Israel Influence: The Good, The Bad & The Ugly

Understanding Israel Global Influence – by Frederic Eger

Israel, a global player with a rich history and cultural heritage, has gained significant influence through its military strength, technological innovation, and strategic diplomacy. Despite facing military opposition from neighboring Arab states, Israel has survived multiple wars and achieved significant diplomatic milestones through peace agreements with Egypt and Jordan in 1979 and 1994. Israel’s high-tech sector has contributed to its economic strength and global partnerships, while its advanced defense industry has made it a key exporter of military technology and intelligence. The Abraham Accords of 2020, brokered by the United States, formalized Israel’s relations with the United Arab Emirates, Bahrain, and Morocco, marking a turning point in regional politics. Israel’s alliance with the United States, spanning military, intelligence, and political domains, has bolstered its international standing and influence in Middle East geopolitics. Its global influence and recognition have expanded, projecting influence from North Africa to the Persian Gulf. Partnerships with Arab states are partly driven by shared concerns over Iran’s regional ambitions, positioning Israel as a crucial actor in the Middle East’s power balance.

The Good.
Despite the shocks from the October 2023 Hamas attack and the ongoing conflict, Israel’s economy has shown remarkable resilience. The OECD projects Israel’s economy to grow above the global average in 2025, maintaining steady growth after a slowdown in 2024. Israel has restored its reputation as a formidable military power, backed by substantial support from the United States and other allies. It has achieved tactical successes against Hamas, Hezbollah, and Iranian proxies, reinforcing its regional deterrence capabilities. The US remains a critical partner, with near-unconditional backing for Israel’s military actions and diplomatic efforts, shaping Israel’s regional and global trajectory.

The Economic Indicators.
Gross Domestic Product (GDP).
Israel’s Gross Domestic Product (GDP) for 2025 is estimated at $531.59 billion, reflecting steady growth from $513.61 billion in 2023 and $525 billion in 2022, according to Trading Economics’ forecast. World Economics estimates Israel’s GDP at $574 billion for 2025, higher than the nominal figure and 17% above official World Bank estimates. This PPP estimate captures Israel’s true economic potential more accurately by accounting for cost of living and price differences. The OECD predicts a 3.4% growth rate in Israel’s economy in 2025, outpacing the global average growth forecast. However, the economy grew modestly by around 0.9% in 2024 due to increased military spending and uncertainty. Overall, Israel’s robust economic standing with steady growth prospects, despite fiscal and geopolitical challenges, is a significant factor in its economic outlook.

Israel Productive Capacities Index (PCI).
Israel’s Productive Capacities Index (PCI) is a tool developed by UNCTAD that measures a country’s ability to produce goods and services. It assesses productive resources, entrepreneurial capabilities, and production linkages across eight categories: human capital, natural capital, energy, transport, ICT, institutions, private sector, and structural change. Israel ranks among the higher-scoring countries on the PCI, indicating its advanced economic structure and technological prowess. Key components of Israel’s productive capacity include highly developed technology and ICT sectors, strong human capital, a robust private sector, and an entrepreneurial ecosystem. However, Israel faces challenges such as high living costs and inequality, infrastructure gaps, and dependence on imported natural resources and energy. To enhance its productive capacities, Israel should focus on targeted investments in infrastructure, particularly transport and affordable housing, policies to reduce living costs and improve social inclusion, and continued support for technological innovation and resource diversification. Addressing infrastructure and resource challenges will be crucial for sustaining and expanding Israel’s productive capacity in the future.

Trade Balance.
Israel’s trade balance, which reflects the value of exports versus imports, provides insights into its integration into global markets and its ability to sustain economic growth. As of February 2025, Israel recorded a trade deficit of approximately $2.52 billion, indicating that it imports more than it exports, which can impact its economic stability and growth. Israel’s trade balance has generally been in deficit since 1959, reaching a record high of $5.18 billion in May 2022. In February 2025, Israel’s exports grew by 3.7% year-on-year to $4.63 billion, driven by increases in agriculture, forestry, fishing, and manufacturing. Import trends decreased by 8.6% year-on-year to $7.15 billion, mainly due to lower purchases of raw materials and investment goods. However, consumer goods imports increased by 11.3%, reflecting domestic demand. Trade accounts for a significant portion of Israel’s GDP, with a trade-to-GDP ratio of 57.53% in 2023. This high ratio indicates substantial integration into global markets, which can enhance economic growth through access to foreign markets and resources. Despite its strong export sector, Israel’s persistent trade deficits can pose challenges for sustaining economic growth. A reliance on imports for essential goods and raw materials may strain foreign exchange reserves and impact economic stability. Opportunities include Israel’s focus on high-tech exports and strategic trade agreements, which can help improve its trade balance and sustain growth. Addressing these deficits through strategic trade policies and enhancing domestic production capabilities will be crucial for Israel’s economic future.

Foreign Direct Investment (FDI).

Israel’s Foreign Direct Investment (FDI) has seen a slight decrease in recent years, with a slight increase of $3.53 billion in December 2024. However, a yearly comparison shows a decline from 2022, partly due to geopolitical instability and internal political challenges. Despite these challenges, Israel’s strong high-tech sector and innovative ecosystem continue to attract foreign investment. Efforts to enhance the investment environment, such as tax reforms and expanding trade agreements, are vital for maintaining and increasing FDI levels.
Israel’s economy remains attractive due to its strong high-tech sector and innovative ecosystem. The normalization of relations with countries like Saudi Arabia is expected to enhance regional partnerships and attract more FDI. Israel’s tech sector, particularly in AI, fintech, and cybersecurity, continues to attract significant investment. The country’s planned tax reforms aim to further boost its attractiveness by simplifying processes for international investors. Geopolitical factors, such as recent conflicts and political instability, have impacted FDI flows, but signs of stabilization and expanding regional partnerships are expected to improve investor confidence. The investment environment, which includes tax reforms and expanding trade agreements, is crucial for maintaining and increasing FDI levels.

Geopolitical Indicators.
Military Power.

Israel’s military power is a significant part of its geopolitical influence, with a defense budget of around $30.5 billion in 2025. The country ranks 15th to 17th globally in military power, with a Power Index score of 0.26. Israel is an undeclared nuclear power, not a signatory to the Treaty on the Non-Proliferation of Nuclear Weapons, adding a strategic deterrence dimension to its military posture. Israel’s active military personnel are approximately 173,000, supported by a large reserve force of 465,000 soldiers. Military manpower constitutes about 4.2% of the total labor force. The Israel Defense Forces (IDF) consist of three main branches: the Israeli Air Force (IAF), Ground Forces, and Navy, all integrated under a unified command structure. Key military capabilities include the highly advanced IAF equipped with modern Western combat aircraft, sophisticated drones, and electronic warfare systems. Israel operates about 595 multi-role warplanes, including 241 fighters and 23 attack aircraft. The Israeli Navy operates around 65 vessels, focusing on offshore security and deterrence in key maritime zones. Defense spending accounts for about 5.3% of Israel’s GDP, contributing to increased national debt levels, which reached over 1.2 trillion shekels (~$336 billion USD) by early 2024.

Social and Development Indicators
Human Development Index (HDI).

Israel’s Human Development Index (HDI) for 2024-2025 is 0.915, indicating a very high human development. This score is attributed to Israel’s advanced healthcare systems, high life expectancy, robust education system, and decent standard of living. However, regional disparities exist, with central and Tel Aviv districts showing higher HDI values compared to northern and southern regions. Challenges to Israel’s HDI include socioeconomic inequalities, regional imbalances, and political-security issues. Policymakers need to address these issues to ensure more equitable development. Future improvements in HDI are expected to come from continued investments in education, technology, infrastructure, and social cohesion. Israel’s HDI ranks among the top tier of global human development, despite ongoing challenges to inclusive growth. However, it faces challenges such as socioeconomic inequality, regional gaps, and security concerns. Policymakers must address these issues to ensure more equitable development.

Infrastructure.
Israel’s advanced infrastructure is vital for sustaining economic growth and global competitiveness. The country boasts an extensive road network, efficient public transportation systems, and international hubs like Ben Gurion Airport. The telecommunications sector is advanced, with a transition from copper to fiber-optic networks enhancing speed and reliability. Israel is also investing in renewable energy sources like solar power to reduce dependence on fossil fuels. As an innovation hub, Israel attracts significant foreign investment in technology and telecommunications, supporting its strong economic performance.

Population Dynamics.
Israel’s population dynamics play a crucial role in boosting labor force productivity and innovation. With a population of 10 million in early 2025, Israel has a relatively young demographic, with a median age of 29.2 years. The high fertility rate contributes to a larger future workforce, while a high concentration of skilled workers in urban areas supports innovation. Israel’s highly educated population is crucial for driving technological advancements and entrepreneurship, enhancing labor force productivity. The country’s tech industry, known as the “Startup Nation,” significantly contributes to economic growth and innovation.

The Bad.
Diplomatic Influence.
Israel’s global diplomatic influence has declined in recent years due to external pressures and internal policy decisions. The weakening of Israel’s Foreign Ministry, budget cuts, and loss of core responsibilities under Prime Minister Benjamin Netanyahu have reduced its effectiveness in shaping foreign policy. Public perception of Israel’s diplomatic corps has also declined domestically, with 2023 survey data showing a sharp drop in Israelis’ confidence in their country’s diplomatic standing and foreign policy performance. Israel continues to face disproportionate criticism and condemnation in international forums, particularly at the United Nations. The conflict in Gaza has intensified scrutiny, leading to high-profile diplomatic setbacks. Key European countries, like Ireland, have taken steps that signal a distancing from Israel, including the recognition of a Palestinian state and the downgrading or closure of Israeli diplomatic missions. Israel faces a unique dilemma in projecting strength and vulnerability, as its efforts to justify military actions are often met with skepticism or condemnation. In conclusion, Israel’s diplomatic influence is currently in decline, marked by weakened institutional capacity, increasing international criticism, and growing isolation in key regions like Europe.

Soft Power.
Israel’s soft power, encompassing cultural influence, education systems, and media presence, plays a significant role in shaping global perceptions. However, recent military conflicts, particularly the Gaza war, have eroded international perceptions of Israel, impacting its Global Soft Power Index ranking. Israel has suffered its steepest drop in the Global Soft Power Index, falling to 33rd place in 2025, its lowest ever. This decline is largely due to its military actions in Gaza and the resulting humanitarian crisis, which have severely damaged its international reputation and goodwill. Despite this, Israeli media and entertainment, such as television shows like “Fauda” and “Tehran,” have gained global popularity, projecting Israeli culture and values. Israel’s universities and research institutions are globally recognized, attracting international students and fostering global partnerships. Expanding cultural initiatives and pursuing peaceful conflict resolution are opportunities for enhancing Israel’s soft power. Israel faces mounting international legal scrutiny, including war crimes investigations by the International Criminal Court and genocide cases at the International Court of Justice, which threaten its diplomatic standing and complicate its global relations. Internally, Israel is weakened by extreme political and social divisions domestically. Regionally, the Middle East remains highly unstable with ongoing conflicts and the proliferation of armed non-state actors, complicating Israel’s security environment.

Israelis Emigration.

Israel is experiencing a 50% increase in emigration in 2024, nearly doubling the decade average of 35,000 per year. This surge is attributed to security concerns, domestic political turmoil, economic challenges, and social tensions. Despite a sharp slowdown in population growth, Israel’s population crossed the 10 million mark in 2024, partly due to immigration and foreign residents. Return and immigration declined, with 32,281 new immigrants arriving in 2024 compared to 47,013 in 2023. Nearly half of those leaving in 2024 were born outside Israel, and about 15% had immigrated within the previous five years. Motivations for leaving include political instability, ongoing war and security threats, economic difficulties, social divisions, and a perceived decline in personal freedoms and opportunities. Approximately 630,000 Israelis currently live abroad, representing about 6% of Israel’s population.

The Ugly.
Corruption Perception.
Israel’s corruption landscape shows mixed performance compared globally, with moderate scores in public sector integrity but noted risks in specific areas:Israel scored 64/100 in Transparency International’s 2024 Corruption Perceptions Index, ranking 30th globally[3][4][5]. This places it above the global average (43) and MENA regional average (39), but below top performers like Denmark (90) and Singapore (84)[4][5]. Israel’s 2024 Corruption Perceptions Index (CPI) scores it 30th out of 180 countries, above both the global average (43) and the Middle East and North Africa (MENA) regional average (39). The country’s score has fluctuated between 59 and 64 over the past decade, showing modest improvement from 59 in 2021 and 62 in 2023. The CPI measures perceived levels of public sector corruption using data from sources like the World Bank and World Economic Forum. Israel is not considered institutionalized, with the judiciary as low-risk for corruption. Moderate risks persist in public services, particularly bribery for utilities and inefficiencies in bureaucracy. High-profile corruption cases highlight ongoing challenges and the need for vigilant oversight and due diligence. In summary, Israel performs better than most countries globally and regionally in perceived public sector integrity.

Fraud & Bribery.
While institutionalized corruption is not widespread, public services (e.g., utilities) show moderate bribery risks[3]. High-profile cases include PM Benjamin Netanyahu’s 2019 indictment over $198,000 in gifts[3]. Israel faces moderate corruption and bribery risks in public services, particularly utilities, with business leaders often paying bribes for access. PM Benjamin Netanyahu has faced multiple corruption charges, including bribery, fraud, and breach of trust. His allegations include accepting expensive gifts worth approximately $198,000 and engaging in corrupt dealings with business interests, media, and government officials. Israel’s overall corruption perception score is moderate, ranking 30th globally with a score of 64. Business operations are generally not heavily hindered by corruption, but public sector integrity varies. Recent arrests of Netanyahu’s aides, Eli Feldstein and Yonatan Urich, and, investigations into electoral bribery further highlight concerns about corruption at high levels of government. While institutionalized corruption is not pervasive, high-profile cases involving prominent political figures like Netanyahu highlight significant bribery and corruption risks within specific sectors and political circles in Israel.

Nepotism & Favoritism.
Though not explicitly quantified, Transparency International Israel warns about weakened oversight mechanisms enabling favoritism risks[4]. The judicial system remains relatively low-risk, but bureaucratic inefficiencies create opportunities[3]. Transparency International Israel has highlighted that Israel’s weakened oversight mechanisms increase the risk of favoritism and nepotism, especially in public institutions and government companies. While the judicial system is considered low-risk, bureaucratic inefficiencies create opportunities for favoritism. Nepotism remains widespread in government companies like the Israel Airports Authority, where a significant proportion of employees have relatives working in the same organization. Despite some improvements, favoritism in hiring and granting tenure to relatives remains a concern, prompting calls for stronger measures to reduce conflicts of interest and nepotistic practices. Nepotism and favoritism undermines organizational integrity and public trust, especially where oversight is weak or bureaucratic inefficiencies prevail.

Discrimination.
Israel’s democratic backsliding concerns (e.g., judicial reforms) are cited as corruption-enabling factors[4][7]. This contrasts with higher-ranked democracies like Germany (75) and Canada (75)[5]. In the MENA region, Israel Outperforms most neighbors (e.g., Iran 23, Egypt 30) but trails UAE (68)[4]. Compared to Western peers:, Israel lags behind the US (65, rank 28) and France (67, rank 25), but leads Chile (score comparable, rank lower)[5][7] The trends are showing that Israel improved its score from 59 (2021) to 64 (2024), though still below 2016’s 64 peak[4][7]. Transparency International emphasizes that Israel’s institutional safeguards require strengthening to match top-tier democracies[4][5].

In 2025, Israel’s hard power and economic resilience are under threat due to military conflicts and humanitarian issues. However, its global standing is characterized by its robust economic framework, geopolitical influence, and social development indicators. Despite challenges like trade deficits and regional disparities, Israel’s strengths in technology, innovation, and strategic alliances make it a significant player. Future prospects for Israel include enhancing domestic production capabilities, expanding cultural initiatives, and addressing regional disparities. By leveraging its strengths and addressing challenges, Israel can continue to enhance its global influence.

Citations:
[1] Israel – Transparency.org https://www.transparency.org/en/countries/israel
[2] Israel Corruption Index – Trading Economics https://tradingeconomics.com/israel/corruption-index
[3] Corruption in Israel – Wikipedia https://en.wikipedia.org/wiki/Corruption_in_Israel
[4] Israel ranks 30th in Global Corruption Index – Ynetnews https://www.ynetnews.com/article/b100owddy1e
[5] Israel improves slightly in corruption survey: https://www.timesofisrael.com/israel-improves-slightly-in-corruption-survey-as-many-nations-get-worst-scores-in-years/
[6] [PDF] The Corruption a Chronic Disease of Humanity: Causes, Effects and … https://bibliotekanauki.pl/articles/19233680.pdf
[7] Israel slips in world corruption index – Globes English: https://en.globes.co.il/en/article-israel-slips-in-world-corruption-index-1001469011
[8] 2021 Corruption Perceptions Index – Transparency.org https://www.transparency.org/en/cpi/2021