Prime Minister Benjamin Netanyahu has admitted that Israel is facing deepening economic isolation as the war in Gaza drags on, warning that the country may soon need to adopt a more self-reliant economic model.
Speaking at a Finance Ministry conference in Jerusalem on Monday, Netanyahu said Israel could be forced to develop “autarkic characteristics” if arms deals and trade agreements continue to collapse.
“Israel is in a form of isolation. We will increasingly need to adapt to an economy where we produce what we require at home,” Netanyahu said, adding that if foreign defense industries shut their doors, Israel must expand domestic manufacturing capacity.
While stressing his preference for free markets, the prime minister suggested that shifting political winds in Europe—driven by mass Muslim migration—were fueling hostility toward Israel and contributing to canceled defense contracts.
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Opposition leader Yair Lapid swiftly condemned Netanyahu’s remarks, calling them evidence of a failed foreign and economic strategy.
“Isolation is not fate, it is the result of Netanyahu’s misguided policies,” Lapid argued. “He is driving Israel into the status of a third-world economy while refusing to change course.”
The warning comes as Israel confronts rising diplomatic tensions, weakening trade ties, and mounting global criticism of its military campaign in Gaza.