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Hamas’ unprecedented attack last month reflected an intelligence failure for Israel, which raises questions about the country’s dominance on the global market for sophisticated espionage technology and other hi-tech offerings. Meanwhile, some of the best young Israeli coders have been called up for military service.
Beyond the horror and loss of human life wrought by Hamas, the collateral damage of the October 7 attack stretches into all corners of Israeli society. The complex, multi-front attack demolished Israel’s sense of security and military superiority in the face of Palestinian armed forces and other groups and countries in the region.
But alongside the political, military and intelligence failures, the attack has been a blow to Israel’s thriving technology sector — notably its world-leading spyware — that will reverberate through the economy in the months and perhaps years to come.
The way Hamas fighters breached Israel’s defenses (pushing through a fortified border barrier, sneaking through the Mediterranean, or flying over the border) may have seemed rather low-tech. Yet the raid on more than 20 Israeli towns and army bases in southern Israel, and reported death count around 1,200, must make Israel’s spy agencies question its tools and methods.
“Hamas surprised us. It was both a military failure and an intelligence failure,” Yaakov Amidror, a former national security adviser to Prime Minister Benjamin Netanyahu, told The Hindu newspaper. “I can say that everything went wrong.”
Holes in espionage technology
High on the list of questions is what happened to Israel’s superiority in the industry of espionage technology, reports Daraj, a top Lebanon-based media outlet.
There are fears about what the Oct. 7 debacle could mean for a national economy that has been boosted by the global dominance of its startups in the surveillance technology industry, which was first developed by the country’s spy agency Mossad, then adopted by the private sector.
The high-tech industry accounted for over 18% of Israel's GDP in 2022, making it the largest sector in terms of economic output, according to the Israel Innovation Authority. It reached 290 billion shekels (over $78.7 billion) that year, a twofold growth within a decade.
For years, Israel has used such technology to keep an eye on all walks of life in Gaza and the West Bank, giving it an opportunity to have prior warnings ahead of any potential attacks.
It’s known that Israeli intelligence services – like other top world spy agencies - use multiple high techniques, said Emily Harding, deputy director of Center for Strategic & International Studies
Such techniques include:
- SIGINT, a phone, and internet tapping to read the adversary’s communications.
- IMINT, overhead images of adversary activity.
- HUMINT human sources to obtain secrets that cannot be stolen any other way.
“The Israeli services are best in class for computer network operations, like clandestine entry into adversary phones and computer systems—their capabilities so good and so sneaky they have caused more than a little controversy,” Harding said.
Even before the war, Israel’s high-tech industry was facing unprecedented challenges.
Israeli technology – notably spyware Pegasus which is designed by Israel’s NSO Group - was exported to other countries, across the world mainly the Middle East and Africa, where governments used to spy on their political opponents and journalists.
Yet, insiders note that even before the war, Israel’s high-tech industry was facing unprecedented challenges. In June, the Israel Innovation Authority reported a sharp decline in venture fund investments over the previous 18 months.
The downturn was attributed to multiple factors, including “the global macroeconomic slowdown, the war in Europe, the tension between China and the U.S., the inflation and interest rate environment,” the authority said in its State of the High-Tech Industry in Israel 2023 report.
The war against Hamas has since added more burdens on the industry, given that an estimated 15% of the workforce in the field have been called to serve in the military.
Such shortage has impacted the country’s ability to meet the needs of its tech companies’ customers and has disrupted the security of research and development centers working on projects in Israel, including Microsoft and Google, Daraj reported.
The Lebanese outlet cited a letter Tomer Simon, a scientist at the Microsoft Israel for Research and Development Centre published in the first of November, expressing concerns about the future of the tech industry in Israel after the war.
"The war has created a substantial vacuum in the workforce of the high-tech sector,” Simon wrote in his letter directed to Tzachi Hanegbi, the head of the Israeli National Security Council. “The absence of these professionals from the day-to-day functioning of the high-tech sector has a wider impact.”
It sends a worrying message about the reliability and stability of their Israeli operations, and of Israel in general.
He argued that such a vacuum “not only harms the current projects but also sends a worrying message to their global headquarters about the reliability and stability of their Israeli operations, and of Israel in general.”
The scientist urged the Israeli government to announce “clear and practical steps” to minimize disruptions of international cooperations' activities in Israel.
“You must maintain a proactive dialogue with these companies, assure them that Israel appreciates their presence and contribution,” he said.
A technician works in a cleanroom at Mellanox Technologies in Yokneam, Israel on April 17, 2019.
Origins of the attack
In the early morning hours of Oct. 7, Hamas fighters breached Israel’s defenses, pushing through a fortified border barrier within minutes.
They used explosive charges to blow holes in the wall. They then dispatched bulldozers to widen the breaches, allowing fighters to stream through on motorcycles and in pick-up trucks. Other armed fighters sneaked through the Mediterranean, or flew over the barrier using paragliders, a new tactic to breach the Israeli fortifications.
Israel’s monitoring towers and cameras and other communications equipment along the barrier were bombed by grenades and mortar shells. That prevented Israeli officers from remotely monitoring the area.
The fighters used explosive-laden drones to destroy and disable remote-controlled machine guns, which Israel installed to fortify its borders.
It turned out that Hamas fighters raided more than 20 Israeli towns and army bases in southern Israel. More than 1,200 Israelis were killed in the attack, according to Israeli authorities.
Hamas’ attack has been viewed as a stunning intelligence failure for Israel’s spy agencies, among the best in the world. Such agencies failed to warn of and stop the Hamas attack.
“Hamas surprised us. It was both a military failure and an intelligence failure,” said Yaakov Amidror, a former national security adviser to Prime Minister Benjamin Netanyahu. “I can say that everything went wrong.”
Such failure includes poor assessment of Hamas’ intentions and its military capabilities and misunderstanding of the impact of Israel's own policies, said Daniel Byman, a senior fellow at Center for Strategic & International Studies.
Israeli intelligence issued a specific warning to border guards immediately before the attack
It also includes overestimating the effectiveness of Israel’s security services; and the possible unwillingness of senior Israeli policymakers to heed intelligence warnings, Byman said in his article published Oct. 10 at Lawfare, a non-profit publication.
“Some of these problems may stem from poor or incomplete collection of intelligence, while others may be due to cognitive biases or other analytic challenges,” Byman said.
The New York Times reported that Israeli intelligence issued a specific warning to border guards immediately before the attack, flagging a surge in activity, but those warnings went unheeded for unclear reasons.
Israeli officials acknowledged such intelligence failure. They, however, declined to provide further details, saying everything will be thoroughly investigated after the war.
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- The Oct. 7 Debacle: A First Deep Dive Into Israel's Intelligence Failures ›
- The Oct. 7 Debacle: A First Deep Dive Into Israel's Intelligence Failures ›