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Israel faces a growing threat of international economic warfare that could cripple the Jewish state, but it has the means to fight back.
By Jonathan Pollard
The Democratic takeover of both houses of Congress has raised the stakes for Israel dramatically. With Washington entering a period of divided government, the possibility of severe economic sanctions against the Jewish state can no longer be dismissed as a distant threat.
The political discourse surrounding this danger has degenerated into a mixture of technological naivety and strategic paralysis.
Suggestions at the prime-ministerial level that cryptocurrency can somehow circumvent a global economic blockade ignore the realities of digital asset tracking, financial transparency, and liquidity constraints.
Meanwhile, the Bank of Israel’s counsel to do everything politically possible to avert sanctions fails to confront a fundamental question: What happens when the concessions demanded by foreign governments undermine Israel’s core security principles?
Imagine Israel struggling to import fuel, obtain critical industrial components, process international payments, or maintain access to essential technologies. Factories could grind to a halt. Even the military’s ability to sustain prolonged operations could be threatened.
Israel must abandon the assumption that diplomacy alone can prevent every hostile international initiative. The possibility of sweeping sanctions demands serious preparation now, not after the first restrictions take effect.
Rather than relying exclusively on diplomatic concessions, Israel must implement a comprehensive strategy built on resource independence, industrial resilience, financial diversification, and credible economic deterrence.
Israel needs a shield strong enough to withstand economic warfare—and a sword capable of making that warfare costly for those who wage it.
Economic independence means little if Israel remains exposed to military threats along its borders.
Hamas, Hezbollah, and other Iranian-backed terrorist organizations must not be allowed to rebuild the capabilities necessary to threaten Israeli communities. Israel must also confront the networks that finance, arm, and sustain them.
Israel’s security arrangements must reflect its legitimate defense requirements, not merely what foreign governments are prepared to tolerate.
This may include annexing Gaza and large parts of southern Lebanon, along with overseeing the creation of an enlarged Druze homeland. Any territorial or security changes must prevent hostile forces from rebuilding without imposing unsustainable burdens on Israel.
The objective is clear: defensible borders and a regional environment in which Israel’s adversaries cannot repeatedly rebuild the military infrastructure needed to threaten its existence.
Israel’s greatest economic vulnerability is not a shortage of talent, innovation, or technological sophistication.
It is dependence.
A country that relies on foreign suppliers for essential fuel, food, machinery, and financial services can be threatened through those dependencies.
Israel must systematically reduce them.
Energy independence must be the first priority.
Israel’s offshore natural gas reserves provide an enormous strategic advantage that extends far beyond electricity generation.
Through proven gas-to-liquids (GTL) technology, natural gas can be converted into liquid fuels suitable for cars, trucks, and aircraft. This could dramatically reduce Israel’s dependence on imported petroleum and provide a vital safeguard against an international oil embargo.
Developing this capability on a national scale would require substantial investment in processing facilities and supporting infrastructure. But the strategic implications are enormous.
Israel could use its own natural resources to keep transportation networks, industries, and essential national services operating even when foreign oil supplies are severely restricted.
Domestic liquid-fuel production must therefore become a strategic priority, alongside expanded fuel reserves, electricity infrastructure, and the evaluation of small nuclear reactors as a potential long-term energy source.
Food security must become a national security priority.
Israel already possesses remarkable expertise in agriculture, irrigation, water recycling, and food technology.
These capabilities should be expanded through automated farming, protected cultivation, strategic food reserves, and alternative protein production.
Not every emerging technology is practical or economical. But a nation fighting for its survival cannot allow its population’s access to basic food supplies to become a bargaining chip in foreign capitals.
Industrial independence is equally essential.
Modern economies and militaries depend on thousands of specialized components manufactured abroad.
A single unavailable part can disable an expensive machine, delay essential repairs, or interrupt production.
Israel must identify its most critical dependencies and develop the capacity to manufacture, stockpile, repair, or obtain essential components through alternative suppliers.
Advanced 3D printing and domestic engineering can help, although Israel cannot realistically reproduce every complex global manufacturing industry.
The goal is selective strategic independence: ensuring that essential national functions cannot be paralyzed by the loss of a handful of foreign suppliers.
Defending Israel’s economy is only half the equation.
A country that can survive sanctions but cannot impose meaningful costs on those responsible remains vulnerable to repeated coercion.
Israel must therefore develop a credible strategy of economic deterrence. Countries contemplating a campaign to cripple the Jewish state’s economy must understand that economic warfare is a two-way street.
Israel possesses capabilities that governments and industries around the world value, including cybersecurity, agricultural technology, medical innovation, and specialized semiconductor technologies.
These are not merely commercial achievements. Where foreign industries genuinely depend on Israeli expertise, they represent potential instruments of national leverage.
The government must identify precisely where that leverage exists.
Which Israeli technologies would be difficult to replace? Which foreign industries would face serious disruption if Israeli cooperation were withdrawn? Which governments would discover that punishing Israel carries consequences for their own economies?
These questions must be answered before sanctions begin.
Israel should prepare targeted trade restrictions, reciprocal economic measures, and the suspension of selected forms of technological and commercial cooperation against countries participating in efforts to cripple its economy.
The principle must be unmistakable: Governments seeking to exploit Israel’s economic vulnerabilities cannot assume that their own economic interests will remain untouched.
This does not mean Israel should indiscriminately cut off exports or destroy valuable commercial relationships. Such actions could damage Israel more than the countries imposing sanctions.
Nor should Israel exaggerate its economic leverage. Foreign competitors can develop alternatives, and some Israeli technologies may be easier to replace than others.
That is precisely why the government must distinguish between genuine strategic dependencies and imagined ones.
Where Israel possesses meaningful leverage, it must be prepared to use it. Where retaliation would be self-defeating, it must develop other means of resistance.
The objective is not economic revenge for its own sake. It is to change the calculations of governments that believe they can impose crushing economic pressure on Israel without paying a price themselves.
Economic deterrence cannot be improvised through angry declarations after sanctions have already been imposed.
Israel must prepare its response before the assault begins, making clear that economic coercion will not necessarily produce Israeli capitulation.
Israel must prepare for attempts to isolate it from international financial markets.
The government and Bank of Israel should establish contingency plans for disruptions to payment systems, foreign exchange, trade financing, and international banking relationships.
These plans should include adequate reserves, domestic payment continuity, diversified banking relationships, and lawful alternative settlement arrangements with willing trading partners.
Cryptocurrency may have limited applications, but it cannot replace a functioning international financial system.
Israel must also reduce dependence on foreign-controlled technologies essential to its economy and national defense.
Critical software, specialized machinery, patented components, and certain medicines may depend on suppliers or licenses controlled abroad.
Israel must identify these vulnerabilities and develop emergency procurement procedures, domestic alternatives, and legally available licensing mechanisms.
Simply confiscating foreign intellectual property could damage Israel’s innovation sector and invite severe retaliation.
The smarter strategy is to ensure that no foreign government or corporation possesses an effective veto over Israel’s essential national functions.
Economic warfare increasingly depends on digital infrastructure.
Banks, ports, electricity networks, communications systems, and transportation facilities are vulnerable to cyberattacks.
Israel must maintain the ability to defend these systems and impose appropriate consequences on those responsible for hostile operations.
But deterrence requires an understanding of escalation.
Attacking civilian financial systems or essential infrastructure abroad could invite devastating retaliation against Israel’s own interconnected economy.
Iran presents a serious military threat requiring credible Israeli defensive and offensive capabilities. Yet economic sanctions and armed aggression are not interchangeable.
Israel must not allow every economic confrontation to become a potential trigger for catastrophic military escalation.
The sword must be powerful enough to deter aggression, but disciplined enough not to inflict greater damage on Israel than on its adversaries.
Israel has repeatedly demonstrated extraordinary ingenuity when confronted by military emergencies.
But economic resilience cannot be improvised overnight.
Energy infrastructure takes years to develop. Industrial supply chains cannot be reconstructed in weeks. Strategic reserves must be accumulated before shortages begin.
Israel needs a permanent national economic-security framework linking the government, Bank of Israel, defense establishment, manufacturers, and technology industries.
Its mission must be to identify vulnerabilities, test severe sanctions scenarios, build strategic reserves, and prepare concrete contingency plans.
Every critical dependency should be examined through one question:
What happens if access to this product, service, technology, or financial system disappears tomorrow?
If an essential part of Israeli society would cease functioning, that vulnerability must become a national priority.
The cost of preparation will be substantial. The cost of discovering these weaknesses during an international economic assault could be far greater.
Israel can no longer assume that military strength, technological superiority, or diplomatic relationships will protect it from a coordinated international economic assault.
Foreign governments must never be allowed to believe that threatening Israel’s economy will automatically force it to surrender essential security interests.
That requires two complementary capabilities.
The shield is self-reliance: the ability to feed the population, power the economy, maintain essential industries, and sustain national defense under severe international pressure.
The sword is economic deterrence: the ability to impose meaningful costs on those who attempt to cripple Israel through economic coercion.
Neither can succeed without the other.
Self-reliance without deterrence invites repeated pressure. Deterrence without resilience is an empty threat.
Israel’s objective is not economic isolation or reckless confrontation. It is to ensure that no foreign government can dictate the Jewish state’s security policies by threatening its economic survival.
A nation that cannot be strangled cannot easily be coerced. And a nation capable of imposing meaningful costs on those who attack its economy is far less likely to become their victim.
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