Israel’s Spy-Tech Industry Is a Global Threat to Democracy

Israel has developed one of the most advanced surveillance industries in the world. With government support, companies like the NSO Group have been offering their services to authoritarian regimes to help them clamp down on political dissent.

Israeli cyber company NSO Group in the Arava Desert on November 11, 2021 in Sapir, Israel. (Amir Levy / Getty Images)

Israel’s surveillance industry is one of the most advanced and prolific in the world. A unique environment of legal enablement, partnerships between private firms and the Israeli military, and the availability of Palestinians as free test subjects has allowed the country to become a world leader in surveillance tech exports.

With around twenty-seven surveillance companies, Israel has one of the biggest clusters of such manufacturers in relation to its size. The NSO Group’s Pegasus is a sophisticated form of spyware categorized as a military export by the Israeli state and only sold with its express permission. Like other surveillance manufacturers, the company is licensed by Israel’s Ministry of Defense.

Pegasus is especially dangerous because it can be planted secretly, giving the attacker total control over a victim’s mobile phone. It effectively undermines all the modern security features like encryption and turns a smartphone into a smart listening device. It can also copy messages, photos, and emails as well as recording calls.

Investigations have revealed that Pegasus was used against the inner circle of dissident Saudi journalist Jamal Khashoggi, who was murdered by Saudi intelligence in 2018. Over the last decade, several reports have also revealed the use of Pegasus against journalists, activists, and political dissidents in various countries. The spyware has facilitated assassinations and severe human rights violations by authoritarian regimes in the Middle East and South America.

Israel and the United States

Israel’s authoritarian tech exports serve the dual purpose of generating profits and fostering its military and diplomatic ties with client countries. Although this trade is done at the expense of human rights and free speech, the United States and its allies continue to take a permissive approach to the NSO Group and the pervasive Israeli surveillance industry.

Over the last four years, the United States has announced several steps to regulate the private surveillance market. In February this year, Washington imposed visa restrictions against those selling and abusing commercial spyware. The ban followed an executive order passed in March 2022 that prohibited US government agencies from purchasing such spyware.

In November 2021, the US Commerce Department blacklisted the NSO Group and another Israeli firm for supplying spyware to foreign governments engaging in political repression. A joint statement released in March 2023 by the United States and its allies called for the regulation of commercial spyware. However, it failed to mention the NSO Group or Israel — the industry leaders who continue to export the technology for commercial and political benefits.

The NSO Group and other Israeli spyware manufacturers are integral to the country’s security and diplomatic establishment. For all practical purposes, they are an extension of the Israeli state. However, there has been no explicit diplomatic pressure on Israel from Washington or its allies to put an end to the export of these malicious technologies.

Big Tech Backlash

The major US tech companies — Apple, Meta, Google, Microsoft, and Amazon — possess immense resources and lobbying capabilities. They have filed lawsuits against the NSO Group and publicly condemned them as “cyber mercenaries.” This hostility stems from the fact that Pegasus undermines the technological architecture and the privacy/security narrative in which these companies have invested through decades of marketing and public outreach.

In addition, the spyware also jeopardizes the fundamental business models of these companies. In 2022, the Pentagon awarded a joint $9 billion cloud computing contract to four major tech companies. The ability of a minuscule spyware company to undermine their security can, therefore, have severe consequences for future defense contracts.

Clearly, the big tech firms and the NSO Group have diverging interests, and that is reflected in the actions of the US government. The superior influence and money-backed lobbying of American tech might explain why the US government has leaned toward banning the NSO Group and other spyware companies within its territory.

Yet while the NSO Group may have lost its market in the West, that has not deterred it from trying to use the Gaza war to revive itself. It has volunteered to play a role in Israel’s war effort, marketing its attempts to help trace missing Israelis and hostages.

A month into Israel’s war on Gaza, the NSO Group wrote a letter to the US Secretary of State Antony Blinken and officials of the State Department to request a meeting. Experts termed the outreach a desperate attempt at “crisis washing.” In the last few years, the company has spent millions to lobby US lawmakers and get off the government blacklist. It is now seeking to capitalize on Israel’s Gaza war, which has killed more than thirty thousand Palestinians in the last six months.

Surveillance Diplomacy

Despite facing losses due to mounting lawsuits and state action, the NSO Group continues to survive and export its authoritarian tech. It is now impossible for the Israeli firm to gain government clients in America. At the same time, the EU’s strict surveillance laws and robust civil society present additional challenges to its growth in the region.

However, the company’s flagship product makes it too important to fail. The software’s use in diplomacy follows the decades-old trend of using weapons sales to gain favor with foreign governments. Israel’s push for diplomatic normalization with Arab states such as the United Arab Emirates, Bahrain, and Saudi Arabia has been accompanied by secretive weapons sales.

As the backchannel relations have grown, groups such as Amnesty International and the University of Toronto’s Citizen Lab have traced the use of Pegasus in the phones of Arab journalists and dissidents. The spyware was also deployed against political opponents, journalists, and activists in India, Hungary, and Rwanda.

Israel has found fertile ground in the decline of democratic values in countries like India and the growing appetite for surveillance tech in the Middle East. In 2017, Narendra Modi became the first Indian prime minister to visit the country. The New York Times reported that a $2 billion deal for sophisticated weapons and intelligence gear was signed during this visit. Pegasus and a missile system were the highlights of this sale.

India has historically supported the Palestinian cause, and its relations with Israel have not been warm. However, in June 2019, it voted in support of Israel at the UN’s Economic and Social Council, opposing a move to grant observer status to a Palestinian human rights organization, marking a significant departure from its previous stance.

The New York Times investigation also revealed that countries like Mexico and Panama changed their UN votes in support of Israel after purchasing Pegasus. The report further stated that Pegasus played a significant yet undisclosed role in garnering support from Arab nations for Israel’s efforts against Iran, as well as in the negotiations leading to the Abraham Accords in 2020, which established diplomatic ties between Israel and some of its historic Arab foes.

Israel’s global isolation because of its unpopular war on Gaza will only boost its attempts to leverage its surveillance industry for diplomacy. The unquestioned support of the NSO Group from Benjamin Netanyahu’s government and the Israeli judiciary, along with the country’s corporate-military partnership, will ensure that the sales of the authoritarian tech continue, incentivizing the growth and proliferation of Israel’s spyware industry.

This industry thrives on a constant supply of trained and highly skilled individuals from Unit 8200, the Israeli intelligence unit likened to America’s National Security Agency (NSA). The unit is a launching pad for its members to join private spyware companies and start their own tech businesses.

Holding Israel Accountable

In spite of the proven role of Pegasus in facilitating human rights violations and subverting free speech globally, the United States and its allies continue to provide diplomatic support to Israel. NSO Group shares were even bought using British Gas pension funds. In 2020, the British government hosted the NSO Group at a secretive trade fair, which was visited by several authoritarian governments with an infamous track record on human rights. 

Although they pay lip service to democratic ideals, the countries of the self-styled free world not only tolerate Israel’s authoritarian exports but also enable them. Israel must be held accountable for its role in undermining democracies and emboldening autocratic regimes. The self-proclaimed “startup nation” that the West likes to call the “only democracy in the Middle East” must be questioned on its rogue surveillance industry.