The need to keep large numbers of IDF reservists on active duty—and thus out of the workforce—and the evacuation of tens of thousands of citizens from the northern and southwestern parts of the country have taken an economic toll on Israel. So too has a decline in foreign investment. Ezra Gardner examines the latest figures:

Even as growth equity begins to recover globally, Israeli venture-capital investments peaked at $29 billion in 2021 but then dropped significantly to $17 billion in 2022 and to $7.3 billion in 2023, and are currently (in 2024) on a $5 billion run. . . . . Israel reported zero initial public offerings in 2024, a decline of 100 percent, indicating that while other regions are recovering, Israel is not.

Beneath the surface, troubling trends from the largest foreign investors tell an even more alarming tale. In 2021, Japanese investment in the Israeli tech sector surged to roughly $3 billion. SoftBank Group Corp., a Japanese multinational holding company headquartered in Tokyo, Japan, engaged in a significant number of deals in Israel, with twelve in 2021, four in 2022, and three in 2023. Since October 7, SoftBank has suspended deals in Israel but has closed nine deals in the U.S., Europe, and Canada. Similarly, Koch Investments, based in Wichita, Kansas, has refrained entirely from engaging in deals within Israel since October 7, mirroring the Japanese trend.

Gardner warns of an “impending crash,” but believes it is not inevitable:

Addressing this issue requires concerted efforts from policymakers, investors, and the tech ecosystem to reinvigorate the nation’s investment appeal. Without swift and strategic action, Israel risks falling further behind in the competitive global market, jeopardizing its position as a leading innovation hub.

While I’ve seen much speculation—some reasonable and well informed, some quite the opposite—about why Jerusalem chose Friday morning to begin its campaign against Iran, the most obvious explanation seems to be the most convincing. First, 60 days had passed since President Trump warned that Tehran had 60 days to reach an agreement with the U.S. over its nuclear program. Second, Israeli intelligence was convinced that Iran was too close to developing nuclear weapons to delay military action any longer. Edward Luttwak explains why Israel was wise to attack:

Iran was adding more and more centrifuges in increasingly vast facilities at enormous expense, which made no sense at all if the aim was to generate energy. . . . It might be hoped that Israel’s own nuclear weapons could deter an Iranian nuclear attack against its own territory. But a nuclear Iran would dominate the entire Middle East, including Egypt, Jordan, the United Arab Emirates, and Bahrain, with which Israel has full diplomatic relations, as well as Saudi Arabia with which Israel hopes to have full relations in the near future.

Luttwak also considers the military feats the IDF and Mossad have accomplished in the past few days:

To reach all [its] targets, Israel had to deal with the range-payload problem that its air force first overcame in 1967, when it destroyed the air forces of three Arab states in a single day. . . . This time, too, impossible solutions were found for the range problem, including the use of 65-year-old airliners converted into tankers (Boeing is years later in delivering its own). To be able to use its short-range F-16s, Israel developed the “Rampage” air-launched missile, which flies upward on a ballistic trajectory, gaining range by gliding down to the target. That should make accuracy impossible—but once again, Israeli developers overcame the odds.