Israel's one-center economy is a national security risk – opinion

A brilliant soldier from Haifa meets an outstanding soldier from Beersheba in an elite technology unit in central Israel. During their service, they gain experience, professional networks, and access to future employers and investors.

When they leave the army, where are they most likely to build their start-up?

Usually, the answer is central Israel, where the state has already concentrated much of their professional ecosystem.

This phenomenon is how Israel's geographic inequality reproduces itself.

Israel often speaks about “the periphery.” The term itself reveals a deeper structural problem. Almost every region is defined in relation to one dominant economic center, Greater Tel Aviv, rather than being developed as a center of power in its own right.

Tel Aviv's success is a tremendous national asset. Israel now needs to replicate some of the conditions that made it successful by developing two additional centers of national strength: Haifa in the North and Beersheba in the South.

That has become an economic necessity and a national security imperative.

Precisely because high-tech matters so much, Israel should want its success spread across several regions.

Yet according to Central Bureau of Statistics data, 86% of open software-development positions are concentrated in the Tel Aviv and Central districts.

The distortion begins long before a start-up raises its first dollar.

The state recruits talented young Israelis from Haifa, the Galilee, Beersheba and the South. Many serve in elite intelligence, cyber and technology units in central Israel. There, they acquire knowledge, connections and access to employers, investors and future partners.

When they finish their service, staying in the center is often the rational economic decision.

Then the money follows. Venture-capital funds, law firms, accountants, banks, real-estate developers, restaurants, cultural institutions and housing demand cluster around the same place.

Human capital attracts financial capital. Financial capital attracts services. Those services attract more talent. The cycle keeps strengthening itself.

Government policy has played an important role in creating this reality.

When Greater Tel Aviv becomes congested under the weight of this concentration, the state responds with enormous investments designed to allow even more people to reach it.

These are important infrastructure projects for millions of Israelis. Yet the scale of this investment raises a larger national question: How much of Israel's infrastructure budget should be devoted to moving workers toward the same employment center, and how much should be invested in creating strong employment centers elsewhere?

For residents of the North and South, this matters enormously. Many lack comparable employment opportunities close to home and therefore depend on access to the center.

A healthier national economy would give talented Israelis several strong metropolitan areas in which they could build careers, companies and lives.

Haifa demonstrates the scale of the missed opportunity.

The city already possesses many of the assets required to become a major national growth center: the Technion-Israel Institute of Technology, the University of Haifa, leading medical centers, seaports, an airport, rail connections, strategic infrastructure and advanced defense industries.

The ingredients exist. Critical mass and long-term national policy remain missing.

The housing market offers one sign of the imbalance. Average housing prices in Haifa remain among the lowest of Israel's major cities: approximately NIS 1.89 million for a 3.5- to four-room apartment, compared with nearly NIS 5 million in Tel Aviv. Beersheba is at approximately NIS 1.29 million.

Housing prices are only one measure of urban strength, but they tell us something about demand and opportunity.

People move for quality jobs, professional opportunities, healthcare, personal security, education, culture, leisure, transportation and housing. A successful regional metropolis needs all of them.

That is why another industrial park or isolated infrastructure project will never be enough. Israel needs complete regional ecosystems.

There is already a model for this.

That process is beginning to produce results. Beersheba has developed a significant cyber and technology ecosystem around Ben-Gurion University, the Gav-Yam Negev High-Tech Park and the military's technology presence.

Israel should build on that model and apply the same strategic thinking to Haifa and the North.

First, Israel should continue building on the relocation of IDF technology and intelligence units to the South while ensuring that Haifa and the North receive a comparable strategic boost.

Selected technology units, government development centers and defense-related functions should be located in the northern metropolis as meaningful operations with talent, professional networks and decision-making power.

Second, the government should offer substantial, long-term incentives for multinational companies to establish R&D centers outside Greater Tel Aviv. Those incentives should be tied to real employment, local partnerships and sustained investment.

Third, Israel should build complete regional ecosystems connecting universities, industry, capital, housing, healthcare, education, culture and regional transportation.

Companies need a reason to invest. Employees need a reason to stay. Families need a reason to build their futures there.

The security argument has become impossible to ignore.

Since October 7, entire regions in the North and South have experienced prolonged disruption. Israel has seen firsthand what happens when war shuts down communities, businesses, schools and infrastructure.

Greater Tel Aviv contains an extraordinary concentration of systems whose disruption would immediately become a national problem: Ben-Gurion Airport, the Tel Aviv Stock Exchange, bank headquarters and the Israeli operations of major multinational technology companies.

A country facing persistent military threats, repeated national emergencies and limited geographic depth should reduce its dependence on a single narrow metropolitan area.

Economic decentralization should therefore be viewed as a national resilience strategy.

Haifa should become the economic capital of Israel's northern metropolis, and Beersheba should serve that role for the South. Both cities should function as strategic anchors capable of generating jobs, investment, innovation and opportunity throughout their surrounding regions.

This will require major investment. Continuing the existing model also carries a major cost.

If Israel keeps directing a disproportionate share of economic activity toward the center, Greater Tel Aviv will grow more expensive and congested while the North and South continue losing talent and investment.

Israel can make a different choice.

We should preserve Tel Aviv as one of the country's great economic engines while deliberately building two more. A resilient country should have several places where its brightest people can study, serve, innovate, raise capital and build companies.

Haifa and Beersheba already have much of the foundation. National policy can supply the scale.