Bound by Blood: How Three Curses Tie America to Israel’s Gaza War: Part II

Part I revealed the structure of the "three curses" formed in 1979—fear of Arab defection, linchpin of Iran encirclement, and nuclear power deterrence—that continue to bind the United States to supporting Israel. However, the "curses" alone cannot explain everything. There is another reason the U.S. continues its support: enormous economic benefits. Part II elucidates the "blood dividend" Israel brings to the United States from two perspectives. Chapter 5 analyses strategic value, and Chapter 6 analyses economic value as a Living Laboratory. Gaza is an experimental site generating tens of billions of dollars annually.

Part II: Blood Dividend—The “True Benefits” Israel Brings to the United States

Chapter 5: Deepening Curses and End of Cold War—Establishment as Proxy Force (1980-1991)

5.1 Lebanon Invasion and U.S. Powerlessness—Manifestation of Strategic Dependence

On June 6, 1982, the Israeli military launched a full-scale invasion of Lebanon under the name “Operation Peace for Galilee.” The ostensible purpose was to halt PLO (Palestine Liberation Organisation) rocket attacks from southern Lebanon. However, the actual operational objectives were far more ambitious. Defence Minister Ariel Sharon aimed to besiege Beirut to completely annihilate the PLO and establish a pro-Israel regime in Lebanon.

This invasion posed a serious dilemma for the United States. The Reagan administration recognised that Israel’s invasion violated international law and significantly worsened America’s position in the Middle East. President Reagan and Secretary of State Shultz applied diplomatic pressure on Israel to withdraw. However, Israel effectively ignored U.S. requests. The invasion continued for three months, and during the siege of Beirut, indiscriminate shelling was conducted, resulting in an estimated 18,000 civilian casualties. From September 16 to 18, the Sabra and Shatila refugee camp massacre by pro-Israel militias occurred, with an estimated 800 to 3,500 Palestinian refugees killed. International condemnation erupted.

Nevertheless, the United States did not halt military aid to Israel. Instead, military assistance for fiscal year 1982 increased by $300 million from the previous year, reaching $1.7 billion. Reagan delivered a speech on September 1 calling for Israel to withdraw, but took no concrete sanctions whatsoever. Behind this contradictory response lay the structural dependence established after the 1979 Iranian Revolution. While the United States could criticise Israel’s actions, it had become unable to constrain them substantively.

This powerlessness taught Israel an important lesson: “The U.S. may criticise, but ultimately continues its support. We effectively have freedom of action.” This recognition would come to define Israel’s subsequent behaviour.

Table 5-1: U.S. Military and Economic Aid to Israel in the 1980s (millions of dollars)

5.2 Intelligence Cooperation and Technology Transfer—Building the “Invisible Alliance”

Throughout the 1980s, U.S.-Israeli relations evolved beyond a simple aid donor-recipient relationship into a “strategic partnership.” At its core were intelligence cooperation and bidirectional military technology transfer.

Israel’s intelligence agency Mossad provided information through networks spread throughout the Middle East that the CIA had difficulty obtaining. Particularly during the Iran-Iraq War from 1980 to 1988, Israel provided valuable information on both countries’ military movements, chemical weapons use, and Iran’s secret nuclear development program. Ironically, Israel was also secretly supplying weapons to post-revolutionary Iran (as part of the Iran-Contra affair) and sharing information obtained through that process with the United States.

On June 7, 1981, the Israeli Air Force’s bombing of Iraq’s Osirak reactor in “Operation Opera” was a symbolic case of this “invisible alliance.” The United States officially condemned the attack and voted in favour of UN Security Council Resolution 487 condemning Israel. However, behind the scenes, sighs of relief were heard within the Reagan administration. Preventing Iraq’s nuclear armament was also a U.S. strategic interest, but the U.S. itself could not execute such an action diplomatically. Israel became an entity that performed the “dirty work” the U.S. could not openly do. The F-16 fighters used in the attack were American-made, and the United States also provided the aerial refuelling technology necessary for the operation. While ostensibly condemning it, the U.S. had substantively enabled the operation.

Technology transfer also became bidirectional. The United States provided Israel with blueprints and manufacturing technology for cutting-edge weapons, which Israel then independently improved. Israeli-modified versions of the F-16 fighter showed performance surpassing the U.S. original in electronic warfare systems and armaments, and that technology was reverse-imported to the United States. The U.S. military adopted Unmanned Aerial Vehicle (UAV) technology developed by Israel in the late 1980s, and would play a decisive role in the subsequent Gulf War and Iraq War.

Table 5-2: Major U.S.-Israel Military Technology Cooperation Projects (1980s)

5.3 First Intifada and “Iron Fist” Policy—Conflict Between Human Rights and Strategy

On December 9, 1987, a traffic accident in Jabalia, the Gaza Strip, sparked a large-scale popular uprising. This uprising, called “Intifada” (Arabic for “shake off”), rapidly spread throughout the West Bank and Gaza. Images of stone-throwing children and Israeli soldiers responding with live ammunition were broadcast on televisions worldwide.

Defence Minister Yitzhak Rabin declared an “Iron Fist” policy. Tactics of breaking protesters’ bones to immobilise them, nighttime curfews, collective punishment through house demolitions, mass arrests—the Israeli military’s response crossed the boundaries of international human rights law. During the four years from December 1987 to 1991, Palestinian deaths reached 1,162, of which 237 were children under 18. The injured numbered about 120,000, and arrests also reached about 120,000.

In the U.S. Congress, voices criticising Israel’s human rights violations grew. In 1988, some members of the House Foreign Affairs Committee proposed freezing part of the aid. Human rights organisations presented evidence that U.S.-made tear gas and live ammunition were being used against Palestinian civilians and demanded an arms embargo. However, neither the Reagan administration nor its successor, the George H.W. Bush (Bush Sr.) administration, implemented aid reductions. Rather, from 1987 to 1989, aid amounts were maintained at the $3 billion annual level.

The State Department repeatedly stated in regular press conferences that it “urged Israel to show restraint,” but actual pressure was limited. The U.S. government’s response was completely double-standard. If other countries committed similar human rights violations, the U.S. would impose aid reductions or sanctions. However, for Israel, criticism remained verbal. Behind this double standard lay the structure of strategic dependence established after 1979. Israel was “irreplaceable,” and the U.S. had become unable to constrain its actions substantively.

Table 5-3: First Intifada Statistics (December 1987-September 1993)

5.4 Gulf War and “Strategic Patience”—Establishment of New Role Division

On August 2, 1990, Iraqi President Saddam Hussein invaded Kuwait. The United States organised a multinational force of 37 countries to prepare military operations against Iraq. However, here the U.S. made an unprecedented request to Israel: “Do not participate in the war.”

The reason was apparent. If Israel joined the multinational force, Arab countries (particularly Egypt, Syria, and Saudi Arabia) might leave the coalition. For Arab countries, fighting alongside Israel was politically unacceptable. To maintain Arab support, the United States demanded “strategic patience” from Israel.

On January 17, 1991, the Gulf War began. Saddam attempted to transform the war from a “U.S.-led invasion” into an “Arab versus Israel” framework by attacking Israel with Scud missiles. From January 18 to February 25, 39 Scud missiles struck Israel. Residential areas in Tel Aviv and Haifa were directly hit, causing civilian casualties. Within Israel, voices demanding retaliatory attacks grew. The military immediately prepared counterattack operations, and fighter aircraft were placed on standby for takeoff.

However, Prime Minister Yitzhak Shamir refrained from a counterattack, following strong U.S. requests. President Bush personally pleaded with Shamir by phone, promising “the U.S. guarantees Israel’s security.” The United States emergency-airlifted Patriot missile interception systems and deployed U.S. military units to Israel to support missile defence. This was the historic moment when U.S. forces directly took operational action for Israeli defence for the first time.

As compensation for this “strategic patience,” the United States promised Israel three “gifts.” First, emergency deployment and operational support of Patriot missile defence systems. Second, $10 billion in post-war housing loan guarantees (to support acceptance of massive Jewish immigration from the Soviet Union). And third, assurance of Israel’s advantageous position in the post-war Middle East peace process.

Table 5-4: Timeline of Major Events 1980-1991

By 1991, through victory in the Gulf War, the United States reigned as “the sole superpower of the post-Cold War era.” However, in the Middle East, strategic dependence on Israel had not changed. Instead, through the Gulf War, a new precedent was established of U.S. forces directly engaging in Israeli defence. Throughout the 1980s, the “three curses” deepened further, and America’s freedom of action became increasingly constrained.

Chapter 6: Living Laboratory—Immense Wealth Generated from Battlefields

Israel is not merely an ally of the United States. It is a “Living Laboratory.” Cutting-edge weapons are tested in actual combat, their effects are precisely measured, and the data obtained generates competitiveness for the U.S. defence industry. At the centre of this laboratory is the Gaza Strip. The “world’s largest open-air prison”, where 1.5 million people are blockaded, provides an ideal environment for military technology experimentation, and the “Combat Proven” brand born from it generates tens of billions of dollars in value annually.

6.1 Gaza—Construction of a Perfect Experimental Environment

In August 2005, Prime Minister Ariel Sharon made a decision that surprised the international community: complete withdrawal from Gaza. Twenty-one Israeli settlements were dismantled, and approximately 8,000 settlers were forcibly evacuated. The international community welcomed this as a “historic concession.” However, the true meaning of this withdrawal became clear over the following 18 months.

In January 2006, when the Islamic resistance organisation Hamas won the Palestinian Authority elections, Israel and the United States immediately imposed economic sanctions. In June of that year, when Israeli soldier Gilad Shalit was abducted, the Rafah border was closed and material imports were severely restricted. In June 2007, when Hamas forcibly seized complete control of Gaza, Israel imposed a full sea, air, and land blockade. In September of that year, the Israeli government designated Gaza as a “hostile territory” and restricted electricity supply to 8 hours or less per day.

Table 6-1: Phased Intensification of Gaza Blockade (2005-2007)

Through this blockade, Gaza became the “world’s largest open-air prison.” 1.5 million residents were completely cut off from outside contact, and UN reports indicated that “80% of Gaza residents depend on international food aid.” Unemployment reached 45%, and the economy completely collapsed. However, this situation created ideal conditions from a military technology experimentation perspective. A completely isolated, densely populated area, restricted resident movement, difficult external monitoring—all of these constituted a perfect “laboratory” for precisely measuring the effects of new weapons.

6.2 Conducting Experiments—Large-Scale Operations and New Weapon Testing

On December 27, 2008, Israel launched “Operation Cast Lead.” During the 22-day operation, large quantities of cutting-edge precision-guided weapons were deployed. GBU-39 Small Diameter Bombs, JDAM precision-guided bombs, white phosphorus munitions, and DIME (Dense Inert Metal Explosive), whose international use was questioned, were used. DIME is an experimental weapon that scatters fine tungsten powder during an explosion and has the effect of severing human bodies. Numerous casualties with limbs abnormally severed were brought to Gaza hospitals, and doctors testified to “injuries never seen before.”

The 22-day operation results showed overwhelming asymmetry. Palestinian deaths reached 1,387. Meanwhile, Israeli deaths were 13, recording a death ratio of 107 to 1.

The UN’s Goldstone Report concluded that Israel’s operations “raised suspicions of war crimes and crimes against humanity.” However, the United States voted against adopting the report at the UN Human Rights Council.

In the November 2012 “Pillar of Defence” operation, 167 people died over 8 days, recording a death ratio of 28 to 1. In the July-August 2014 “Protective Edge” operation, 2,251 people were killed over 51 days.

Table 6-2: Comparison of Major Military Operations (2008-2014)

6.3 Immense Wealth Generated by “Combat Proven”

The actual combat data obtained from the Gaza experimental site brought immeasurable value to the U.S. defence industry. The most prominent success story is the Iron Dome missile defence system. The actual combat interception rate of 90% against rocket attacks from Gaza amazed military authorities worldwide. With this “Combat Proven” track record, Iron Dome was exported to the United States, South Korea, Azerbaijan, Romania, and other countries, with total exports estimated to exceed $50 billion.

Israeli actual combat data for the F-35 fighter became the best advertisement for Lockheed Martin. Israel was the first country in the world to deploy the F-35 in actual combat, and its performance data had a decisive influence on other countries’ purchase decisions. AI target identification systems, autonomous drone technology, and urban warfare systems—all of these were tested in actual combat in Gaza and acquired the premium of “Combat Proven” rather than “catalogue specifications.”

Other countries’ arms manufacturers can only provide theoretical values and test site data. However, Israeli-made weapons come with actual combat data in densely populated areas, effectiveness measurements in environments mixed with civilians, and operational track records under long-term blockade. This difference creates a decisive competitive advantage in the international arms market and justifies premium pricing. The U.S. defence industry—Lockheed Martin, Boeing, Raytheon—shares this actual combat data to accelerate technological innovation and improve the performance and sales of its own products.

The essence of the Living Laboratory is the precise measurement of weapon effects in densely populated areas. Even civilian casualty data is applied to solving the technical problem of “improving prediction accuracy of collateral damage” in next-generation weapon development. Gaza’s suffering is thus converted into a database for military technology.

6.4 Economic Circulation Structure

The United States provides $3.8 billion in annual military aid to Israel. However, this aid money is merely part of a perfect investment cycle. 60% to 70% of Israel’s high-tech companies and defence industries are under U.S. capital control. Giant investment funds like BlackRock, Vanguard, and State Street reign as major shareholders, with a structure established whereby Israeli corporate profits ultimately flow back to U.S. shareholders.

The estimated return on investment (ROI) is 150% to 200%. The annual total value is estimated at $65 billion to $130 billion, or more. This circulation structure functions as follows: First, the U.S. provides $3.8 billion in aid. Second, Israel purchases U.S.-made weapons with these funds. Third, purchased weapons are tested in actual combat in Gaza. Fourth, “Combat Proven” data is acquired. Fifth, weapons utilising that data are exported worldwide at high prices. Sixth, export profits flow back to U.S. shareholders through Israeli companies.

In this structure, the $3.8 billion aid is not an “expenditure” but an “investment.” Taxes are not simply spent but flow back with added value. The Living Laboratory situation created by the Gaza blockade and military operations functions as the most important “value-added generation device” in this investment circulation. Israeli company stock prices, dividend increases, and technology transfers—all of these are ultimately returned to U.S. investors as profits.

Table 6-3: Economic Circulation Structure

6.5 “Investment Recovery” Through 52 UN Vetoes

During the 52 years from 1972 to 2024, the United States exercised its veto 52 times on Israel-related resolutions at the UN Security Council. Since the 1979 Camp David Accords, this frequency has increased markedly. Particularly noteworthy is the opposition to the resolution concerning the 2009 Goldstone Report.

The United States clearly rejected adoption of a report that the UN Human Rights Council concluded showed “suspicions of war crimes and crimes against humanity.” Behind this rejection exists a cold cost-benefit analysis. It is a judgment that the economic and military benefits obtained by continuing to bear this burden for Israel outweigh the cost of receiving international “historical condemnation.”

The 52 vetoes serve as “investment by-products” of the $3.8 billion in annual aid.

Table 6-4: U.S. Vetoes at UN Security Council (Israel-related, major cases)

6.6 “American Taxes Return with Added Value”—Perfect Investment Circulation

Annual aid of $3.8 billion generates a value of $65 billion to $130 billion or more. Converted to ROI, this is an astonishing figure of 1,700% to 3,400%. This is the core of the economic motivation for the U.S. to continue bearing the burden.

However, to be precise, the primary actor in this structure is Israel. Gaza blockade, military operations, and construction of the Living Laboratory—these are actions based on Israel’s geopolitical judgments. The United States is in the position of being a beneficiary of the actual combat data and technological innovation resulting from those actions. However, because the by-product profits are so enormous, economic rationality suggests the U.S. does not actively intervene to stop Israeli actions.

The United States did not intentionally create the situation where 1.5 million people in Gaza suffer under blockade. However, the by-products of that situation—value as a Living Laboratory, Combat-Proven data, military technology innovation—can be said to be an indirect motivation for continuing to bear the burden. This is the economic relationship of U.S.-Israeli relations that has continued for 45 years since 1979.