Amir Cohen / REUTERS An Israeli soldier from the Nahal Infantry Brigade aims his weapon during an urban warfare drill near an abandoned hotel in Arad, southern Israel, February 2017. 

How Israeli Conscription Drives Innovation

Could Similar Policies Benefit Europe?

Ofer Familier, a 35-year-old Israeli, works as business development director of Vayyar Imaging, a successful start-up that makes radar-based imaging sensors for breast cancer. At first glance, this work seems to stand apart from his former duties in the Israeli air force intelligence corps, where he completed his three-year mandatory military service. But in a larger sense, Familier’s stint in the military has been crucial to his entrepreneurship—as it has for that of many others. Two years ago, Nadav Zafrir, the head of the Israel Defense Forces’ signals intelligence department, left to launch a start-up tracking cybercrime. It swiftly raised $18 million in venture capital funding. There are hundreds more stories like theirs.

The IDF’s conscription system has brought great benefits to Israel’s economy. The armed forces meticulously place talented conscripts in technological, combat, and intelligence units. The skills that the conscripts acquire are a significant benefit to them in the civilian labor market after they leave. As Familier told me, “Technical intelligence units in the IDF are like Harvard. You form networks and end up doing business together.” And, he added, “as an 18-year-old conscript in the IDF, you’re given a lot of responsibility about life-and-death decisions, you make command and management decisions, you decide whether to continue an operation.”

The country’s booming high-tech sector, which yielded most of the country’s 1,500 new start-ups in 2015 and accounts for 40 percent of its exports, is to a large extent powered by former conscripts from such elite units: although only 20 percent of young Israelis are selected for technological and combat units, 60 percent of high-tech workers have served there. Eran Yashiv, a Tel Aviv University economics professor who also heads the economics and national security program at the Institute for National Security Studies in Tel Aviv, has for years monitored the economic effects of the draft. “Conscription is human capital formation,” he told me. “The private sector benefits from the training the armed forces provide.” The Chief Economist Department of the Israeli Finance Ministry is currently conducting an evaluation of the IDF’s contribution to the civilian sector.

The IDF’s conscription system has brought great benefits to Israel’s economy.

In a 2013 study on the connection between the IDF and Israel’s high-tech success, two scholars at the University of Texas at Austin—Ori Swed and John Sibley Butler—reported that service in the IDF “cultivates new skills (human capital), new social networks (social capital), and new social norms and codes of behavior (cultural capital).” In other words, conscripts learn new skills and behavior that no university could offer, and they form lasting networks. The result, the scholars say, is “military capital,” which conscripts absorb in the military and subsequently utilize in the civilian sector. Although 60 percent of adult Israelis have performed military service, the rate rises to 90 percent in the high-tech sector.

In its latest innovation index, Bloomberg ranks Israel as one of the world’s top five countries for R & D, along with Finland, Japan, South Korea, and Sweden. In 2015, Israeli start-ups raised $2.6 billion in venture capital, compared to $1.9 billion raised by start-ups in France, a country eight times larger in population.

LESSONS FOR EUROPE

During the Cold War, Israel had plenty of conscription company: virtually all European countries—the United Kingdom being the most notable exception—had compulsory military service for men. But when the Cold War ended, the draft was seen as obsolete. Future missions would be small, would take place far from home, and would require agility. France abolished the draft in 1996; Italy did so in 2000; Spain in 2001. Sweden followed in 2010 and Germany in 2011. Bulgaria, the Czech Republic, Hungary, Latvia, Lithuania, Macedonia, Poland, Romania, Slovakia, and Slovenia would also abolish the draft after the fall of the Iron Curtain.

But the draft isn’t dead. In 2015, Lithuania reinstated conscription, and last month the Swedish government announced it would do the same. Lithuania concluded that it needed to grow its military as a result of growing Russian hostilities, while Sweden had a dual motivation. It needed to respond to Russian aggression, but, perhaps more important, the armed forces had had trouble recruiting enough professional soldiers. Norway expanded its draft to women last year; Sweden will also make its draft gender-neutral. And French presidential frontrunner Emmanuel Macron has jumped on the bandwagon, proposing a return of the draft in France.

In purely military terms, France doesn’t need a draft: thanks in part to widespread youth unemployment (24.7 percent), the armed forces have had no trouble recruiting professional soldiers. The same goes for Italy, with 40.3 percent youth unemployment, and Spain, where 48.3 percent of all residents aged 24 and under are out of work, according to the EU’s statistics agency Eurostat. But what European countries do need is a way of creating sustainable employment, and it is here that they could borrow a page from the Israeli playbook.

Bernard Boëne, a French military sociologist who for many years taught at the country’s military academy, Saint-Cyr, says that the draft not only keeps young men and women out of unemployment; “it also provides a second educational chance through vocational training in job specialties highly valued on the labor market.” But, as Boëne points out, there’s a catch: “That educational benefit only applies where mandatory service is long and leaves plenty of time for educational training beyond basic military training.” No country, European or otherwise, is likely to adopt Israel’s system of three years’ mandatory military service for men and two years for women. (Macron’s proposal, for example, is for only one month of conscription.)

But in Finland, which drafts virtually every able-bodied man (the best and brightest for one year, others for shorter terms), talented 18-year-olds gain expertise and networks that give them a leg up in the labor market. If France, Spain, or Italy were to introduce a selective draft, talented young men and women could later become inspired to launch start-ups, bringing enormous economic benefit.

“There’s potential for other countries to learn from the Israeli model,” Yashiv told me. “But the success depends on which soldiers are selected for conscription. It takes a lot of time and money to train boys and girls from low-education backgrounds. You need top achievers in the best conscription positions, and that doesn’t solve youth unemployment.”

It does, however, steer talent toward fields that they may otherwise not have considered. In European countries, a selective draft has the potential to serve as a breeding ground for post-conscription start-ups. Familier has also worked in the United Kingdom and France, including a stint as a McKinsey consultant. “There the vast majority of people there look to progress within more traditional routes, whereas in Israel people look to innovate and break from the norms,” he says. “Conscription teaches you not to accept the norms, and that leads to a lot of innovation.”

Norway doesn’t have to worry about youth unemployment: only ten percent of those aged 15–24 are out of work. It does, however, have to worry about its post-oil economic future. Its armed forces, who select the intellectually, mentally, and physically fittest 11–12 percent of all 19-year-olds for conscription, could become an incubator of post-conscription innovation. Henning A. Frantzen, deputy head of the personnel department at Norway’s Ministry of Defense, considers it an opportunity. “Today the armed forces have more specializations, including cyber,” he told me. “Conscription is no longer just about walking far and carrying heavy loads.” What the military needs to get better at, he added, is to describe its activities and the skill sets they impart in terms that civilians understand.

Signals intelligence, cutting-edge radar applications, multipurpose aircraft operations, digital tank communications: modern armed forces have impressive technological capabilities. If Frantzen and his colleagues in Norway and beyond learn the right lessons from the Israeli example, they may soon find themselves selling their military capital and forging closer ties with the civilian sector—perhaps even with venture capitalists.

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