Naomi Klein has a piece in the July 2 issue of the Nation that talks about business in Israel:

At a glance, things aren't going well in Israel. So why, in the midst of such volatility, is the Israeli economy booming like it's 1999, with a roaring sotck marke tand growth rates nearing China's? [ . . . ]

In the 1990s, Israel was in the vanguard of the information revolution. After the dot-com bubble burst in 2000, Israel had its worst year since 1953. Then came 9/11, and new profit vistas opened up for any company that claimed it could spot terrorists in crowds, seal borders from attack and extract confiessionsz from closed-mouthed prisoners. Within three years, large parts of Israel's tech economy had been radically repurposed. Put in Friedmanesque terms: Israel went from inventing the networking tools of the "flat world" to selling fences to an apartheid planet.

The key to Israel's supergrowth is not mysterious. Many of the country's young entrepreneurs are using Israel's status as a fortressed state, and its occupation of Gaza and the WEst Bank, as a kind of twenty-four-hour-a-day showroom -- a living example of how toenjoy relative safety amid constant war. Now Israel is exporting that model to the world. [ . . . ]

Israel now sends $1.2 billion in "defense" products to the United States -- up dramatically from $270 million in 1999. In 2006 Israel exported $3.4 billion in defense products -- well over a billion more than it received in US military aid. That makes Israel the fourth-largest arms dealer in the world, overtaking Britain.

Much of this growth has been in the so-called "homeland security" sector: high-tech walls, unmanned drones, biometric IDs, video surveillance, air passenger profiling systems, the training of border guards and interrogators. Before 9/11 "homeland security" barely existed as an industry. By the end of this year, Israeli exports in the sector will reach $1.2 billion -- an increase of 20 percent. Israel has turned endless war into a brand asset, pitching its uprooting and occupation of the Palestinian people as a half-century head start in the "global war on terror." [ . . . ]

Since Israel began its policy of sealing off the occupied territories, human rights activists have often compared Gaza and the West Bank to open-air prisons. But in researching the explosion of Israel's homeland security sector, a topic I explore in greaer detail in a forthcoming book (The Shock Doctrine: The Rise of Disaster Capitalism), it strikes me that they are something else too: laboratories where the terrifying tools of our security states are being field-tested. Palestinians are no longer just targets -- they are guinea pigs.

This argues that Israel has a powerful economic disincentive for doing anything that might reduce or resolve its conflict with the Palestinians and its other designated enemies, as if political and psychological factors weren't intractable enough. Normally, such a conflict should be bad for business, but it looks like Israel has turned the tables. Key no doubt is to keep Israeli and American "wars on terror" in sync -- easy enough as long as the neocons, who follow Israel's worst instincts without showing the slightest hint of competency, are in power. I've long worried about the US becoming Israel writ large. With Israel all the more unlikely to change course, the US is all the more in peril.

One also worries about Israel's non-US exports. To the extent that Israeli technology facilitates the crushing dominance of haves over have-nots, it will tempt elites everywhere to fend challenges off with force rather than reason, leading to much damage on both sides. It seems to me that we are on the cusp of a momentous point from which we either recognize the need for forging a more evenly shared cooperative community or watch perpetual conflict between increasingly desperate rich and poor as we slide toward Hobbesian hell. In that event, Israel is well positioned to arm the rich, largely because that's what they've been doing for 60 years now. This development just locks them in even deeper.