Introduction

The key to corporate survival resides increasingly in a political or even a cultural capacity; the ability to influence future customers and suppliers. ... The form of this emphasis on persuasion, however, is distinctive to the arms sector, where it is bound up with the prospect of war, the security potential of new technologies, and so on. Companies have power because they can present themselves as possessing unique knowledge of these issues. This is particularly prominent in the current flurry of claims and counter-claims concerning the future of war.

(Lovering, 2000: 170)

In Naomi Klein's book The Shock Doctrine (2007), she writes: "The fact that Israel continues to enjoy booming prosperity, even as it wages war against its neighbors and escalates the brutality in the occupied territories, demonstrates just how perilous it is to build an economy based on the premise of continual war and deepening disasters" ... "clearly, Israeli industry no longer has reason to fear war" (Klein, 2007b:428, 440). These claims are both fascinating and unsatisfying. They raise the questions: Who profits from war? And for whom is the war economy perilous?

In Israel's Occupation (2008), Neve Gordon developed the idea that the privatization ideology has been implemented in the occupation of the Palestinian Territory, conceptualizing Israel's reliance on the Palestinian Authority (PA) for policing and maintaining the occupation as a form of outsourcing. It was no coincidence that Gordon proceeded from researching the implementation of privatization in the occupation to the study of Israel's arms industry (Gordon, 2009). And yet he did not discuss the connection between the two. The Israeli attack on the Gaza Strip in the winter of 2008/09 is a good example of this nexus. The PA played an important role in enforcing order in the West Bank and allowing the Israeli military to move its troops into Gaza (Human Rights Council, 2009:335–45). Following the attack, the Israeli military held a trade fair in which the technologies used in the attack were showcased and offered for sale (INN TV, 2009). Furthermore, this invasion brought to the fore the role of private economic interests in forming Israel's security policies. In the years that followed the attack, a debate stirred inside Israel about the privatization of security, as evidenced in books by Yael Berda (2012), Yagil Levy (2012) and Erella Shadmi (2012a); in the film The Lab by Yotam Feldman (2013); and in a series of reports by the Van Leer Institute (Paz-Fuchs & Leshem, 2012; Paz-Fuchs & Ben-Simkhon-Peleg, 2013, 2014; Havkin, 2014). The political economy tools proposed in The Global Political Economy of Israel by Jonathan Nitzan and Shimshon Bichler (2002) are a way to measure who has profited from the privatization of security, who has lost, and how much.

Although Israeli institutions deny the very existence of privatization of security, the inconsistency of this denial is revealed in the "core vs. periphery" discourse which decision-makers adopt. This narrative justifies the privatization by distinguishing between aspects worthy of privatization and those which are not, a distinction between "core and periphery," in which only peripheral functions of the security institutions may be privatized. However, empirical evidence shows that outsourcing started in 1994 of Israel's core security activity: the occupation of the West Bank and Gaza.

1.1 THE QUESTIONS

This book examines the apparent contradiction between, on the one hand, the very strong emphasis on security politics in Israel as a major tool in the hands of the government for the promotion of policy, with, on the other hand, the tendency of the government in recent years to privatize security – and thereby deprive itself of this tool. Existing theories of Israeli militarism have not yet grappled with this phenomenon. The empirical evidence shows that the process of privatization accelerated simultaneously in almost all of Israel's security institutions: the military, the police and the arms industry. Such privatization was considered taboo in Israel's early years, but the resistance to the privatization has weakened in a series of stages.

The main question that I hope to answer in this book is what are the main reasons for privatization of security in Israel beginning in 1994? This question can be broken down into three smaller questions: (1) How allocation of Israeli public resources to security contributes to privatization, and what kinds of privatization were promoted by this resource allocation? (2) How did Israeli military and security policies affect the distribution of responsibilities between the state and the private sector in the application of force? (3) How have international developments in privatization of security (especially in the US) affected Israel's security privatization policy, and how does the private security and military sector in Israel fit into the global market?

Mainstream as well as critical currents among Israeli political science scholars reject the idea that privatization of security in Israel is possible, and very few scholars have acknowledged this trend. Faced with evidence of privatization taking place, three causal hypotheses have emerged to explain it. The first, relying on official statements of government bodies, is that public security institutions fail to address the requirements of the Israeli government, which is then forced to turn to the private sector instead (see for example State Comptroller, 2010:13–38). An alternative hypothesis emerges from critical scholars that privatization of security contributes to the profits of Private Military and Security Companies (PMSCs), and is driven through corruption and lack of public oversight over government decisions (see for example Paz-Fuchs, 2011:62–6). A third alternative hypothesis is that privatization of security is promoted to absolve state institutions of responsibility to human-rights violations committed by security bodies (see for example Gordon, 2002:321–37).

I wish to argue that a political economy perspective in the framework of the Differential Accumulation Theory (DAT) as developed by Nitzan and Bichler, as well as Securitization theory, can offer a different explanation. (1) Allocation of public funds and regular troops to Israel's security missions has become a heavy economic and political burden, and privatization through sale, outsourcing and privatization by default (see below), in line with neoliberal beliefs and practices, shifts the burden to the private sector while weakening the tie between citizenship and military service in Israel. (2) The Israeli occupation of the Palestinian Territory contributed to securitization in Israel and to an accumulation of...