Israel's war with the Palestinians
has cost it nearly $10 billion in additional defense costs. The conflict (the "Second
Intifada") began in 2000, and has hurt economic growth as well. While Israel's
economy has continued to grow, it has done so at about two-thirds the rate of
North American and European countries.
Palestinians have fared far worse, with their economy collapsing, and most of
the population being reduced to poverty. While one in five Israelis is
considered poor, more than two-thirds of Palestinians are. While high tech
sectors of the Israeli economy have done very well, poverty has also increased.
A decade ago, only about ten percent of the population was poor. Thus despite
the continued growth of the Israeli economy, most Israelis are aware that they
are losing momentum.