Wars bring economic wealth. Reading the series of articles appearing in many media outlets highlighting how the Israeli economy has been doing increasingly well since the campaign to invade and destroy Palestine began, it seems that for many, the tragedy of war translates into economic and financial gains. It is certainly not news that there are those who get rich from wars, but now there is an additional element: start-ups.
One such article, published a few days ago in an Italian financial newspaper, had a headline highlighting how the Israeli stock market has been steadily rising over the last two years, i.e. since the invasion of Gaza began, and how start-ups are growing – according to the headline – ‘despite the war’. And this is where the mistake lies: start-ups based in Israel are not growing despite the war, they are growing precisely because there is a war.
The much-vaunted model of the so-called ‘start-up nation’, a name with which the Israeli state has proclaimed itself, is in reality a huge mistake, not because it is not true that there are start-ups, but because the most important piece of information is missing: the start-ups that are created in the Israeli state are, for the most part (with very few exceptions), start-ups that develop technologies, products and services related to war. We can call them technologies for defence, security, cybersecurity, intelligence, dual-use, but in most cases they are things made for waging war. It goes without saying, therefore, that if you create start-ups that develop things for waging war, they will grow not despite war, but precisely because there is war, precisely thanks to war. War is their market, their business. Start-ups created in the State of Israel need war in order to grow and thus to keep their investors happy.
Investors who now need to start becoming increasingly aware that this is the case, that if their return on investment in these start-ups is going well, it is because there is a war going on and therefore their profits derive from the disaster that has been unfolding in the Palestinian territories for two years., a tragedy that has killed more than 65,000 people to date, including 20,000 children, and injured more than 165,000, making it the worst massacre in history in terms of civilian casualties, including 1,600 health workers and 250 journalists. Targeting journalists means that you are afraid of the truth.
Therefore, the start-ups founded in the State of Israel that are growing today owe their growth to the horror of war and their Investors must decide what role to play. They can choose to turn a blind eye and reap the rewards of their investments, or they can decide to suspend operations involving start-ups involved in contributing to the war effort. They can also decide to put pressure on the entrepreneurs they have invested in to ensure that their choices and actions do not contribute to atrocities., but they must take a clear stance, knowing that if they do nothing, they risk becoming active and inexcusable accomplices to what is happening in Palestine.
Unfortunately, the situation is unlikely to improve. The new arms race is seeing growth in the military industry worldwide, including in Europe, and will also have structural consequences for the world of start-ups and innovation. Increasing amounts of money are being invested and will continue to be invested in supporting innovation that has military applications. Venture capital funds dedicated to so-called defence tech are multiplying both in number and in terms of investment capacity, and the concept of dual-use, i.e. technologies that can have both civil and military value and utility, is increasingly present, even if it sometimes takes the form of a ‘quick fix’ rather than a genuine strategic choice.
Let’s be clear: the world is heading towards a period of conflict, and although this is a path that would be better avoided for many reasons, as explained here, it is a fact of life and we cannot ignore the need to be prepared for any possible, albeit undesirable, scenario. But here, the rule of the troublemaker applies: those who start wars are guilty, those who create the conditions for horror are guilty, and those who invest in countries and companies, and in start-ups, in countries that foment war are equally complicit and guilty. This is somewhat different from those who invest in defence-tech companies that are located in countries that do not want war but need to equip themselves so as not to succumb to aggressors. It is a subtle difference, but it is a difference that should also make us reflect on the appropriateness of speculative investments in technologies, companies and start-ups that have to do with war, even when it comes to innovation. Here, it is not like space tech, which was once the preserve of governments and international governmental organisations and has now become a field of development for private companies. In space, no one shoots, and hopefully no one ever will. The management of defence investments should be subject to constraints, should not be managed through speculative financial instruments, and should be largely at the discretion of national and supranational governments and institutions. Otherwise, what is happening now in Israel will continue, where wealthy investors are getting richer and richer thanks to the bombs and deaths in Gaza, using the increasingly strident and illusory excuse of investing in innovation. (photo by Mohammed Ibrahim on Unsplash)
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