense and repressive regimes worldwide, including the Israeli military.
The Israeli tech employees who have joined this movement, however, do not seem worried about their industry’s entanglements with warfare, and much like the rest of the main protests in Israel, have remained startlingly quiet on the issues of occupation and apartheid. In this sense, the slogan “no democracy without high tech” is really a call to return to the more stable, profitable status quo of previous governments: an arrangement marked by nominal commitments to democracy, while systematically denying Palestinians’ most fundamental rights.
Sophia Goodfriend is a Ph.D. candidate in Anthropology at Duke University with expertise in digital rights and digital surveillance in Israel/Palestine