Israel appears to have pulled off an economic miracle despite nearly three years of war. The technology sector has soared, the markets have set records, and foreign capital has continued to flow in. But the boom is restricted to a narrow corridor of the economy: high-skilled, export-facing, and insulated from sirens. The gap between this miracle and the losses absorbed by ordinary citizens is the cost the war has exacted.

In June, a missile hit a vineyard near Bat Shlomo in the hills of northern Israel. The army had calculated it would fall on open ground, where nothing strategically vital would be lost. Israel’s finite, expensive interceptors were assigned elsewhere. The loss fell almost entirely on the family that farms it. The burned vines, the ruined harvest, years of growth erased by a single crater. The standard damage assessment by the government covered only a fraction of the losses. The grower is paying to test the scorched soil for contamination himself. The cold arithmetic of defense dictated that it was collateral damage worth accepting.

Israel’s economy has run on a version of this logic throughout nearly three years of war, and the parts of the market that were defended held remarkably. Tel Aviv’s benchmark index rose 52% in 2025, nearly tripling the S&P 500’s return. By the investment bank Jefferies’ tally, mergers and acquisitions reached roughly $82 billion, including the two largest foreign acquisitions in the country’s history: Google’s purchase of cybersecurity startup Wiz, and Palo Alto’s acquisition of identity security company CyberArk.

The International Monetary Fund projects economic growth for Israel in 2026 outpacing every G7 economy, all of it achieved through military reserve call-ups, mass displacement, rising security costs, and a war on multiple fronts. Investor confidence on this........

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