Stolen Ground: Land Rent, Gaza's Gas, and Why Ordinary Israelis Are Being Played into Supporting Genocide
There is an economic argument about the Israel-Palestine conflict that seldom gets made. Not because the evidence for it is weak. Because the evidence for it is uncomfortable for nearly everyone involved: for the Israeli right, for the liberal Western donors funding the conflict, for the Palestinian leadership, and for the Western left that prefers its analysis simple and its villains easy to identify.
The argument is this. The engine driving the
dispossession of Palestinians, the rise of the Israeli far right, and the
conditions that produced the Gaza genocide is not, at its root, religious or
ethnic or even purely ideological. It is economic. Specifically, it is the
economics of land rent: who captures the value that communities and public
investment create, who gets locked out of it, and what desperate people do when
the ground beneath them has been turned into an asset class they can never
afford.
This is not a comfortable argument for anyone. But it is, I think, the correct one. And understanding it matters, because without it the conflict looks like a clash of eternal hatreds that no policy can address. With it, it looks like something far more familiar: a system in which the mechanisms of land and resource extraction are making ordinary people desperate, and that desperation is being harvested by the ruthless and the ideologically extreme.
Let us start with the numbers.
The Housing Crisis Nobody Talks
About When They Talk About Israel
Israel has one of the worst housing affordability
crises in the developed world. This is not a fringe claim. It is documented by
the IMF, the Bank of Israel, Tel Aviv University’s Alrov Institute, and
Israel’s own Central Bureau of Statistics.
The average price of an apartment in Israel as of
early 2024 was 1.974 million shekels, against an average monthly salary of
12,492 shekels. That means the average Israeli needs 158 monthly salaries,
roughly thirteen years of total income, to buy a home. In Tel Aviv, the situation
is considerably worse. In Israel’s financial hub, it would take the average
household thirteen years to buy a home even if every single penny of their
income went toward nothing else.
House prices rose 118 percent in nominal terms, or
82 percent in real terms, between 2006 and 2017 alone. After a brief pause,
prices rose a further 20.3 percent in 2022, while salaries rose by a modest 4
percent. Housing prices have been rising at 8 to 12 percent annually in many
desirable locations, while wages have grown at roughly 3 to 4 percent. The gap
between the two creates what one analyst describes as a mathematical
impossibility: even high-earning professionals in technology, medicine, and law
cannot accumulate sufficient capital for property purchases through savings
alone.
For young, first-time buyers, the current market
presents an almost insurmountable challenge. A large and growing proportion of
Israeli households cannot afford homes in central cities like Tel Aviv and
Jerusalem and are being forced toward peripheral areas. The combination of
rising prices and high interest rates creates a situation that researchers at
Tel Aviv University describe as simply untenable for new households trying to
enter the market.
The result is a generation of Israelis who work,
pay taxes, serve in the military, and cannot afford to live in their own
country’s cities. That is a political fact as much as an economic one.
Desperate people, locked out of the formal housing market in Israel proper,
look for solutions. And the Israeli settler movement, for decades, has been
offering one.
The Settlement as the Housing
Solution Nobody Admits
The Israeli settlement enterprise in the West Bank
is usually discussed in purely political or religious terms. It is the project
of messianic nationalists. It is the fulfilment of a biblical mandate. It is
the strategic goal of people like Bezalel Smotrich and Itamar Ben-Gvir, who
between them represent the most extreme elements of the current Israeli
government.
All of that is true. But it is not the whole
picture.
Settlements also offer something that Israel’s
urban housing market does not: cheap land. Land in the West Bank is not cheap
because it has no value. It is cheap because it has been taken from
Palestinians, often by force or through legal frameworks that would not pass
scrutiny under international law. The settler gets the land, the house, the
government subsidy, and the military protection, all at a fraction of the cost
of comparable housing inside the Green Line. For a young Israeli family who
cannot afford a flat in Tel Aviv or Jerusalem, the settlement is a rational
economic choice, wrapped in the language of national destiny.
Smotrich is a second-generation West Bank settler
who has been methodically pursuing an agenda to officially eliminate any
prospect of a Palestinian state in the West Bank and Gaza. He has the backing,
in the current coalition, to do it. He has described a major settlement
expansion east of Jerusalem as “Zionism at its best” and said it “buries the
idea of a Palestinian state.”
But Smotrich did not emerge from nowhere. He
emerged from an Israeli society in which the promise of affordable housing
within internationally recognised borders has been comprehensively broken, and
in which the only party offering ordinary families a path to home ownership is
the one pointing toward Palestinian land. The land hunger driving the settler
movement is not only ideological. It is material. It is the land hunger of a
population being squeezed out of its own housing market by dynamics it has not
been given the tools to understand.
This is a textbook Georgist dynamic. When land
within the legal economy becomes unaffordable because its value is being
captured by investors and speculators rather than distributed to the community
that created it, the people locked out do not simply accept their fate. They
find other land. In Israel’s case, that means Palestinian land.
Where the Money Is Coming From
To understand why Israeli land prices have risen so
far above what working Israelis can afford, you need to follow the capital
flows. And those flows run, in significant measure, from the United States and
Europe.
Even during Israel’s ongoing war in Gaza, foreign
interest in Israeli properties has surged. Real estate brokers have reported a
noticeable influx of buyers from abroad, particularly from the United States
and France.
Billion-shekel purchases by overseas buyers are
fuelling criticism that much of Jerusalem’s new housing is beyond the reach of
local residents, even as officials say rising antisemitism worldwide is driving
demand from Jews abroad. One Brooklyn-based company acquired 200 luxury
apartments under construction near Jerusalem’s Mahane Yehuda market in a deal
valued at up to 1 billion shekels, or around 270 million US dollars, marketed
to the Syrian Jewish community overseas.
The investment is not limited to individual
diaspora buyers. Israel attracts 11.8 billion dollars in foreign real estate
investment annually. The combination of domestic uncertainty in America and
Israeli opportunity is creating what some analysts describe as the most
significant wealth transfer in the history of Jewish diaspora-Israel relations.
Government bonds flow in the same direction. Israel
Bonds, formally the Development Corporation for Israel, has become an important
source of government financing by courting US state treasuries and
municipalities. Ohio alone purchased 35 million dollars of Israeli bonds in a
single year, with one deal approved in under forty minutes.
This capital does not arrive in Israel and
disappear. It flows into the land market, pushing prices higher. It flows into
construction of luxury apartments marketed to overseas buyers rather than
affordable housing for Israeli workers. It inflates the asset values of those
who already own property while making purchase impossible for those who do not.
The diaspora investor, often buying a pied-Ã -terre or a second home they visit
a few times a year, is competing in the same market as the young Israeli couple
trying to build a life. The investor has capital built up over decades in the
American economy. The Israeli couple has a salary of 12,000 shekels a month and
a government that has watched the land component of apartment prices rise from
140,000 shekels to 550,000 shekels per unit in less than a decade.
The Israel Land Authority, which controls the
release of state-owned land, saw its revenues rise by almost 700 percent in
less than a decade, reaching 41 billion shekels in 2022. Its protocols suggest
this budget was passed without proper oversight. The state is exploiting its
monopolistic power over land to generate enormous revenue at the expense of
citizens, mostly from the productive sectors who serve in the military and pay
high taxes, while those revenues are barely returned to the public in the form
of new affordable housing.
There is your mechanism. Publicly owned land is
being released into the market at prices that generate maximum revenue for the
state rather than maximum housing for its citizens. Foreign capital is flowing
in to compete for what gets built, pushing prices beyond the reach of ordinary
Israelis. The community creates the value, the landowners and the state capture
it, and the people who need homes are told the solution is across the border,
on land that belongs to someone else.
The Gas Under the Sea
While Israelis are being priced out of their own
housing market and directed toward Palestinian land as the solution, there is
another resource question that runs through the Gaza conflict and gets even
less honest discussion than the housing crisis.
In 2000, natural gas reserves were discovered in
the waters off the Gaza coast. The Gaza Marine field, estimated to contain 1.1
trillion cubic feet of natural gas, far exceeds the energy needs of both the
Gaza Strip and the West Bank. Under the Oslo Accords, maritime zones near Gaza
are under partial Palestinian control. The gas field was licensed to British
Gas by the Palestinian Authority. Its development would have provided a
foundation for Palestinian economic self-sufficiency.
It has never been developed. For over two decades,
Israeli obstruction of Gaza Marine has been a constant feature since its
discovery in 2000, as part of a policy to keep pressure on the Palestinians.
Israel insisted on purchasing the gas at below-market prices, demanding around
2 dollars per cubic foot against a market price of 5 to 7 dollars. The biggest
resource in Palestine was being held up by the Israelis.
Then Israel made its own major offshore
discoveries. The Leviathan field, discovered in 2010 off Haifa, contains an
estimated 22 trillion cubic feet of gas and is the largest natural gas
reservoir in the Mediterranean. It supplies the Israeli gas market as well as
Jordan and Egypt. Once Israel had its own gas, its interest in allowing
Palestinians access to theirs diminished further.
The situation since October 2023 has made this
worse. During Israel’s genocidal war on Gaza, Israel’s Ministry of Energy
awarded twelve new natural gas concessions in zones that, according to
international law, fall within Palestinian maritime borders, to six local and
foreign companies including the Italian firm Eni, Britain’s BP, and Dana
Petroleum. Israeli authorities exercise full and effective control over Palestine’s
maritime areas, denying Gaza access to resources in its own waters.
To be precise about what the evidence does and does
not show: most serious analysts do not argue that the war was launched in order
to seize these gas reserves. The Gaza Marine field is modest compared to
Israel’s own Leviathan and Tamar fields, and it strains credibility to suggest
military action on the scale of the Gaza offensive was motivated primarily by a
resource of that size. The causal relationship between gas and genocide is
contested, and intellectual honesty requires acknowledging that complexity.
What the evidence does show, clearly and without
ambiguity, is this: Palestinian natural gas resources have been systematically
blocked from development for over two decades, costing the Palestinian people
billions in lost revenue. Those same resources are now being carved up through
Israeli licensing while the territory’s population is under military
bombardment. Whether that is cause or consequence or opportunistic extraction
in the fog of war, it represents a pattern in which Palestinian resource wealth
is consistently denied to Palestinians and made available to others. That is
not a conspiracy theory. It is what the documents show.
Netanyahu, Ben-Gvir, Smotrich,
and the Political Economy of Desperation
None of this happens in a political vacuum. The
Israeli far right did not emerge fully formed from religious texts. It emerged
from a specific set of economic and social conditions, and understanding those
conditions matters for understanding what is driving the conflict.
In the November 2022 elections, Ben-Gvir and
Smotrich joined forces and gained an impressive 14 seats in the Knesset. Over
600,000 Israelis voted for them, with 2 out of 10 soldiers supporting the
Religious Zionism Party. These are not, in the main, people who woke up one
morning with an abstract desire to dispossess Palestinians. Many of them are
people locked out of the Israeli housing market, squeezed by a cost-of-living
crisis that has been building for fifteen years, and attracted to a political
movement that offers them land, community, and a sense of national purpose, on
the other side of an internationally recognised border.
The social protests of 2011, when thousands of
Israelis set up tent camps over worsening housing affordability, showed that
the housing crisis was capable of generating mass political mobilisation. What
it did not generate, at that point, was a political analysis that correctly
identified the mechanism. The protests produced demands for cheaper housing
without a theory of why housing had become so expensive. That analytical gap
was filled, in the years that followed, not by the left with a coherent
land-value analysis but by the right with a territorial one. The settler
movement told young Israelis: the land you cannot afford is being given to your
enemies. Come and take it.
This is a recruitment pitch grounded in economic
reality, weaponised for ethnic displacement. The housing crisis did not cause
the settlement movement, which predates it. But it supplies the settlement
movement with a constituency that rational economic actors who are otherwise
not ideologically extreme can join without feeling they are doing something
obviously wrong. When the legal housing market has failed you and the state is
offering subsidised housing in a different place, the moral distance from the
dispossession of Palestinians narrows to something that feels crossable.
Smotrich understands this. Ben-Gvir understands
this. Netanyahu, whatever his personal convictions, understands the political
arithmetic perfectly well. A coalition that offers economically desperate
Israelis the promise of affordable land requires a supply of land. The West
Bank and Gaza are that supply. The occupation is not separable from the housing
crisis. They are the same problem expressed in different registers.
The Georgist Lens: Why This Is
the Right Framework
Henry George, writing in the 1870s, asked a
question that cuts through virtually every aspect of this conflict: who
captures the value that communities create?
In Israel’s case the answer is unusually visible.
Real estate accounts for 19 percent of Israel’s GDP directly and another 13
percent indirectly. Real estate accounts for not less than 40 percent of the
public’s total wealth. The entire Israeli economy, in other words, is
substantially organised around land. And the value of that land was not created
by its owners. It was created by millions of Israeli workers, by public
investment in infrastructure and services, by immigration that grew the labour
force, and by diaspora capital that flowed into the country over decades. All
of that community-created value has been capitalised into land prices that its
creators cannot afford to access.
The policy implication is the one that Georgist
economics has always pointed to: tax the land value, not the labour that
creates it. A Land Value Tax in Israel, assessed on the unimproved site value
of each piece of land, would break the speculative hold that landowners and
developers have over the housing market. It would make it impossible to sit on
Palestinian-adjacent land waiting for values to rise. It would redirect the
community-created surplus to the community that created it, making housing
affordable without requiring the dispossession of anyone.
There is no serious political movement in Israel
currently advancing this analysis. There is no significant force on the left,
either inside Israel or in the international organisations that claim to care
about peace, that has made Land Value Tax or the socialisation of land rent the
centrepiece of a peace programme. The Oslo peace process, which dominated a
generation of diplomacy, was almost entirely silent on land economics.
That silence has costs. A Palestinian state built
on the right to develop Gaza Marine and the redistribution of land value
through LVT would be economically self-sustaining in a way that a Palestinian
state built on foreign aid and a truncated territory is not. An Israeli economy
that stopped extracting rent from its own citizens through artificially
constrained land supply would produce the affordable housing that currently
pushes young Israelis toward the settler movement. The two things are
connected. They are both instances of the same failure to understand that land
rent is not a private windfall to be pocketed by whoever holds the title. It is
the economic expression of what the community has built. It belongs to the community.
One Land, One People
What if the root cause of the conflict simply
ceased to exist? What if every person living between the Jordan River and the
Mediterranean Sea had a guaranteed home, guaranteed rights, and an equal stake
in a shared future? Could Jews, Muslims and Christians lay down the weight of
history and build something entirely new together? It is one of the most
profound questions in modern politics, and it deserves to be taken seriously.
Most serious analysts agree that the Israeli-Palestinian
conflict is not, at its core, a religious war, though religion has been
weaponised by extremists on all sides. It is fundamentally a conflict over
land, security and belonging. People fight when they feel they have no home, no
rights and no future. Remove those conditions, and you remove the fire’s
oxygen. History offers uncomfortable proof of this. Where communities have
genuine legal equality, shared economic opportunity and security from state
violence, sectarian hatred tends to wither over time, not overnight, but across
generations. The hatred so many people assume is ancient and inevitable is very
often a symptom of injustice rather than its cause.
So consider a single, secular, democratic state
built on genuine equality. One person, one vote, regardless of ethnicity or
faith. One law for all, with no separate legal systems rooted in religion or
nationality, and equal protection and justice for every citizen. Freedom of
worship fully protected, so that Jews pray at the Western Wall, Muslims at Al-Aqsa
and Christians at the Church of the Holy Sepulchre, each tradition respected
and secured. No further seizure of land, with property rights enshrined in a
written constitution and fair mechanisms established to address the historical
dispossession that has poisoned so much of the relationship between these
communities. And alongside all of this, a genuine process of truth and
reconciliation, not to erase the past but to acknowledge it honestly, to allow
wounds to be named, and to make a shared future possible.
Would it work? There are real reasons for hope.
Before the violence of the twentieth century hardened into the situation that
exists today, Jews, Muslims and Christians lived side by side across this land
for centuries, imperfectly and sometimes uneasily, but often peacefully. The
city of Haifa is a modern example that is frequently cited, where Arab and
Jewish citizens share neighbourhoods, hospitals and universities with a degree
of genuine daily coexistence. It demonstrates that living together is not
impossible. South Africa was told that reconciliation was a fantasy. Northern
Ireland was told that peace would never come. Both remain works in progress,
complicated and fragile, but both chose the difficult path rather than the
endless one.
The honest challenges cannot be ignored either.
Generations of trauma, dispossession and violence have left wounds that do not
heal quickly on any side. Trust, once broken so comprehensively, does not
return easily. Extremist minorities, who depend on the conflict to justify
their power and their identity, would resist change with every means available
to them. The deep economic inequality between communities would need urgent and
sustained attention, because political equality without economic opportunity is
a hollow thing. And the international powers that have long benefited,
strategically or commercially, from the region’s division would not step aside
without pressure.
Yet consider what this land and its people could
become without the crushing burden of permanent conflict. The vast resources
currently consumed by walls, weapons, checkpoints and military occupation could
be redirected into schools, hospitals and infrastructure. A shared economy
could draw on the combined strengths of Jewish, Arab and Christian intellectual
and cultural traditions, in a region that was for centuries a crossroads of
civilisation, science and commerce. A society that managed to build genuine
coexistence after everything these communities have endured could become
something remarkable, a demonstration to a watching world that people who have
every reason to hate one another can choose something harder and more
worthwhile instead. Children could grow up in a place where their identity is
shaped by curiosity about their neighbours rather than fear of them.
The conflict does not persist because Jews, Muslims
and Christians are simply incapable of sharing a life. History and basic human
nature suggest otherwise. It persists because of power, fear and the deliberate
machinery of division, forces that are sustained by those who benefit from
keeping people apart. Strip away the land seizures, the apartheid structures,
the unequal laws and the grinding daily repression, and what remains are
people. People who want safety, dignity, a future for their children and a life
lived without fear.
That is not a utopia. It is simply what most human
beings, in most places, are asking for. And it has been achieved before, in
places the world had long given up on. The question is not truly whether it
could happen here. The question is whether enough people, on all sides and
beyond, will ever find the courage to choose it.
What Is Actually Happening and
What Needs to Be Said
The framing that dominates Western discussion of
the conflict presents it as a clash between two peoples with competing
historical claims to the same land, mediated by military force and
international diplomacy. That framing is not false. But it is dangerously
incomplete.
Underneath the political conflict is an economic
one. Palestinian communities are being systematically deprived of land and
life, and of natural resources that international law says are theirs. Israeli
communities, particularly younger and working-class Israelis, are being priced
out of a housing market inflated by diaspora capital and speculative land
hoarding, and directed toward Palestinian land as the only affordable
alternative. The people profiting from both sides of this arrangement are
landowners, developers, financial institutions, and foreign investors whose
capital extracts rent from both populations simultaneously.
The right-wing coalition governing Israel has no
interest in resolving this. Its political survival depends on maintaining the
conditions that create settler demand: housing unaffordability inside the Green
Line and a supply of Palestinian land outside it. Netanyahu’s coalition needs
the settlers, and the settlers need the economic conditions that produce them.
The liberal Western response, organised around
two-state diplomacy and humanitarian aid, has also failed, precisely because it
has never engaged with the economic mechanisms. You cannot build a viable
Palestinian state, or better still, a unified state with true equality, on land
whose value will immediately be captured by whoever controls the surrounding
territory and its gas fields. You cannot de-radicalise Israeli politics without
addressing the housing crisis that makes the settler proposition economically
rational. And you cannot address either of these things without first
understanding and naming the role of land rent.
The rent seekers, in this
conflict, understand very well how their interests are being served. The
question is when the rest of us will.
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