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Israel raises record $5bn in bond sales to US investors as Gaza genocide strains economy

Israel has raised a record $5 billion through Israel Bonds, a US-based broker-dealer, to help finance its ongoing war on Palestinians in Gaza, marking a surge in foreign support for the country’s economy despite mounting concerns over domestic fiscal sustainability.

Since the start of the war, Israel has spent some $67 billion to destroy Gaza and slaughter some 110,000 Palestinians, an estimated 80 percent civilians. US taxpayers provided Israel with nearly $18 billion in military aid during the first year of the war alone, according to the Costs of War Project at Brown University.

Israel’s war-related spending has ballooned, leading to a record government borrowing of nearly $76 billion last year. While most of Israel’s debt is raised in the local bond market, international placements and Israel Bonds play a vital supplementary role. US states such as New York, Texas, Ohio, and Florida, particularly Palm Beach County, its largest single investor at $700 million, are among the most prominent backers.

But even as capital flows in, experts have warned about the war’s long-term economic toll. Karnit Flug, a former Governor of the Bank of Israel and a senior fellow at the Israel Democracy Institute, stated this week that increased war spending threatens to collapse essential public services, including hospitals, schools, and public transportation. Speaking ahead of the Eli Hurvitz Conference on Economy and Society, Flug cautioned that the current path is unsustainable. “Without changes in the government’s course of budget policy and without internalizing the potential snowball effect of sanctions and restrictions, Israel will find itself on a very risky path,” she said.

As taxes rise and public services deteriorate, she warned that the burden is falling disproportionately on high-productivity, tax-paying Israelis—many of whom are the most mobile and capable of leaving the country. Flug urged the government to reassess its budget priorities and reduce dependence on wartime borrowing, citing Israel’s heavy reliance on human capital and infrastructure for future growth.

Netanyahu’s ultra-Orthodox partners move ahead with Knesset dissolution plan

Ultra-Orthodox (Haredim) Israeli parties in Benjamin Netanyahu’s coalition said on 6 June that they are moving forward with an effort to dissolve the Knesset over the government’s failure to pass a law exempting members of the Haredi community from military service.

On Thursday, Israel’s Attorney General Gali Baharav-Miara announced that the army will issue over 50,000 conscription orders to ultra-Orthodox students next month, further fueling outrage across the Haredi community. The attorney general said the matter of drafting ultra-Orthodox into the army “is not progressing sufficiently, as the army urgently needs new recruits, which requires imposing personal sanctions on draft evaders,” according to Israel’s Broadcasting Corporation (KAN).

Ultra-Orthodox Israeli Jews of military age have been able to avoid compulsory enlistment into the army for decades by enrolling in yeshivas (religious schools) and obtaining repeated one-year service deferrals until they reach the age of military exemption. Since the war in Gaza began, a manpower crisis plaguing the army has compelled the government to move forward with drafting the ultra-Orthodox into military service – to the chagrin of the far-right, religious parties in the prime minister’s ruling coalition.