Israel raises record $5bn in bond sales to US investors as Gaza genocide strains economy

The Cradle, June 7, 2025 — 

Israel has spent some $67bn to carpet bomb Gaza and slaughter tens of thousands of Palestinians.

Israel has raised a record $5 billion through Israel Bonds, a US-based broker-dealer, to help finance its ongoing war on Palestinians in Gaza, marking a surge in foreign support for the country’s economy despite mounting concerns over domestic fiscal sustainability.

Bloomberg reported on 7 June that the figure, more than double what Israel Bonds typically raises in similar timeframes, reflects a wave of investment from US state and local governments as well as individual and institutional buyers.

“Oct. 7 changed everything,” said Dani Naveh, CEO of Israel Bonds, referring to the 2023 Hamas-led attack on Israeli settlements and military bases to break the 17-year siege on Gaza. “This $5 billion isn’t just capital, it is a global vote of confidence in the Israeli economy,” he claimed.

Since the start of the war, Israel has spent some $67 billion to destroy Gaza and slaughter some 110,000 Palestinians, an estimated 80 percent civilians. US taxpayers provided Israel with nearly $18 billion in military aid during the first year of the war alone, according to the Costs of War Project at Brown University.

Israel’s war-related spending has ballooned, leading to a record government borrowing of nearly $76 billion last year. While most of Israel’s debt is raised in the local bond market, international placements and Israel Bonds play a vital supplementary role. US states such as New York, Texas, Ohio, and Florida, particularly Palm Beach County, its largest single investor at $700 million, are among the most prominent backers.

But even as capital flows in, experts have warned about the war’s long-term economic toll. Karnit Flug, a former Governor of the Bank of Israel and a senior fellow at the Israel Democracy Institute, stated this week that increased war spending threatens to collapse essential public services, including hospitals, schools, and public transportation.

Speaking ahead of the Eli Hurvitz Conference on Economy and Society, Flug cautioned that the current path is unsustainable. “Without changes in the government’s course of budget policy and without internalizing the potential snowball effect of sanctions and restrictions, Israel will find itself on a very risky path,” she said.

As taxes rise and public services deteriorate, she warned that the burden is falling disproportionately on high-productivity, tax-paying Israelis—many of whom are the most mobile and capable of leaving the country. Flug urged the government to reassess its budget priorities and reduce dependence on wartime borrowing, citing Israel’s heavy reliance on human capital and infrastructure for future growth.