Inside Israel’s War Machine: How Gaza and Regional Campaigns Are Funded

Nisaba Media, (Amman, Jordan): Despite ranking as the second-largest economy in the Middle East after Saudi Arabia, Israel’s capacity to sustain a genocidal war against Palestinians for nearly three years raises critical questions about its economic and military infrastructure.

This financial resilience has also allowed Israel to conduct operations on other fronts, including Lebanon, Syria, the West Bank, Yemen, and Iran.

With a GDP of roughly $540 billion last year, slightly higher than the UAE, Israel’s economy has long been militarized.

Wars have historically fueled its growth, often through territorial expansion, appropriation of neighboring resources, and foreign aid. The ongoing conflict in Gaza offers a clear view of the financial and logistical networks sustaining Israel’s military campaigns.

Analysts identify five main funding channels: U.S. military aid, arms exports, gas revenues, international loans, and donations through global Jewish and Zionist networks.

1. U.S. Military Support

American military aid is Israel’s primary lifeline in Gaza and the West Bank. As of October 2023, nearly 600 active U.S. Foreign Military Sales agreements valued at $23.8 billion were in place, facilitating rapid weapons transfers. Following the outbreak of hostilities, Washington provided over $22 billion in military assistance, including precision-guided munitions, Hellfire missiles, Iron Dome interceptors, bunker-busting bombs, artillery, armored vehicles, and Apache helicopters.

Congress approved an additional $20 billion package in 2024, including F-15 jets, tank shells, mortars, and advanced munitions.

While some high-yield bombs were temporarily withheld due to civilian casualty concerns, aid continues under long-term agreements, guaranteeing Israel a qualitative military edge.

Annual U.S. support of $3.8 billion extends through 2028, including joint funding for missile defense systems like Iron Dome, David’s Sling, and Arrow. NATO allies, particularly Germany, also contribute, although many European and Asian nations have suspended or limited arms sales due to humanitarian concerns.

2. Arms Export Revenue

Israeli defense industries serve both domestic and export markets. Arms sales fund ongoing military operations by strengthening the state’s fiscal base and enabling continuous weapons production.

In 2024, Israel’s arms exports reached a record $14.8 billion, with missiles, shells, and air-defense systems accounting for nearly half.

Europe remains the largest market, followed by Asia-Pacific and Abraham Accords states (UAE, Bahrain, Morocco), reflecting both commercial growth and the strategic dimensions of normalization agreements.

These deals often include technology transfer, joint production, and long-term cooperation on drones, air-defense systems, and reconnaissance satellites.

3. International Loans and Bond Issuance

Israel supplements its military financing with international loans and bond sales.

The cumulative cost of Gaza and other fronts from October 2023 to early 2025 is estimated at $66 billion, with U.S. aid covering roughly half.

Israel has issued billions in domestic and international bonds, benefiting from U.S. loan guarantees and favorable borrowing terms.

The government has also redirected budget allocations, increased deficit spending, and adjusted taxes to cover remaining costs.

Defense expenditure rose to $46.5 billion in 2024, or 8.8% of GDP, the largest annual increase since 1967.

4. Donations via Global Jewish and Zionist Organizations

The fourth key funding stream comes from private donations.

Since October 2023, federations and organizations in North America and worldwide have raised over $1 billion for Israel, supporting everything from military aid and settlements to humanitarian campaigns aimed at Palestinians.

Groups like Keren Hayesod, FIDF, and the One Israel Fund have significantly increased contributions, which also facilitate programs supporting settlers and families of soldiers.