Introduction

Many developed states are working to improve their competitive position by creating knowledge industries that would incorporate their national economy into global markets (OECD, 2016; Retter et al., 2022; WIPO, 2023). Unlike traditional industrial development, which requires physical inputs and consumption of national and material resources, knowledge industries depend mostly on the intellectual capabilities of a state and their harnessing to create knowledge (Powell and Snellman, 2004, p. 201).

Secondary to the great powers, that lead global technological development, middle-power states have the greatest potential to develop competitive knowledge industries given their relatively large size, power, and influence (Flemes, 2016). This article focuses on the role of knowledge industries as the amplifier of influence of small and medium-sized (SMS) developed states in world politics, as part of broader discussions on the role of technology in reshaping international relations.

Recent studies point to technology as a defining element for middle powers, with digital middle power status attributed to states according to their technological development and leadership in certain sectors (Pannier, 2023; Siniver and Tsourapas, 2023). However, the concept of middle powers lacks a cohesive definition, especially when considering smaller states like Israel, Singapore, Sweden, or the United Arab Emirates, which have established their economic and political power through technology. This unique group of states challenges the theory of middle powers, which lacks clear analytical classifications for understanding their geopolitical weight and the role technology plays in increasing it (Jeong, 2019; Robertson and Carr, 2023).

Aiming to explain these theoretical challenges, this article examines what SMS states can do to develop competitive knowledge industries that would elevate their status, comparable to middle powers. We draw on Christos Kassimeris’s (2008) perspective who argued that “it is not power per se that these states lack, it is the opportunity to display it" (Kassimeris, 2008, p. 85). This perspective is particularly pertinent because SMS states have narrower margins for strategic errors when it comes to executing technological policies due to the scarcity of resources, and the greater risks associated with foreign trade (Streeten, 1993). Despite their technological development and established economic base, developed SMS states face strategic constraints and risks given their limited resources, a small marketplace, and increased dependence on foreign trade, compared to greater powers (St. Bernard, 2004; Bishop, 2012; Baldacchino, 2020, pp. 72–73). This article sets the foundations for a renewed exploration of the theory by providing insights into how these states leverage technology for political influence and their role in global politics.

We focus on Israel’s efforts to increase national intellectual capabilities by tracing the technology policy processes of knowledge industries development in satellite (a subset of the telecommunications and space industries), cybersecurity, and artificial intelligence (AI). We argue that a prevailing perception of existential threat shaped a unique Israeli approach to securitizing civilian knowledge development, according to which science and technology were critical means for the state’s survival. Securitization of those technological fields increased the government’s commitment, responsibility, and intervention in order to preserve critical knowledge by developing them as sustainable knowledge industries. Applying the securitization theory allows for a more nuanced understanding of how technological advancements are framed as critical to national security, thereby justifying exceptional measures and increased government intervention. Exploring those performative aspects of security framing in this article provides a unique perspective on the strategic importance and political implications of knowledge industries, which may not be fully captured by other positivist theories.

Israel’s development path explains how a state can gain remarkable technological achievements despite extreme risk conditions, including regional instability, resource scarcity, and diplomatic inferiority, which impose far greater burdens. Its establishment as a digital middle power under those conditions demonstrates the success of its technological policy and sets an example of how nations can thrive in technological development despite unfavorable conditions (Flemes, 2016; Siniver and Tsourapas, 2023).

Examples from recent years show how technology served Israel’s foreign policy and increased its influence. Since the establishment of diplomatic relations between India and Israel in 1992, the volume of trade between the countries has increased from $200 million to approximately $8.5 billion in 2023 (MoEI, 2017). However, since the visit of India’s PM Narendra Modi to Israel in July 2017, the scope of trade relations between the countries has almost doubled. Modi said Israel’s research infrastructure and high-tech industry contribute to mankind’s benefit, and India views it as “…a technological powerhouse and a country that has braved many odds” (PMIndia, 2017).

Japan is another example of a country that has been actively strengthening its relationship with Israel over the past decade through a variety of collaborations in technology, security, and cyber security (Ningthoujam, 2023). Over a hundred Japanese companies are operating in Israel, and 13% of the foreign investments in Israel in 2023 were Japanese (Israel Export Institution, n.d.). Towards the end of that year, the countries were at an advanced stage of negotiations on an open trade agreement that would enhance the scope and intensity of their relations.

The article is organized as follows: section “Science, technology, and international relations” presents a literature review on science, technology, and international affairs. The next section is the “Theoretical framework”. It applies the Securitization theory and explains its relevance to shaping Israel’s civil security sector. The next section is the “Research design”. Section “Israel's national security guiding principles” addresses Israel’s national security concept and the defining operative principles that have been guiding Israel since its early days. Section “The development of knowledge industries in Israel” is the analysis of specific knowledge industries’ creation that demonstrate the incorporation of national security principles into the government civil development plans. This section is followed by the section “Discussion and conclusions”.

Science, technology, and international relations

The corpus of science, technology, and international relations encapsulates how government policies and the international environment, affect the technological development, innovation capacity, and overall competitiveness of states. Many states today struggle to develop competitiveness in a winner-takes-all market, where big tech companies gain disproportionate profits (Dendrinou, 2023). Quite a lot of them have been developing technology strategies and policies in the past decade to meet international competitive standards in different technological fields (Naveh, 2022; Harold and Kamijima-Tsunoda, 2021). This led to the development of an important strand of literature in comparative studies on technology policy that examines the hardships and gaps between declared technology policy and its actual implementation (e.g., Ten Holter et al., 2021; Rubinfeld and Gal, 2017; Schroeder, 2016).

Another strand of literature in this corpus focuses on the interplay between national technology governance frameworks and their implications for global competition in a variety of technological areas (Roberson et al., 2021; Dafoe, 2018; Jakhu and Pelton, 2017). Although governments do not necessarily take the lead in driving technological growth, scholars of this strand demonstrate that they serve as regulators, in charge of capacity building, as well as supporters, partners, and generators of technology governance, making them indispensable in the development of knowledge industries (Dortmans et al., 2022; Bareis and Katzenbach, 2022; Meltzer, 2022).

Studies of this strand, explain that the domination of China and the United States in critical and emerging technologies development stems from significant government investments in human, digital, and physical infrastructures (Gaida et al., 2023). This enabled the early growth of global tech giants such as Alibaba, Apple, Tencent, and Google, which drive today’s technological innovation and control essential cyberspace infrastructures (Brooks and Wohlforth, 2015; Matania and Sommer, 2023). They become significant not only for their economies but also for fulfilling the national security needs of their countries (Sommer et al., 2023).

However, the discourse on technology and middle powers is lacking in the literature, possibly due to the absence of a stand-alone definition of a middle power. At times, this leads to the identification of states like Canada, Egypt, and Indonesia as middle powers despite their obvious differences. Scholars agree that middle powers represent both strong and emerging economies with significant influence on regional and global politics to varying degrees (Katzenstein, 2005; Öniş and Kutlay, 2017). In regional studies, these states are often attributed to having soft power, influence, and economic strength (Jordaan, 2003). They also exhibit functional and behavioral characteristics (Chapnick, 1999; Carr, 2014) and are perceived through social identity and constructivist lenses (Mares, 1988; Thies and Sari, 2018; Teo, 2022). Therefore, further exploration into the role of technology is an essential component to understanding the influence and potential of middle powers in global politics today.

Theoretical framework

Securitization theory explains how certain issues are framed as threats to national security that require exceptional, and often immediate, measures to address them through social discourse (Cavelty and Mauer, 2009; Buzan and Wæver, 2003; Buzan et al., 1998). Political actors construct security rhetoric, or speech acts, to justify policies or actions critical to their security (Buzan et al., 1998, p. 26). Issues can be considered matters of national security once they are framed and presented as such (Stępka, 2022, pp. 33–61; Watson, 2012). Therefore, security is not simply a predefined objective situation, but rather a performative concept that describes reality and transforms the social construct through speech acts (Balzacq et al., 2016; Watson, 2012). As such, Security is redefined in securitization processes and gets a broader meaning that includes economic, nutritional, health, environmental, personal, community, and political dimensions, beyond the military connotation of the term (Buzan et al., 1998, pp. 71–74; Ullman, 1983).

In addition to the role of the government as the securitizing agent, the collective acceptance of an audience plays a crucial role in establishing the infrastructure and justification for response measures to the securitized issue (Léonard and Kaunert, 2011; Balzacq et al., 2016; Côté, 2016). The audience acceptance enhances social cohesion and a sense of national identity, which shape government policy measures. While the role of external audiences is less clear, they can be seen as capable active agents validating the securitization process, potentially leading to cooperation, alliances, and normative support that enhance national security (Côté, 2016, p. 534, pp. 547–553).

This article draws on the expansive interpretation of securitization construct processes as outlined by various researchers (e.g., Lupovici, 2014; Buzan et al., 1998, p. 30). Matt McDonald (2008, p. 537) explains that the construction of security "…must pay attention to the social, political and historical contexts in which particular discourses of security (even those defined narrowly in terms of the designation and articulation of threat) become possible". Historical narratives, culture, and identity are significant factors to account for when examining security issues construction.

Contradictions in the way states securitize issues often stem from contextual factors, such as different national interests, strategic alliances, threat and norm perceptions, and domestic politics (e.g., Lupovici, 2014). These factors impact state behavior through varying prioritizations and responses to security threats and provide different rationales for undertaking extraordinary measures. By recognizing and responding to new types of threats, states develop strategies that enhance their overall resilience by building and improving national capabilities to manage or mitigate the threat.

Despite these differences, studying specific securitization narratives may offer valuable insights into how a threat perception develops, framed, and managed in different political settings. Therefore, we apply this approach to analyze Israel’s context-specific strategies and practices, which may inspire other states and be adapted to various geopolitical and cultural settings of smaller and middle-sized (SMS) states.

Many studies on securitization in Israel have focused on collective national identity creation and the ramifications of the Israeli-Arab conflict, especially in the Palestinian context, as central explanatory variables that impact the construction of security discourse in Israel (Wertman and Christian, 2023; Levy, 2020; Abulof, 2014; Olesker, 2014; Sheffer and Barak, 2010). Others have emphasized the prominence of traditional security discourse and close relations between the Israeli civil and military sectors (Lupovici, 2014; Barak and Sheffer, 2007; Michael, 2009).

In particular, the impact of military technological units on the civil sector has been used to describe the quality of Israel’s technology-intensive defense industry (Matania, 2022, pp. 4–5; Baram and Ben-Israel, 2019; Swed and Butler, 2015; Breznitz, 2002, pp. 130–148). Paikowsky and Ben Israel (2017), for example, showed the significance of Israel’s space program to its national security and explained how this embodies Israel’s security concept.

Other works argued that the Israeli case is unique because existential threats construct its social discourse in many facets of life. Kobi Michael (2009) defined the prevailing state of emergency in Israel since its independence in 1948 and the strategic threats it faces as a "trend, process or development that substantially endangers the existence of the state of Israel as the national homeland of the Jewish people" (Michael, 2009, p. 689). Uriel Abulof (2014) argued that Israel is characterized by deep securitization—the process by which a society becomes fundamentally preoccupied with security issues to the point where security considerations permeate every aspect of political and social life. According to this observation, one of the prominent aspects of "deep" securitization is the blurring of boundaries in the social discourse construction.

Research design

Empirically, the article analyses primary documents and academic sources on Israel’s science and technology development and its strategic environment that can explain government preferences and policy design over the years. Those include inter alia, protocols, verbatim records and reports of the Knesset committees, policy papers on behalf of government bodies, the Knesset Research and Information Center and the State Comptroller reports, and conclusions of assigned task forces to examine and formulate national technology development concepts. We also include biographies and published memoirs of Israeli leaders and other officials that provide a firsthand witness to Israel’s technological discourse and policy design.

The article focuses on the satellite, cybersecurity, and AI industries as representative test cases of Israeli technological development since the 1980s. Each of those technological domains represents a different stage of technology autonomy.

Comparing the policies between those types of technologies will allow us to generalize about the government’s approach to increasing Israel’s intellectual capabilities. It should be noted that the analysis does not attempt to evaluate the effectiveness of Israeli technology policies. Rather, it attempts to explain its political motivations.

However, the success of Israel in these three technological fields is almost unquestionable. In cybersecurity, for example, the Israeli industry attracted 40% of all private investments in the world in 2021. This was with a third of global unicorns (private start-up companies valued at over one billion dollars) being Israeli (INCD, 2022). In space, Israel has gained substantial achievements in the self-development of satellites for different applications, since its first satellite launch in 1988, and in 2022 defined space as an industrial domain of national interest in the coming years (ISA, 2022). In AI, nearly 1500 local start-up companies operate alongside research and development centers of top multinational technology companies, which lead the development of infrastructure technologies for AI-only second to US companies (IIA, 2022).

It is important to note that although audience acceptance is crucial for constructing the Israeli narrative (Wertman and Christian, 2023), however, the conceptualization of the audience and the specific roles of various sectors are beyond the scope of this article. Our discussion, therefore, remains focused on the Israeli government’s role in the securitizing discourse and the narrative surrounding the securitization of knowledge industries.

Finally, we apply a theory-centric research method whereby evidence from the policymaking process of each case study is used to test the applicability of securitization theory to the broader scope of Israel’s technological policy (Beach and Pedersen, 2019). This approach enables the reconstruction of the chain of events from which one can learn about the evolution of the policy and the needs it serves. It is particularly suitable for this research because it allows incrementally examining developments on the timeline that are part of a sequence of events or “processes that are path dependent or rooted in strategic interaction” (Hall, 2006, p. 29; Morgan, 2016; Collier, 2011).

Israel’s national security guiding principles

Most of the focus on Israel’s national security concept in the security studies literature is devoted to the military aspects of power creation and demonstration (Amidror, 2020, 2021; Tamari, 2014) or to developing innovative ideas for dealing with evolving threats (Matania and Bachrach, 2023; Shai and Mintz, 2016; Shabtai, 2010). Dov Tamari argues for a blurred distinction between national security strategy and military doctrine in Israel, which are often misunderstood as concepts under which Israeli governments operate (Tamari, 2014). A national security concept has never been officially adopted in Israel, despite several attempts to formulate it, which may contribute to this confusion (Ben-Israel, 2013). The concept of national security exists only as an oral tradition and rests on the views of Ze’ev Jabotinsky, a revisionist Zionist leader who was the first to establish the notion of Military Zionism in the 1920s, and David Ben-Gurion, the founding father of the State of Israel, and its first prime minister, who defined the national security pillars of Israel in two seminars that he executed in 1948 and 1953. They assumed that Israel would always be in a constant and insoluble conflict with its Arab neighbors. According to Ben-Gurion, "The essence of our security problem is our very existence" (Ben-Gurion, 1950).

Ben-Gurion claimed that the root of the security problem stemmed from Israel’s quantitative inferiority to the Arabs, inter alia, in territory, population, army, resources, and production capacity. Seemingly, Israel cannot change this equation and, therefore, will always face the risk of existential threat (Matnaia and Bachrach, 2023; Matania, 2022; Ben Israel, 2013).

The realization of the security concept is based on principles that embody the rationale for force buildup and use. These principles enabled Israel to overcome its shortcomings and maintain its security (Ben-Israel, 2013, pp. 51–58). However, among the principles guiding the concept, self-reliance, and the creation of a qualitative edge– based on human and technological assets– are those that constitute the basis for Israel’s approach to survival (Matania, 2022), as Ben-Gurion himself articulated in his strategic plan: "Maximum assistance in the civilian economy for supply, transportation, construction, military production, and other military services" (Tibon, 2011). These principles embody a large-scale and ongoing political effort to establish sources of power beyond the military. They also contribute to the creation of "military consciousness," that is, militarism among the Israeli public that brings them closer to the army and its values. This makes them key organizational principles of society (Kimmerling, 1993, p. 135).

Ben-Gurion sought to create a qualitative advantage and preserve the utilization of human capital, science, and technology that would fulfill Israel’s self-reliance. The massive immigration of Jews to Israel, including academics and scientists, helped realize the principle of qualitative edge in several complementary ways. First, through compulsory military service, reserve forces, and the recruitment of women, Israel was able to manage its demographic inferiority without foreign aid (Matania, 2022). Second, Ben-Gurion saw science and technology as central motives for building the state (Katzir, 1989). Third, the establishment and integration of the Science Corps into the army and the construction of an infrastructure for education in science subjects enabled Israel to maintain an independent security policy and establish a knowledge industry from the late 1960s, which became Israel’s economic base (Barell, 2009). There was a combined effort at the time, to establish military industries and invest in the air force, signals intelligence, and nuclear science thanks to the technological bias of these fields in which Israel could express its qualitative superiority (Matania, 2022). Ben-Gurion expressed this vision in a speech he gave in September 1948, at the height of the War of Independence (Barell, 2009; Barell, 2014, p. 2): “... The State of Israel will not fulfill its mission of carrying out development projects and absorbing large immigrants if it does not master the science of all branches of life: if the conquests of the highest science and the conquests of the most sophisticated techniques are not laid at the foundation of agriculture, industry, crafts, navigation, aviation, and housing, and if maximum encouragement is not given to the workers of pure and useful science, to expand their conquests.”

A later indication of the preservation of the qualitative advantage principle can be found in Dan Meridor’s insider account on the report of the Committee for the Formation of Israel’s Security Concept of 2006 that he was nominated to chair (Meridor and Eldadi, 2019, p. 7). Meridor and Eldadi (2019) examined the report’s conclusions and recommendations a decade later and noted that the preservation of the qualitative advantage principle in building power, based on the “nurturing of human capital, the development of advanced technological capabilities, and the strengthening of organizational infrastructure and strategic cooperation.” (Meridor and Eldadi, 2019, p. 44).

The development of knowledge industries in Israel

Israel’s knowledge industries are closely linked to its military and political history. For example, in late 1960, after the victory of the Six Days War of June 1967, Israel invented the unmanned aerial vehicle for reconnaissance missions (Yanai, 2020). In the aftermath of the failure to provide early warning of the Yom Kippur War in October 1973, the military industries started developing microelectronics to satisfy the demand for improved sensors for intelligence collection (Eilam, 2011, p. 382; Nemirovsky, 2015). The defense industry was responsible for developing knowledge in new and emerging technologies. Today, Israel holds 2.4% of the global defense industry, ranked 9th among the world’s great and middle powers (Wezeman et al., 2023).

The 1980s: The satellite industry

Israel’s space exploration dates to 1963, with the establishment of the National Committee for Space Research and the integration of knowledge-based industries into the Israeli economy since the early 1970s (National Library of Israel, 1963). However, beyond the scientific efforts, the peace agreement between Israel and Egypt in March 1979 called for Israel to develop an operational capability in space. Under the peace agreement, Israel withdrew from the Sinai Peninsula, and the area became demilitarized. In doing so, Israel lost its ability to conduct reconnaissance missions, and its ability to collect, deter, and provide early warning for war was compromised (Zorn, 1991). This led to the establishment of a special new department for the space program inside the Directorate for Defense R&D in the Israeli MOD, called the "Space Administration" (1981), and to the establishment of the Israel Space Agency (ISA) in 1983 to promote a national space program. According to Haim Eshed, the first director of the Space Administration, the main reason for establishing the ISA was to provide civilian assistance for military space operations (Yanai, 2020, pp. 70–71). The real question that accompanied decision-makers at the time was whether Israel could afford not to invest in space. According to Eshed, “Technological capabilities carry great weight in the region in which we live, and the satellite industry must be a high-priority national goal. ISA and the deepening connections with leading Israeli scientists made it possible to reach the state-of-the-art space research that made it possible to advance the program".

By September 1988, Israel had launched its first self-produced satellite—Ofek-1, using its own launcher, Shavit. This launch back then in the 80s was not just a pure military-oriented step, but also a technological achievement for such a small country with about 4M people and demonstrated Israel’s capacity to become part of the "space club" and its ability to establish its power in the region (Ben-Israel and Paikowsky, 2017). Not only that, but another success was the formation of teams of scientists and engineers during the joint work, which made it possible to advance additional projects on the technological front (Yanai, 2020, p. 79). As a result of this success, Israel Aerospace Industries (IAI, the main space contractor) decided to open to competition in the civilian satellite communications market in the early 1990s.

Towards the end of the 1990s, the government adopted a multi-year work plan and budget to support the Ofek military satellite project until 2010. The decision, however, was criticized in 2006 by the State Comptroller, who argued that the project was indeed significant to maintaining vital areas of knowledge, but its impact on the state economy was not examined (State Comptroller of Israel, 2006). A year later, the director general of the IAI warned that the continuation of the national space program is at risk due to low government budgeting and support (TAU, 2009). This was a turning point in the momentum of the industry’s development that revealed its dependency on the military’s space project (Getz et al., 2008, p. 10). In the years after, the government budgeted ISA only partially. Another crisis emerged after Israel lost two communication satellites (Amos 5 and 6) in 2015, while no other communication satellites were in the production chain. As a result, the government established an inter-ministerial committee to examine the state of the space program and communications satellites (Paikowsky, 2016). The committee concluded that Israel had, at this point, only partial autonomy and redundancy in space. This refers to Israel’s ability to autonomously satisfy its communication requirements as critical infrastructure in the event of a disruption (Paikowsky, 2016, p. 7).

The industry’s crisis and the government’s ad hoc solutions for budgeting the space program risked the ability to maintain vital knowledge while, at the same time, the global satellite market continued to grow (Borowitz, 2022). An orderly plan for government support for R&D in communication satellites could have reduced the uncertainty and preserved the stability of the industry (Paikowsky, 2016, p. 6).

Furthermore, communication satellites were not defined as an essential security need, hence no development strategy had been formulated to develop them.

Consequently, Israel remained dependent on foreign suppliers in several areas throughout the satellite development chain, which eroded the basis for creating a sustainable space industry (RIC, 2017). During this time, the government did not take an unequivocal position regarding the need for civil industrial space activity, which hindered its development. The government’s approach to the industry has changed in 2022 with the adoption of ISA’s plan to develop all aspects of a sustainable civilian industry over the next five years. This included increasing the number of researchers and scientific networks and doubling the number of companies that would increase the industry’s potential. At the same time, the budgetary source for the program remained unsettled. A few months later, space was defined as an area of national priority with the adoption of the report of the Committee for Formulating Areas of National Priority for R&D (NCCRD, 2022, p. 11).

Throughout the development of the civilian industry, the government continued to invest in the defense space industry, which preserved a knowledge base and resulted in the development of the Ofek series of reconnaissance satellites, the last of which was launched from Israel in March 2023.

The 1990s: The emergence of the hi-tech sector and the cybersecurity industry

The civilian Israeli satellite industry had an early foothold on the global satellite market. However, unlike the military space program, it failed to develop sustainably. Contrary to this, Israel created a national ecosystem in cybersecurity that gave it a competitive advantage at an early stage of global market emergence. While private startup companies have been driving Israel to success in the cyber industry, this could not have happened without governmental support and the growing military interest in cyberspace. The rapprochement in security relations between the US and Israel during the 1980s and the strategic importance the Reagan administration saw in Israel, led to an increase in Israel’s qualitative edge and the emergence of an Israeli high-tech sector (Cobban, 1989). At the same time, the increase in civilian knowledge production and the privatization of companies from the defense industry increased the pool of sources for technological innovation (Knesset, 1984).

The spread of the Internet to the public during the 1990s was also the time for the Information and Communication Technology (ICT) industry to take root in Israel (Orpaz, 2015). The government began to implement deliberate policies and initiatives that supported civilian knowledge industries and the development of dual-use technologies in a variety of fields (Baram and Ben-Israel, 2019). The most important and influential initiative was Yozma ("initiative" in Hebrew), that launched in 1992 to stimulate the venture capital industry through direct government investments in venture capital funds, which enabled them to raise foreign capital, thereby creating a climate that encourages high tech investments (Avnimelech and Teubal, 2005).

Another initiative was the creation of national technological incubators to attract private capital at the seed stage and provide guidance and support for entrepreneurs (Frenkel et al., 2005, pp. 82–88). The absorption of scientists, physicists, mathematicians, and other immigrants from the former Soviet Union created a critical mass for the development of the ICT sector, which later formed the basis for the growth of the cybersecurity industry.

In 1997 the President of the Israel Academy of Sciences and Humanities established TELEM—The forum for national infrastructures for research and development, which created a voluntary framework designed to coordinate and pool resources for national R&D (Israel Academy for Sciences and Humanities, n.d.). Forum members include the top governmental scientific leadership: the Chairman of the Planning and Budgeting Committee of the Council for Higher Education (responsible for the financing of Israel’s universities and colleges), the Head of the Innovation Authority (then still the Chief Scientist of the ministry of economy, responsible for the governmental aids to the high-tech sector), the Director General of the Ministry of Science and Technology, the Head of The Directorate for Defense Research and Development (DDR&D) in the Ministry of Defense and the Deputy Head of the Budget Department in the Ministry of Finance. This initiative was an expression of the organic way in which frameworks were created based on needs that arose from the field and through local collaborations, without a guiding politician’s hand.

Taking advantage of the ICT sector that had developed between Yozma’s establishment and 2010, the government began to support the development of a competitive cybersecurity industry. In November 2010, PM Netanyahu nominated a National Cybernetics taskforce that would formulate a national plan to place Israel among the five leading countries in the cyber field.

The task force was led by the Supreme Committee for Science and Technology, which was made up of the leading R&D personnel in Israel from academia, the military, and industry (Prime Minister’s Office, 2011). The purpose of the task force was to preserve Israel’s position as a hub for the development of information technologies and to provide it with advanced capabilities in cyberspace that would ensure its economic and national resilience. The sub-committee on economic benefits stated in its conclusions that a leading and strong Israeli industry is an important element in preserving Israel’s cyber capabilities, especially in aspects of the defense system. It was also recommended to direct the cyber industry to focus on developing a response to national security needs. The task force, on its part, recommended the establishment of a national cyber bureau under the Prime Minister, and the development of Israeli-made technologies and solutions.

Following the report, the government decided in 2011 to develop capacity in cyberspace and subsequently appointed a national cyber director under direct reporting to the PM in order to formulate a defense concept and engage in the building of national cyber power (Government of Israel Resolution 3611, 2011). Furthermore, it established an Israeli National Cyber Bureau (INCB). One of its goals was to design a national cyber ecosystem that would link the security, technological, and economic aspects of the growth of the knowledge industries. The idea was to leverage the starting point of cyber companies and push them towards independence at a time when the global market is hungry for solutions (Matania and Rappaport, 2021, pp. 73–75). The chosen method was to create national priority areas of knowledge, in contrast to the prevailing government approach until then that refrained from intervening in the market development direction. Adopting a prioritized approach made it possible to take advantage of Israel’s unique cyber infrastructures and grow the cybersecurity sector at a relatively time when market demand is already high.

In this framework, the INCB promoted capacity-building programs in the same way that the government had done several times before (e.g., Yozma in the 1990s): Encourage the civilian sector through various investments and incentives to build the nation’s capacity in the cyber realm (Matnaia, 2017). The initiatives aimed towards three main fronts. The first was KIDMA—a joint initiative of the Chief Scientist of the Ministry of Economy (known as Israel’s Innovation Authority since 2016) and the INCB. In Kidma, cyber-security startup companies were offered preferred competitive terms that included a grant of up to 50% of the approved budget for risky R$D projects, as well as marketing assistance to accelerate local innovation and support their growth.

The second front was connecting the industry to the needs of security. For this, the INCB and the DDR&D collaborated to launch the MASAD program. MASAD promoted dual-use R&D projects on cybersecurity that serve both civilian cybersecurity and defense cybersecurity needs by supporting startups, companies, and academic activity in the field. The intention was that “Through the industry, unique technologies would be developed for the advanced security needs of the government and the critical infrastructures in Israel, similar to the technologies promoted by DDR&D for the Israel Defense Forces. The focal point would be technologies and methods that cannot be found in the free market open to all” (Matania and Rappaport, 2021, p. 79).

The third front focused on the development of science, technology, and human capital in academia in the various fields of cybersecurity through the establishment of a joint fund of the INCB in collaboration with the Ministry of Science to support research and the establishment of academic centers in all universities across the country by INCB. The government understood, as Ben-Gurion did, that long-term growth and innovation could not be achieved without investing in academic infrastructure.

There was no deliberate effort by Israel to develop a cyber industry as it did in the defense sector. Instead, the government managed its resources to create sufficient conditions for private companies to grow and commercialize their knowledge (IATI, 2023). The spillover of knowledge between the defense and civil sectors and the recognition of the importance of civilian industry in safeguarding security interests have provided a fertile ground for innovative cybersecurity services and solutions in the civilian market (Swed and Butler, 2015).

It is interesting to read how Benjamin Netanyahu, under whose leadership Israel’s cyber strategy and governance were created, related the need for high-tech industry in general and cybersecurity in particular. In his autobiography, he mentioned that he had viewed economic knowledge as a tool for national power, and not as a tool for increasing competitiveness in economic markets (Netanyahu, 2022, p. 497). According to Netanyahu, Israeli survivability requires economic success, which in turn enables the development of exceptional military capabilities, thereby increasing Israel’s political power, hence its survivability.

The 2018s: The Artificial Intelligence industry

AI and data science serve as a platform for research and development in a wide range of knowledge fields. However, the AI industry has only gained momentum in recent years due to the increase in data, computing power, and algorithm development. Many countries identified AI as critical to their national interests since 2017, with the release of national AI strategies and policies that delineate their visions and goals for AI use and development (Harari, 2019).

Discussions on the need to regulate the development of the AI industry began in February 2018, when PM Netanyahu brainstormed with the National Security Council’s advisers and other experts to examine the future core technological fields, critical and most influential on Israel’s future, and the modes in which Israel can lead in those areas (Ben-Israel et al., 2020, p. 13). As in the cases of the satellite and cybersecurity industries, the security part under-lied this brainstorming at the PM office, was to figure out how to maintain and advance Israel’s dominance in the high-tech field as a critical cornerstone in its national security in its broadest sense.

Following this meeting, the Prime Minister established the National Initiative for Intelligent Systems. A team of experts was formed to formulate recommendations for Israel’s AI plan. The team recommended treating AI as a critical infrastructure and taking actions that would create a critical mass for the industry’s development. The report specifically mentioned that “a collection of sporadic efforts is not enough to make Israel a power in the field” (Ben-Israel et al., 2020, p. 19). Ultimately, the recommendations were not adopted. The political crisis Israel fell into between 2019 and 2022 amidst the COVID-19 pandemic did not allow a permanent and stable government to implement the plan (Shahaf, 2022).

The political stalemate brought the TELEM forum to decide to step up and establish an advisory committee to examine specific issue areas, in infrastructure, human capital, regulation, and data accessibility in which government intervention can accelerate AI development. The committee reported on significant gaps between demand and supply in each subject area examined (TELEM, 2020). In human capital management, they found a shortage in all positions relevant to AI and data science in industry, academia, and the defense sector. Additionally, under-developed central computing infrastructures affect the ability to train and recruit human capital.

Regarding the lack of appropriate regulation, the committee explained that practitioners in the field do not have sufficient access to data. Without the adoption of a national plan for AI, Israel may find itself in scientific, technological, and economic gaps that will be difficult to close, as well as scientific and technological dependence that could limit its national resilience” (TELEM, 2020, p. 9).

Following the report, and soon after Naftali Bennett took office as Prime Minister, the government adopted resolution 212 to adopt part of TELEM’s recommendations (Government of Israel Resolution 212, 2021). The Innovation Authority has stepped in to lead the government activities in this field– from sectoral pilots to promote AI in national services, through financing R&D projects in startups, and initiation of collaborations between AI companies and governmental authorities to share data and knowledge (IIA, 2023). Despite PM Netanyahu’s decision in 2023 to renew the initiative (Government of Israel Resolution 173, 2023), the Hamas invasion of southern Israel on October 7, 2023, brought a halt to government efforts to promote it.

Discussion and conclusions

An SMS state’s development of advanced technology increases its weight in world politics because technology is associated with power, and developing modern technology does not necessarily depend on quantities of national resources but rather the use of those resources efficiently. This is reflected in the relatively large hi-tech sectors in developed SMS states that generate considerable contributions to their nation’s GDP compared to other national sectors.

The key rationale behind Israel’s technological policy was to increase national security through securitization of the knowledge industries under review. Interestingly, two main motivations can explain the government’s policies to fulfill this rationale. First is a direct threat. Israel’s satellite industry was established as a direct response to a direct threat to its national security, and to compensate for strategic shortcomings that the peace agreement with Egypt has created. The same happened in the cyber arena, where the PM was anxious about new forms of threats that might undermine the nation’s cyber domain. However, although the threat of cyber was the trigger to the whole cyber initiative, it was then turned to cope with the second motivation—to capitalize on the opportunities of the cyber domain by utilizing the same government investments made to mitigate the threat, also to establish a vivid state-of-the-art cybersecurity eco-system through various vehicles that encouraged the civilian sector to step in.

While the Satellite initiative started and eventually ended in the purely defensive realm, cybersecurity started as a defensive initiative to mitigate threats but ultimately ended as a new pillar in the civilian high-tech sector of Israel. In the AI initiative, however, the government was completely motivated to capitalize on the opportunities these technologies offer in order to ensure that the hi-tech sector remains robust and competitive in the future, with an indirect contribution to national security through the capabilities that AI creates. At large, Israel compensated for its strategic shortcomings by promoting the qualitative component of its national security concept. Later, the security discourse spilled over to technology policy which brought the government to intervene and give precedence to technology that supported specific security and knowledge needs rather than the social and economic benefits they can entail. This approach to developing knowledge is rather different than in other developed SMS states, such as Denmark, Finland, and Ireland, where market-driven processes of neo-corporatist arrangements paved the way for increased state investment in R&D (Maggor and Frenkel, 2022).

However, the differences in the triggering rationale behind the three technologies promoted by Israel and the later rationale that preserved them may raise a more general idea: Once an SMS state mitigates a specific risk or satisfies an urgent need, it should also seek a global opportunity through the posture it had already established in a specific technological field. This is what Israel smartly accomplished in cybersecurity but has failed to achieve in the satellite field. Nevertheless, we should be cautious not to draw the wrong conclusions as many reasons and circumstances may affect the accomplishment of such opportunities and decisions, but the general idea is to advance technology in fields that have already been implemented and invested by the government for other reasons.

Theoretically, understanding who a middle power is has more to do with our intuitive perception of the global distribution of power. Since the theory of middle powers is too broad and contains many asymmetric variables among those included in this group, it does not provide a clear analytical classification for a middle power.

Moreover, the cyber age and the technological race have brought SMS states to regional and international achievements and positions of influence that do not usually characterize SMS states, thus creating an additional difficulty for the theory. Understanding the centrality of technology as an embedded element of power makes it possible to contain powerful SMS states and thus make the theory more relevant and inclusive in a manner that faithfully reflects today’s changing power relations.