More than one month war in Gaza is having devastating effects on Israeli business activity, with hundreds of companies on the verge of bankruptcy.
The Israeli labor ministry says that around 765,000 Israelis or 18% of total workforce - are not working after being called up for reserve duty to fight the Palestinian resistance in the Gaza Strip.
According to the Financial Times, evidence is already mounting of the war’s destructive impact on the regime's economic activity.
Last week, financial measures unveiled by Israeli Prime Minister Benjamin Netanyahu and his finance minister Bezalel Smotrich drew condemnation from business groups.
In an attempt to ease rising economic anxiety, the Israeli war cabinet announced new provisions. Yet, a group of 300 leading Israeli economists called on Netanyahu and Smotrich to "come to your senses".
"The grave blow that Israel was dealt requires a fundamental change in national priorities and a massive rechanneling of funds to deal with war damage, aid to victims and the rehabilitation of the economy," they said in an open letter.
The Financial Times cites Eugene Kandel, chair of Start-Up Nation Policy Institute, a think-tank, and one of the signatories of the economists’ letter, as saying that the Israeli government has still not shown it has understood the gravity of the situation.
Economic experts inside the occupied territories have expressed grave concern that Netanyahu's promised financial packages for companies at high risk of sinking into bankruptcy will not be enough should the regime's economic prospects continue to worsen.
Netanyahu’s coalition partners from ultra-Orthodox and settler parties are continuing to direct vast sums to projects that critics say have no place in a war economy, such as a scheme to encourage religious observance among students.
According to Foreign Policy magazine, Israel’s wartime economy can’t hold up forever and may be heading toward a recession very soon, with the regime’s massive military mobilization near Gaza leading to serious economic strain.
At the top of the list of sectors that will bear the brunt of a long war on the Gaza Strip include oil and gas, tourism, health care, retail and technology among others.
The Israeli economy is estimated to have reportedly entered the war with US$200 billion in reserves and US$14 billion in military aid from the United States. Yet experts say the ongoing war on Gaza will cost the Israeli economy billions more and take much longer to recover than it has in the past.
Essentially, the war on Gaza is widely expected to take a heavy toll on the regime's economy in the short and long term, according to economists and analysts.
Global credit rating agencies such as Fitch Ratings, S&P as well as Moody’s Investors Services have warned that a further escalation of the war will result in a downgrade of the regime's sovereign debt rating.
S&P has already lowered the Israeli credit outlook to
negative, citing the risks of the war on Gaza broadening, with a more pronounced
effect on the economy. The rating agency pointed out that the negative outlook
reflects the risk that the … war could spread more widely or affect Israel’s
credit metrics more negatively than we expect.
One economist told Foreign Policy that the cost of two previous wars - the
Israeli war on Lebanon in the summer of 2006 and against the Gaza Strip in 2014
- cost up to 0.5% of the GDP and mainly impacted the tourism sector. But
this time, estimations are set for a fall of up to 15% in annual terms in the
last quarter of this year.
A long list of airlines has stopped flying to the Israeli-occupied Palestinian territories. The flight cancelations will further damage the Israeli economy, first and foremost, the tourism industry that the regime heavily relies on.
It has also proven a challenge for the hundreds of thousands of anxious Israelis seeking to leave the occupied lands amid the war and daily rocket salvoes being fired by the Palestinian resistance forces from the besieged Gaza Strip.
Rocket barrages that appear to have no end in sight. Over the 30 days since the Hamas operation, hundreds of thousands of Israelis have been displaced or fled from settlements near the Gaza Strip and all the indications are that they will not be returning.
According to the Israeli Ministry of Tourism, hotel rooms are almost fully occupied, not by foreign tourists, but instead by Israeli settlers seeking shelter and making plans to leave the occupied Palestinian territories. Many had already left by sea, with at least one American ship evacuating Israelis from the port of Haifa.
More are planning to depart, with online campaigns beginning to pop up that highlight how Israelis are all intending to leave the settlements near Gaza and other areas forever.
Since
Netanyahu took power in early January this year, brain drain has been common
among Israelis who were already furious with their new government.
Now, with incoming missiles on a daily basis and increasing anger at Netanyahu
and his cabinet ministers, the emigration of highly trained or qualified
Israelis has risen even further.
As the regime faces one of its most difficult times, one settler told Israeli media, "We fled to Cyprus right after the first siren Saturday. We’re a family of parents and four children. My gut told me that this wasn’t just another round, and my nerves had been frayed for 10 months from this country that had gone crazy on us. We bought tickets at 10 in the morning, and by 5, we were in Paphos. Now we’re here trying to calm down."
As the war on Gaza drags on, a lot of Israelis, along with their families, from all over the occupied Palestinian territories, have either already traveled abroad or voiced their intent to do so.
Their main concern is that they have no safety anymore as the largest war against the Gaza Strip in modern history risks spilling over and broadening. They fear for their lives.
