As cyber threats grow, Israel’s push for digital sovereignty highlights the strategic role of secure infrastructure, VPN use, and tech innovation in defending national interests.
Rethinking Digital Security
Israel’s reputation in cybersecurity is well established, but the conversation is expanding. Cyber sovereignty, once viewed mainly through a defense or regulatory lens, is now being considered a core infrastructure issue. Questions around control, data access, and digital independence are starting to shape how resilience is planned across sectors.
Recent cyber incidents linked to foreign actors have highlighted a key vulnerability, much of Israel’s digital ecosystem still runs on external platforms. Cloud providers, remote access systems, and globally managed networks play a central role in everything from municipal services to financial operations. As that dependency deepens, so do the risks. System disruptions, data exposure, and jurisdictional challenges are no longer hypothetical concerns, they’re active threats that call for a more coordinated national response.
What’s emerging is a clear policy signal. Long-term digital resilience requires more than defense capabilities. It requires a coordinated effort to secure control over data flows, infrastructure access, and system architecture. Cyber sovereignty is beginning to take shape not only as a security imperative, but as a national infrastructure issue.
The Strategic Need for Cyber Sovereignty
Cyber sovereignty in Israel has entered the national security agenda. It’s now being treated as a structural concern tied to how critical infrastructure is governed and protected. At the center of it is a growing concern over infrastructure control: who manages the systems that keep the country running, and how much of that control is still held offshore.
That concern isn’t coming out of nowhere as in the past year, Iranian-linked groups have repeatedly targeted Israeli infrastructure. One series of attacks focused on water systems and energy regulators, exploiting gaps like default passwords and unpatched software. The tools were simple, however the impact was extensive. The Israel National Cyber Directorate issued public alerts urging operators to tighten access, while international agencies flagged the same vulnerabilities. These warnings didn’t arrive in isolation, they followed a pattern, regional tension building, then digital pressure mounting right behind it.
What these incidents make clear is that cyber threats can no longer be treated as technical problems with technical fixes. They’re strategic disruptions. The infrastructure is digital, but the consequences are physical with delayed services, exposed systems, and weakened deterrence.
For Israel, the case for cyber sovereignty is becoming clearer: if control over key systems is outsourced, so is part of the country’s security posture.
Technology Infrastructure and the VPN Dilemma
As cyber risks evolve, more organizations in Israel are turning to tools that offer greater privacy and control over how their data moves. VPNs, once mostly associated with individual browsing protection, are now being adopted across a wide range of sectors. Despite enterprise-grade VPN infrastructure costing companies millions of dollars per year to implement at scale, VPNs have become a baseline component of secure access strategies in sectors like healthcare and finance.
Securing Civilian Systems in a Cross-Border Environment
This change reaches beyond government and defense. Sectors like healthcare, finance, and education in Israel now operate with encrypted traffic as a baseline. It’s how systems stay protected and how sensitive data moves without interruption. As more services move online and teams work across borders, secure access has become part of everyday infrastructure.
The global VPN market, including corporate and remote-access services, is projected to expand from approximately USD 2.2 billion in 2025 to USD 5.6 billion by 2033, reflecting how organizations worldwide are making VPNs a baseline for secure access amid hybrid and remote operations. In healthcare specifically, while VPNs aren't mandated by HIPAA, many institutions use them as a core security measure, encrypting data in transit, restricting access, and supporting compliance with regulatory safeguards.
Overcoming IP-Based Restrictions in Sensitive Work Environments
To manage risk and maintain access, remote teams in Israel’s fintech and healthtech sectors often need access to cloud systems that only allow trusted IP addresses, like a dedicated IP VPN to help meet this requirement by enabling encrypted, authenticated access to tools like billing portals, telemedicine platforms, and internal dashboards, avoiding disruptions and login barriers.
Notably, dedicated IP VPNs have become essential when platform access depends on IP whitelisting or country-based filters. A dedicated IP ensures stable, encrypted connectivity from a consistent address that supports access to region-locked dashboards, cloud services, and sensitive internal systems. Options for VPNs start at a few dollars a month, which may offer a practical solution for smaller teams, NGOs, or independent contractors working across digital borders.
Healthcare providers rely on IP-restricted access to safeguard patient data and maintain compliance with privacy regulations such as HIPAA and ISO standards. Clalit Health Services, for example, relies on Citrix-based virtual desktop infrastructure to deliver remote care and securely coordinate patient data through its Ofek Network. Similarly, LeumiTech, a leading provider of banking services for Israeli startups, operates across borders and requires robust access to private APIs and financial platforms without triggering IP-based access blocks.
The broader issue is infrastructure dependence. Many of the services critical to Israeli institutions are hosted or routed through external platforms. While VPNs offer a layer of protection, they also highlight a deeper challenge, like how to secure operations when the infrastructure itself isn’t always within the country’s control.
Balancing Innovation and Control
Israel’s tech sector is built on speed, scale, and ambition. But as its cybersecurity tools gain global reach, questions around oversight are becoming harder to ignore. The challenge now is finding space to innovate without losing control of how those innovations are used, or how they’re perceived.
The NSO Group, an Israeli cyber company, is one example. Pegasus, its flagship spyware, once received praise for helping law enforcement track criminals. That reputation has since unraveled as a U.S. court ordered NSO to pay $168 million in damages to Meta, after Pegasus was used to access WhatsApp accounts linked to journalists, diplomats, and human rights groups. The ruling brought fresh attention to how surveillance tools are deployed, and what responsibility sits with the companies that build them.
Diplomatic pressure followed as NSO remained on the U.S. Commerce Department’s Entity List, limiting its access to American technology; attempts to reverse the decision were also denied. For Israeli regulators, the message has landed: global partners are no longer separating innovation from accountability.
Policy changes are certainly underway with encryption frameworks, export licenses, and internal oversight being tightened. The National Cyber Directorate is working with the Ministry of Defense and the IDF’s Matzov unit to bring more structure to how cyber tools are classified and controlled. It’s not a wholesale reset, but the shift is happening, quietly, and with growing urgency.
Global Implications and Partnerships
Israel’s approach to cyber sovereignty is unfolding in parallel with broader international trends. To maintain commercial access to EU markets, it must stay in step with GDPR standards. And in the realm of defense, long-standing U.S.-Israel collaboration is growing more operational, with Cyber Dome VII marking a continued investment in joint readiness.
Expanding Cyber Cooperation Beyond the West
Israel’s reach in cyber partnerships extends into the Middle East. Under the Abraham Accords, it has joined with the UAE, Bahrain, and Morocco on shared cyber-threat intelligence efforts. The “Crystal Ball” project, backed by Rafael Advanced Defense Systems and the UAE, aims to spot and repel attacks across the region.
Defensive cooperation also includes financial systems. Since 2021, the U.S. Treasury and Israel’s Ministry of Finance have pursued bilateral cybersecurity agreements to protect critical economic infrastructure. Another emerging platform is I2U2 (India, Israel, UAE, U.S.), which includes cybersecurity innovation among its areas of public-private collaboration.
These partnerships aren’t just diplomatic PR. They send a message to Israeli citizens and enterprises: infrastructure must be secure, interoperable, and resilient. From boardroom data agreements to shared cyber drills, Israel’s global partnerships reinforce domestic policy, and drive home the need for secure foundations in services that touch every citizen.
Infrastructure, Not Just Innovation
Israel’s approach to cyber sovereignty is starting to take shape around a few core priorities, like control over infrastructure, clarity around data routing, and a national security model that fully accounts for digital threats. That means building systems that can operate independently, withstand external pressure, and still meet global standards.
Encrypted services, dedicated VPNs, and cross-border drills all play a role, but the foundation rests elsewhere. Policy has to keep pace with capability. Infrastructure must be governed, not just optimized. And the public, whether institutions or individuals, needs to understand what’s at stake when key systems are managed offshore.
Israel’s next chapter in national resilience won’t hinge on physical defense alone. It will be shaped by how the country secures its digital ground, through regulation, architecture, and global cooperation.
Jacob Wolinskyis Founder/CEO of HedgeFundAlpha (formerly ValueWalkPremium), institutional-level hedge fund intelligence.