Are transnational socioeconomic trends trumping Zionist ideology in the Occupied Palestinian Territories?

In this essay, the author explores how globalization of Israeli capital has undermined the ideological thrust of Zionism in constructing policies towards Occupied Palestinian Territories. 

By Kanchi Gupta, 27th August, 2012

This essay demonstrates that while Zionist ideology is predicated on the expansion and territorial integrity of ‘Eretz Israel’, the nature of its administrative regime was steered by Israel’s internal socioeconomic dynamics. Israel’s sui generis ‘instrumentalization’ for the ingathering of global Jewish diaspora and resulting ethnic make-up, as well as social democratic, secular and religio-national ideological preferences are inclusive of Israeli political structure. However, as Israel’s economy opened to global capital, neoliberal capital interests spilled across borders and determined the construction of Israel’s policies in Occupied Palestinian Territories. Therefore, the essay determines that Israeli policy outlined below must not be viewed solely through the lens of ideologically driven military conflict. Rather, Israel’s military policy is an amalgamation of its economic and political strategies, which have further created transnational neoliberal economic imperatives.

These imperatives drive Israeli’s administration and thus, undermine the Right/Left dichotomy of Israel’s political composites, with the Labor ‘doves’ on one side and settlement driven Likud ‘hawks’ on the other. In order to demonstrate this, it is important to first outline the course of Israel’s administrative policies in Palestinian territories and their impact on economic, political and social organization of Palestinian inhabitants. The second of part of the essay will outline the effect of globalization of Israeli capital on its policies in order to derive that the ideological thrust of Zionist ‘geography of imagination’ has been undermined by neoliberal capital interests and the economic vision of the dominant capitalist class.

Structural Dimension of Israel’s Administration:

Zionist discourse constructed Palestine as an empty space, devoid of its native Arab population and launched a political, military, economic and cultural campaign in order to establish this ‘imagined geography’ as ‘facts on ground’. As soon as the 1949 war was over, Israel initiated a massive transfer of land ownership in a brutal effort to erase the Arab population and establish its sovereignty as well as patrimony. The physical forms of erasure of Arabs, including evictions, displacements, seizures and demolitions, were accompanied by a large-scale grid of Jewish settlements on confiscated land. (Massad, 2000, Gregory, 2004)

As described by Derek Gregory, the nature of colonization was such that it fused together ‘settlement, security and sovereignty’ in an ‘essential union that continued to function as something far deeper than a political or military objective, something much closer to an existential imperative’ (Gregory, 2004). Israel maintained the same ‘existential imperative’ in order to claim legitimacy for the occupation of the West Bank and Gaza Strip By asserting that the 6-day war was a pre-emptive war that sought to defend Israel’s existence and deter Arab countries from invading it (Farsakh, 2006)

Initially, Israel assumed responsibility of administration of major civil institutions like education, health-care, financial and legal systems. However, in what Gordon describes as the ‘colonization principle’, simultaneous expropriation of Palestinian land and water facilitated settlement construction to establish a territorial claim over the indigenously populated area. While Israel incorporated Palestinian labour as cheap workforce, the system of economic integration was such that it made the WBGS economy dependent on Israeli demand and regulations. For example, heavy taxes on Palestinian population and one-sided customs union that allowed access of Israeli goods to Palestinian markets but restricted entry of Palestinian goods into Israeli markets. As a result, a rise in employment, per capita income and standard of living was accompanied by diminishing productive capacities and hence, ‘de-development’ of OPTs. Settlers, moreover, were central to the institutionalization of a legal system of segregation whereby the military placed the settlers and the Palestinians under different legal systems in the occupied territories, the former under Israeli law while the latter subject to military laws. While the settlements were administered like any other town in Israel, the Palestinians were not included into the Israeli polity as citizens (Gordon, 2008, Farsakh, 2006).

This division of space is embodied in the outcome of the Oslo Agreements which ‘subcontracted’ responsibilities of Israel as an occupier to the international community, while at the same time institutionalized Israeli security concerns as a governing principle for political, legal and economic activity. In what Gordon calls the ‘separation principle’, Israel sought to re-organize power by preserving control of Palestinian space while transferring responsibility of its citizens to Palestinians themselves as well as the international community. However, Israel continued to monitor and administer ‘moving’ inhabitants through imposition of closures, checkpoints and blockades, construction of the separation barrier and fortification of outposts and settlements. Labor flows were also regulated by the military according to security considerations through permit systems and eventually, practically ended the employment of Gaza workers in the Israeli economy (Gordon, 2008 Farsakh, 2006). This eventually facilitated greater integration between the West Bank and Israel and separation between Gaza and Israel. This institutionalization of security concerns through shifting modes of control from use of violence and rule of law, to use of bureaucratic modes of control, finally to policies of separation eventually destroyed the economy of OPTs including their education, welfare and health-care systems.

While the Intifada is used as a pretext, Falah contends that the articulation of Israeli occupation through spatial re-organization is aimed at ‘enclavization’ and spatial dismemberment of OPTs for the greater goal of territorial aggrandizement. The geopolitical vision of Eretz Israel underlines the tactic of ‘spatial buffering’ whereby Palestinian inhabitants are ‘cleansed’ from areas contiguous to borders of OPTs. The Separation Wall is the most visible symbol of control and expropriation of Palestinian space while abrogating direct control of its population. The Wall has facilitated the sundering of enclaved spaces from other areas and this territorial non-contiguity has not only weakened the population politically, economically and socially, but has also ruined any effective fabric of sovereignty. (Falah, 2005, Pallister-Wilkins, 2011)

Therefore, this part of the essay asserts that Israel’s administrative regime institutionalized its ideological vision through shifting modes of establishing and extending spatial control in order to ‘naturalize’ its own territorial component. The eventual ‘bantustinization’ of OPTs was constructed to create a structure conducive to their economic and spatial domination while dismembering any plausible threat to Israeli ‘geography of imagination’. (Falah, 2005, Pallister-Wilkins, 2011)

Socioeconomic Trends:

The opening up of the Israeli capital to global orientation defined by privatization of state and quasi-state enterprises, relaxation of government control of capital markets and increased foreign investment was looked upon as the undermining of the social democratic thrust of Labor Zionism. However, Hanieh argues that the Israeli leadership was never antagonistic to private capital. Instead this capital was directed to Ashkenazim business groups that eventually coalesced into five large state and quasi-state conglomerates due to the absence of a strong indigenous capitalist class. However, the economic crisis of 1970s and 1980s compelled the National Unity Government comprising of both Labor and Likud factions to introduce economic reforms that transferred control of key economic sectors to the emergent capitalist class. As a result, Israeli economy progressed from low-tech to high-tech export-oriented economy and provided a cost-efficient environment to multinational corporations like Microsoft, IBM, Motorola etc. for establishing local branches for production and research. This internationalization of Israeli capital marked to a large extent an ideological shift in Israeli politics and necessitated the ‘cantonization’ rather than transfer of OPTs. (Hanieh, 2003)

The demagogic nature of Israel’s approach towards the Arab-Israeli conflictis most significantly exemplary of the influence of transnational forces and the internal dynamics they created . In the 1970s and 1980s Israel was boosted by aid from the United States and in a position to reject any resolution of the Palestinian-Israeli conflict owing to its military strength demonstrated in the 1967 and 1973 wars. As a result, U.S. aid, which had previously been in the form of unilateral capital transfers from American Jewry, was replaced by sequentially increasing economic and military assistance from the government. So much so that by the 1980s, economic support loans to Israel were were replaced by economic and military grants and no restrictions were placed on the expenditure of these funds. This strategy was predicated on building Israel’s military capacity in order to integrate Israel as a U.S. strategic asset and combating Soviet influence in the Middle East. Moreover, the persistence of the conflict allowed the U.S. to maintain its presence in the Middle East while mediating between Israel and Arab states but more often than not, supporting Israel’s positions. (Beinin, 1998)

However, in case of the Oslo Accords or the 1993 Declaration of Principles, Yitzhak Rabin reversed his long-standing refusal to negotiate with the PLO because of the ‘peace and privatization’ vision espoused by his government’s Ashkenazim supporters who were opposed to the costs connected with the occupation. Instead of Zionism’s ideological and institutional impediments, they favored neoliberal economic policies, export and profit oriented economy, privatization of public sector enterprises and integration with European markets and hence, wanted the conflict to be resolved. Thus, the peace process was not motivated by the goals of equality and social justice, but rather by the interests of the Ashkenazi Israeli business elite. No matter what the outcome of negotiations, the Declaration of Principles aimed to create an open economy with free movement of goods between Israel and OPTs which would consolidate Israel’s position as the dominant economy of the Middle East. For example, the expansion of the electronics and metals sectors would augment the Israel’s military supremacy in the region. (Hanieh, Beinin)

However, Beinin argues Religio-Nationalist factions, shifting allegiance from Labor to Likud, espoused a biblical right to sustain military force over Palestinian Arabs in order to secure the legitimacy of Jewish claim to Eretz Israel and would therefore, in no way be deterred by the costs of occupation. But this too was underlined by the support base of the Likud, the Mizrahim, who formed the working class and inhabited bulk of settlements in OPTs. While Labor Zionism always advocated exclusion of Palestinians, the 1967 war transformed them into a reserve of cheap labor, elevating the Mizrahim from the lowest strata of the labor markets, who were then opposed to evacuation of OPTs. (Beinin, 1998)

The solution envisaged was ending direct military rule and ‘cantonizing’ OPTs under self-rule governed by a system of control based on permits and closures, and creating isolated enclaves surrounded by settlements and separation barriers. (Hanieh, 2003). It is contended that this ‘cantonization’ was advocated by the politically weakened Labor Party that demagogically raised the issue of ‘separation’ in light of costs of indefinite occupation, without addressing the Palestinian’s right to self-determination. This move was intended to appeal to the Jews who were opposed to repression of the Intifada but were also against withdrawal from WBGS on nationalistic grounds.
However, Pallister-Wilkins cites that construction of the Wall as a tool of separation is in fact illustrative of a trend towards neoliberal forms of domination, both within Israel and transnationally. She contends that the neither the ‘need for a barrier’ nor the route of the Wall are results of top-down government planning, but rather a product of influence of interests of multiplicity of organizations like real-estate developers, settler lobbies, environmental activists, Jewish religious organizations, political and human rights groups etc. that ‘operate independently, in spite of or in accordance with state policies’ (Pallister-Wilkins, 2011). Algazi cites the example of ‘Green Park’, a settler housing development that is being built on the land confiscated in the village of Bil’in due to the construction of the Wall, by Leviev and Boymelgreen’s Danya Cebus company which is a subsidiary of Africa Israel. Such settlements, like in the case of the Modi’in Illit bloc, are intended for those ‘struggling to subsist’ by providing them housing and social services not affordable in Israel. (Pallister-Wilkins, 2011, Algazi, 2006).

Algazi contends that Modi’in Illit is a site of high-tech capitalist modernization of Israel where subsidized land, wages and public resources attract corporations that are functions of privatization and represent transnational interests. A prime example of this is Israel’s largest software company, Matrix, that describes itself as the ‘first Zionist local offshore outsourcing’, an alternative to relocate offshore in order to compete with low-paid computer programmers in India. The company’s operation is sustained by the state by the provision of confiscated land in the Modi’in Illit settlement bloc, and it employs ultra-orthodox women’s labor under exploitative working conditions and low remuneration. Algazi contends that these women are victims of colonial capitalism that are incorporated into the settlement process and subsequent employment by exploiting their poverty. Thus, capitalist interests have also coalesced as a result of the Wall, to produce certain social, political, economic and spatial realities in the occupied territories. (Pallister-Wilkins, 2011, Algazi, 2006).

However, if unilateral disengagement from Gaza is considered, it can be argued that only an ideological shift within Revisionism, the ideology of Likud and secular Israeli right, could have caused the abandonment of ideological commitment to Jewish control of Erezt Israel. Following the Intifada that severely tarnished Israel’s international image and claim to legitimacy, moderate Revisionists were of the opinion that territorial maximization including control of historically Jewish territories captured in 1967, was undermining Israel’s desired Jewish and democratic character. (Rynhold and Waxman, 2008) Instead Falah contends that Israel’s disengagement from Gaza must not be understood as partitioning. Instead, by retaining control over its sea and air space and its borders, Israel retains total control of both sides of the Green Line while discarding Gaza, a negligible piece of real estate devouring Israel’s military and financial resources in favor of creating conditions for annexation of more than half of West Bank. (Falah, 2005)

Rynhold and Waxman maintain that given the marginal Jewish settlers in Gaza, the amelioration of demographic threat to Jewish nationalism was an important factor in the decision to withdrawal from Gaza and parts of West Bank. Moreover, when the Road Map for peace was sponsored by the ‘Quartet’, the U.S., the EU, Russian and the UN, appeared to reach a ‘diplomatic deadlock’. Sharon adopted a policy of Israeli initiative by disengaging from Gaza in order to maintain U.S. support for its hardline policies against the Palestinians and avoid erosion of support amongst its patrons and diaspora Jewry, and evade domestic pressures, particularly following the international outcry to the West Bank Separation Wall. Thus, ideological change was a prerequisite because it radically altered the way the Likud conceptualized Israel’s national interest. (Rynhold and Waxman, 2008). Therefore, the disengagement from Gaza is illustrative of a myriad of socio-economic factors ranging from international pressures, economic considerations and demographic challenges that alter Israeli administrative tendencies and determine the course of Palestinian realities.


This essay demonstrates that transnational socio-economic factors characterized by a network of influences from that of international pressure to necessities of global capital have undermined Zionist ideological considerations driven by their ‘imagined geography’ of control over all of historically Jewish land including those occupied in 1967, and the overlapping policies of the ‘dovish’ left and ‘hawkish’ right over the course of Israel’s economic revolution are symbolic of this. While Israel’s administrative regime in OPTs is defined by their ‘cantonization’ aimed at spatial expansion and control, this ‘cantonization’ is not so much a function of the territorial integrity of Eretz Israel as it of neoliberal capital interests that have coalesced around these territories and constructed new structures of domination, nationally and transnationally. Therefore, while ideological tendencies have always been a necessary condition for the course of Israel’s policies, they fall short of being sufficient conditions because Israel’s administration is steered, to a large extent, by its opening to global capital and the economic imperatives this necessitates.


  • Algazi, Gadi, “Offshore Zionism”, New Left Review 40 (2006)
  • Beinin, Joel, “Political Economy and Public Culture in a State of Constant Conflict: 50 Years of Jewish Statehood” in Jewish Social Studies 4:3 (Spring – Summer, 1998), pp. 96-141.
  • Falah, Ghazi-Walid, “The Geopolitics of ‘Enclavization’ and the Demise of a Two-State Solution to the Israel-Palestinian Conflict”, Third World Quarterly 26:8 (2005)
  • Farsakh, Leila, “The Political Economy of Israeli Occupation: What is Colonial about it?”
  • Gordon, Neve, “From Colonization to Separation: Exploring the Structure of Israel’s Occupation”, Third World Quarterly 29:1 (2008)
  • Gregory, Derek, “The Colonial Present” (Oxford: Blackwell Publishing Ltd, 2004)
  • Hanieh, Adam, “From State-Led Growth to Globalization: The Evolution of Israeli Capitalism” in Journal of Palestine Studies 32:4 (Summer, 2003), pp. 5-21.
  • Massad, Joseph, “The Post-Colonial Colony: Time, Space and Bodies in Palestine/Israel” in The Pre-Occupation of Postcolonial Studies edited by Fawzia Afzal-Khan and Kalpana Seshadiri-Crooks, Durham and LOndon: Duke University Press, 2000
  • Pallister-Wilkins, Polly, “The Separation Wall: A Symbol of Power and a Site of Resistance?”, Antipode 43:5 (2011)
  • Rynhold, Jonathan and Waxman, Dov, ” Ideological Change and Israel’s Disengagement from Gaza”, Political Science Quarterly 123:1 (2008)

Kanchi Gupta is an economics and politics graduate from University of Bath, UK. She is currently pursuing postgraduate studies in International Studies and Diplomacy from SOAS, London. Her interests include political research, freelance travel writing and amateur poetry.


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