From domination to extermination: Israel’s military industry and strategy since 1948

First published at Phenomenal World.

Israel is one of the most militarized countries in the world. The Israel Defense Forces, and the broader landscape of Israeli security forces, are the core around which the country’s institutions, financial structures, and economy have been developed since David Ben-Gurion ordered the founding of the IDF on May 26,1948. Across the intervening decades, the country’s political economy has developed around this central organizing principle of war, evolving as the nature of war has changed with US foreign policy in the Middle East.

In the 1940s, decentralized settler-colonial militias consolidated into a state-owned and publicly managed enterprise for the production of military goods. The Israeli state limited this industry’s exports, a pattern that continued after independence as state-owned weapons manufacturers produced arms for expansionary aims. During the early Cold War and post-colonial period, Israeli military strategy reflected this economic model. Rather than pursuing conventional warfare, settlement was promoted through small military units carrying out ethnic cleansing campaigns with light weaponry. While Israel did import weapons, mainly from France, it equipped these militias primarily through domestic production.

It was in the aftermath of the 1973 Arab-Israeli War, with the surge in US military financing, that the Israeli military’s procurement practices changed. The new phase in the global Cold War initiated a period of sectoral change inside Israel’s defense industry. The war exposed grave weaknesses in Israeli defense, which had struggled against the Soviet-armed militaries of the Arab countries. Israel’s response was a rapid and steep increase in imports of US weapons systems. But this decision required structural adjustment: in order to strengthen its links with the US defense industry, Israel privatized and liberalized its domestic military apparatus. Throughout the latter decades of the twentieth century, the Israel Defense Forces (IDF) transformed into a high-tech colonial police force, managing the Palestinian populations of Gaza and the West Bank by means of surveillance and control. As weapons imports from the US kept apace, Israel re-oriented its own production towards new specialized technologies of surveillance and incarceration. A new global division of labor in the production of military equipment came into being, one shaped by the War on Terror and the US-led global defense industry until 2023.

The genocidal campaign Israel is waging in the Gaza Strip marks a disruption to the decades-long status quo. Since October 7, Israel’s military industry has increasingly sought to supplement its overwhelming dependence on military imports with its own domestic production — a return to its origins in militia-nation mobilized for constant hostilities. The shift has been qualitative and quantitative. In producing for domestic consumption, the Israeli military-industrial complex has begun to recompose its production profile around low-tech arms designed for brute destruction and displacement, for products and practices more akin to its founding strategy.

A settler-colonial state

The roots of Israel’s arms industry predate the founding of the state itself. Israel Military Industries — the company behind the Desert Eagle and the Uzi — was established in 1933 as a small arms manufacturer to supply early Zionist militias. Its weapons were produced in secret, smuggled, and stashed illegally for use by these armed Zionist groups. The militias that later formed the IDF were armed primarily with Sten submachine guns, mortars, and light armored vehicles — weapons well-suited for intimidating civilians and ultimately effective in the ethnic cleansing of Palestine. These weapons favored small-unit tactics and irregular warfare in rough terrain, aligning with Israel’s early doctrine of high mobility and decentralized command, and exemplifying what Israeli generals often described as the ideal of “a small and smart army.”

The collectivist settler mentality was essential in shaping the Zionist movement’s militarism, armament strategies, and relationship to the indigenous Palestinian population. Under the leadership of former Israeli Prime Minister David Ben Gurion, leader of the Labor Party and the trade unions, the state monopolized Israeli arms manufacturing. That monopoly over arms production advanced the country’s public sector, with proceeds channeled back into R&D.1 This kind of warmaking also influenced military recruitment policy. To maintain unit cohesion and loyalty, Israel exempted large segments of the population from conscription — Palestinians, Ultra-Orthodox Jews, and later, growing numbers of secular Jews. The strategy proved successful in 1948, 1956, and 1967, when lightly armed, agile units could outmaneuver less organized Arab forces. With the outbreak of war in 1973, however, the limitations of this strategy were quickly exposed.

The infrastructure of domination

While Israel’s military success against Egypt, Syria, and Jordan in the 1967 Six-Day War generated overconfidence among Israeli military elites, the 1973 Yom-Kippur war shattered this conception of self-sufficiency, including in arms manufacturing. Large purchases of Russian military equipment by the governments of Iraq and Syria, as well as the explosion of Arab oil revenues and the influx of weapons these purchased, signaled the arrival of a regional weapons build up across many different axes of conflict. When the war began in October, Israeli small units and even air superiority failed to halt the advance of Syrian and Egyptian divisions. Mid-war, Israel turned to imports of US-made arms, necessitating new tactics — and ultimately, a new strategy.

Dependency on US military financing began in the middle of the Yom-Kippur war and quickly became a key feature of the Israeli arms industry. Israel’s structural hostility to the Soviet-funded Arab socialist governments made it a natural proxy for US Cold War interests. By rescuing Israel from the brink of destruction, the US gained a new state asset for projecting its own power in the Middle East, and a ready opportunity to restructure Israel’s military industry around its own economic and geostrategic priorities.

In the years that followed, the US used military financing to exert pressure on the sort of technologies and equipment that Israel could produce at home. The Pentagon identified Israeli military research projects that could potentially create competition with American defense companies and negotiated their eventual termination. These included work on an anti-tank missile to compete with the US-made LAU missile, as well as Israel’s flagship arms project — the Lavi jet fighter, developed in the 1980s and designed to surpass the F-16 Lockheed Martin fighter.2 The Pentagon also monitored Israeli arms exports of systems containing US technology, forbidding their sale to countries like Russia and China.

Since 1973, Israel has become the largest recipient of US foreign military assistance in the world — and since the 1979 Iranian Revolution the region’s largest buyer of US military equipment by far. Since the Yom-Kippur War began, the US has given to Israel a total sum of over $171 billion in military assistance , not adjusted for inflation and without interest.3 This shift in the basis of Israeli military procurement has profoundly reoriented the role of Israel’s own home-grown weapons manufacturers. While the US is the world’s largest arms exporter by a wide margin, Israel has become a major arms exporter in its own right, with the highest rate of per-capita arms exports in the world. While US weapons exports emphasize North Atlantic Treaty Organization (NATO) members, however, most of Israel’s arms export is directed at non-NATO members.

The marriage between US and Israeli military interests would have two outcomes. First, under US influence, private arms companies gained prominence over state-owned enterprises in IDF procurement as the country underwent a broader period of intense privatization. Pressures for privatization were heightened as a result of the painful adjustments imposed by the US on arms production as well as military spending cuts reflecting the end of the Cold War. In 1993, a governmental committee headed by Professor Israel Sadan convened to study the future of Israeli military procurement, recommending the privatization of “peripheral” functions, from storage and distribution to logistical acquisitions and even base security itself. Competition among privatized vendors was presented as a cost-saving measure that, Israelis were assured, would not compromise security. Efficiency was the watchword of the day, a principle captured by then IDF head Ehud Barak, who declared, “everything that doesn’t shoot or directly help to shoot will be cut.”4

Privatization was not limited to the arms industry. With the 1985 Structural Stabilization Plan, Israel embarked on a large-scale privatization process of its telecommunication infrastructure and services, Israel’s national airline, the banking sector, and partial privatization in the water, health, and ports.5 In addition to appealing to US preferences, privatization provided members of the Israeli security elite with lucrative opportunities in the management of private arms companies.

Second, these private companies would become increasingly embedded with the US-led Global War on Terror. Privatization went hand in hand with specialization in technologies used in cyber-warfare, attack drones and advanced electronic systems for military vehicles.6 Following the Second Intifada and the attacks of September 11, 2001, Israel and the US shared an interest in developing high-tech systems for surveillance, regulation, and control.

Since 2001, between 70 and 80 percent of Israeli made weapons have been sold as exports. Israeli arms companies have developed a reputation for selling weapons to customers otherwise on the margins: countries under military embargo, rebel groups, militias, states without diplomatic ties to other major weapons’ producers, and even customers who later turned these weapons against Israel.7 Israel developed this reputation during the 1960s-height of the global Cold War, exporting weapons to Uganda, Angola, Chile, South Africa, Singapore, Taiwan, Nicaragua, Guatemala, and pre-revolution Iran. Later, as the geography of hot wars shifted, its exports shifted to Rwanda, Yugoslavia, Turkey, Azerbaijan, and India. In recent decades, the Gulf States increasingly began to import Israeli weapons. While Israel lags behind the scale of leading global arms exporters such as the US, Russia, the UK, France, and Germany, it achieved the status of the world’s largest per-capita arms exporter in around 2009, after the 2008 invasion of the Gaza Strip killed about 1,400 Palestinians.8

In 2003, US President George Bush created the Department of Homeland Security (DHS) with a budget exceeding $59 billion. The DHS and the climate of the GWOT presented the perfect opportunity for Israeli military and security companies to capitalize on their experience in the occupied territories. Israeli companies presented the occupied Palestinian territories as a testing ground for developing products fit for an evolving US Homeland Security project, and Tel Aviv soon became the world capital of the weapons industry’s security sector.9 The string of Israeli military operations inside Gaza, Lebanon, and elsewhere have been boons for the country’s arms companies, allowing them to market their products as “battle-tested” at the various arms fairs that follow on the heels of each operation.10 By now, these military products have become big business and a key sector of the Israeli economy. In 2012, Israel brought in $7.5 billion thanks to military exports; that same year, former Israeli Defense Minister Ehud Barak reported that 150,000 Israeli households rely on the weapons industry for income.

The special relationship between Israel and the US is key to all of this. A fundamentally military relationship, the exchange of money and weaponry plays a structuring role in the Israeli economy. While about 75 percent of the $3.1 billion of US military aid to Israel must be spent on American weapons, the rest can be spent on domestically produced arms. This strengthening diplomatic alignment has facilitated industrial integration, as when the US-based Magnum Research shifted production of its Magnum and Desert Eagle pistols to Israel. Today, even when Israel buys US-made weapons, they are often built with Israeli components. Government allocated research funds and joint university research programs have lent an air of scientific legitimacy to technologies of repression.11 In 2018, the wave of privatization and new export demand culminated in the purchase of the state-owned Israel Military Industries by the privately-owned Elbit Systems; the latter, consequently, became Israel’s largest arms company and the twenty-eighth largest arms company in the world by 2019. It supplies militaries not only directly but indirectly as a subcontractor to larger firms such as General Dynamics and Airbus.12 Elbit Systems clearly embodies the new face of Israel’s arms industry: technologies of oppression, product lines complementary to rather than competitive with US weapons, and global exports that capitalize on the value governments across the globe place on Israel’s experience with occupation.

In the five decades following the 1973 war, Israel’s state-backed settler-colonial militias had been transformed into a high-tech system for Palestinian oppression. In its now capital-intensive military, weapons firms demonstrate their advanced technology through military assaults on Palestinians and the daily surveillance and control of the occupation.13, 14 

Specializing in surveillance systems, riot gear, and incarceration infrastructure, the “laboratory” produced tools ideal for maintaining the occupation but ill-suited for conventional warfare. No longer a combat force, the IDF was transformed into a colonial police army — prioritizing deterrence, humiliation, and the suppression of Palestinian resistance over battlefield supremacy. Tens of thousands of private security guards have been trained in the development and maintenance of these technologies.

The strategy of extermination

Israel’s decades-long dependence on this model of high-tech policing of enclosed Palestinian populations was thrown into crisis by the October 7 attacks. Leaked internal investigations from March 2025 reveal that officers dismissed the possibility of a Palestinian attack, believing their deterrence regime to be unbreakable. When Hamas shattered this illusion, Israel’s far-right government reverted to what had seemed until then an outdated form of warfare: US-supplied heavy weapons — artillery, tanks, armed drones, naval bombardment and fighter jets — to use in a prolonged siege of an entire population.

The genocide being carried out by Israel in Gaza, along with the invasion of Lebanon and airstrikes in Syria, Yemen, and Iran, share one significant feature: they are conducted primarily with imported weapons. The majority of these are subsidized by US taxpayers, though Israel pays a premium on weapons from Germany, Serbia, and increasingly “countries with which we have no diplomatic relations, including Muslim states on all continents,” an Israeli defense establishment official told Ynet in November 2024. As the IDF depleted munitions and equipment in its post-October 7 campaign, Israeli arms dealers have been converted into scavengers among a global arms trade whose prices are inflated by the demand for weapons in Ukraine — trading high-tech weapons systems such as UAVs and computerized equipment in exchange for the basic materiel of shells, gunpowder, and other explosives.15 According to the Wall Street Journal, by December 2023, the US had delivered to Israel over 5,000 Mk82 unguided bombs, 5,400 Mk84 2,000-pound unguided bombs, 1,000 GBU-39 1,000-pound bombs, and approximately 3,000 JDAM kits. Since October 7, the US provided an estimated $17.9 billion in weapons and ammunition to Israel, in addition to the annual foreign military funding of $3.8 billion and the paid imports of $8.2 billion from US arms companies.16

The transition to a strategy of maximizing destruction has also triggered a return to domestic weapons manufacturing. In the Elbit Systems shareholder conference of 2025, the trend was clear: Israel remains dependent on arms imports, but is attempting to procure as much as possible from domestic companies in order to evade the impact of the growing military embargo against it. Elbit Systems’ share of exports dropped from 79 percent in the first quarter of 2023 to 58 percent in the fourth quarter of 2024. But this recomposition of demand around the company’s founding domestic buyer has not reduced sales. Elbit Systems’ recent financial reports reveal that the company’s revenue and operating profit had surged not due to exports but thanks to “a material increase in the demand for its products and solutions from the Israel Ministry of Defense (IMOD) compared to the demand levels prior to the war.” For the year ended December 2024, the company realized $1.6 billion in profits on $6.8 billion in revenues — compared to $1.5 billion in profits on $6 billion in revenues for 2023. Its order backlog has increased from $17.8 to $23.8 billion. Across the board, Israeli arms companies have seen a flood of orders from the national military.17 In May 2025, Elbit issued $588 million of new equity, underwritten by Bank of America Securities, J.P. Morgan, Jefferies, and Morgan Stanley.

As in earlier periods, this economic shift has accompanied changes to military strategy. One telling example is Elbit Systems’ new 155mm Sigma (Ro’em) cannon. At first glance, its development seems paradoxical: Israel faces a critical shortage of 155mm shells, so why invest in a cannon that doubles the rate of fire? The Sigma’s innovations reveal the IDF’s deeper priorities: its robotic autoloader reduces crew requirements from seven soldiers to just two, enabling smaller units to operate with minimal coordination or discipline. With US bombs continuing to flow, and US aid financing Israeli purchases of shells from across the globe, the new equipment can facilitate a reorganization of IDF strategy.

The Sigma is a weapon for militia-style bombardment — maximizing destruction per soldier while institutionalizing the very lack of discipline that has characterized Israel’s Gaza campaign. It embodies the IDF’s transformation: a technologically advanced army returning to artillery, where firepower substitutes for strategy, and annihilation replaces occupation.

These tools are being wielded with the mentality of settler militias. “Artillery and direct tank fire are more effective than expensive precision weapons,” an IDF officer said in November. “Killing a terrorist using a tank shell or sniper, rather than a missile fired from a UAV, is regarded as more ‘professional.’”18 Tanks shell refugee camps point-blank; airstrikes flatten entire blocks to kill single militants. The US doctrine of combined arms and precision strikes is ignored, replaced by indiscriminate annihilation. The weapons industry created to police occupation zones across the global South in the late Cold War has turned inward, to supplement a modern fleet of US-made equipment of maximum destruction.

• 1

  Ya’akov Lifshitz, Security Economy, the General Theory and the Case of Israel, Jerusalem: Ministry of Defense Publishing and the Jerusalem Center for Israel Studies (2000).

• 2

  Sharon Sadeh, “Israel’s Beleaguered Defense Industry,” Middle East Review of International Affairs Journal, Vol. 5, No. 1, March 2001, pp. 64–77.

• 3

  Jeremy Sharp, “US Foreign Aid to Israel: Overview and Developments since October 7, 2023,” https://www.congress.gov/crs-product/RL33222, accessed August 2025. 

• 4

  Nadir Tzur, “The Third Lebanon War,” Reshet Bet, July 17th, 2011 http://www.iba.org.il/bet/?entity=748995&type=297, accessed December 2013.

• 5

  Yael Hason, Three Decades of Privatization [Shlosha Asorim Shel Hafrata], Tel-Aviv: Adva Center (November 2006).

• 6

  Sadeh, 2001.

• 7

  Jonathan Cook, “Israel Maintains Robust Arms Trade with Rogue Regimes,” Al-Jazeera, October, 2017 https://www.aljazeera.com/news/2017/10/23/israel-maintains-robust-arms-trade-with-rogue-regimes, accessed December 2024. 

• 8

  United Nations, “5. Estimates of Mid-Year Population: 2002–2011,” Demographic Yearbook, 2013 http://unstats.un.org/unsd/demographic/products/dyb/dyb2011.htm, accessed December 2024; Richard F. Grimmett and Paul K. Kerr, “Conventional Arms Transfers to Developing Nations, 2004–2011, “Congressional Research Service, 7–5700, August 24, 2012; Amnesty International, “Israel/Gaza: Operation ‘Cast Lead’ – 22 Days of Death and Destruction, Facts and Figures,” July, 2009 https://www.amnesty.org/en/wp-content/uploads/2021/07/mde150212009eng.pdf, accessed December 2024.

• 9

  Jonathan Cook, “Israel’s Booming Secretive Arms Trade,” Al-Jazeera, August, 2013 https://www.aljazeera.com/features/2013/8/16/israels-booming-secretive-arms-trade, accessed December 2024. Neve Gordon, “The Political Economy of Israel’s Homeland Security/Surveillance Industry,” The New Transparency, Working Paper (April 28, 2009).

• 10

  Sophia Goodfriend, “Gaza War Offers the Ultimate Marketing Tool for Israeli Arms Companies,” +972 Magazine, January, 2024 https://www.972mag.com/gaza-war-arms-companies/, accessed December 2024. 

• 11

  Maya Wind, Towers of Ivory and Steel: how Israeli Universities Deny Palestinian Freedom, Verso (2023). 

• 12

  Stockholm International Peace Research Institute (SIPRI) “The SIPRI top 100 Arms-Producing and Military Service Companies, 2020,” SIPRI, December, 2020 https://www.sipri.org/sites/default/files/2021-12/fs_2112_top_100_2020.pdf, accessed December 2024.

• 13

  Yagil Levy, Israel’s Death Hierarchy: Casualty Aversion in a Militarized Democracy, New York: NYU Press (2012). 

• 14

  This is widely referred to as the Palestinian  “laboratory”—a term used in the critical literature as well as by Israeli arms companies themselves.

• 15

  Hussein, 2024. Yoav Zitun, “From deals in the Third World to dubious brokers: a glimpse into the IDF arms race,” Ynet, November 22nd, 2024, https://www.ynetnews.com/article/h1tefly71g; Cf. https://www.haaretz.com/israel-news/2024-09-27/ty-article-magazine/.highlight/retired-israeli-general-giora-eiland-called-for-starving-gaza-does-he-regret-it/00000192-33f5-dc91-a1df-bffff4930000, accessed January 2025.

• 16

  Ellen Knickmeyer, “US spends a record $17.9 billion on military aid to Israel since last Oct. 7,” AP, October 9th, 2024, https://www.ap.org/news-highlights/spotlights/2024/us-spends-a-record-17-9-billion-on-military-aid-to-israel-since-last-oct-7/, accessed August 2025; Hagai Amit, “89 Billion NIS in two years: the numbers behind the buying binge of the IDF in the war,” The Marker, July 27, 2025. https://www.themarker.com/allnews/2025-07-27/ty-article/.highlight/00000198-4735-deec-ab9e-e73f8bc40000, accessed August 2025.

• 17

  Yuval Azulay, “Israel’s Arms Industry Profits Soar as Wars Fuel Billion-Dollar Contracts,” Calcalist, August, 2024 https://www.calcalistech.com/ctechnews/article/hkuwdfkic, accessed December 2024. 

• 18

  Zitun, “From deals in the Third World to dubious brokers: a glimpse into the IDF arms race,” Ynet, November 22nd, 2024, https://www.ynetnews.com/article/h1tefly71g