The cost of war on the Israeli economy

Perihan Al-Rifai is a distinguished economist who has written extensively on Middle Eastern economies, cybersecurity, and capacity building. She has worked at the International Monetary Fund, the Qatar Central Bank, the American University in Cairo, George Washington University, the International Food Policy Research Institute, and most recently at the Atlantic Council. I recently read her latest book or report, “The Social and Economic Costs of War in Gaza.”

I know that the distinguished researcher works for an American organization, the Atlantic Council, but I must register my objection to the title, especially the use of the preposition (IN) instead of (ON) Gaza. However, I say that the title is somewhat neutral to the point of favoritism. However, the report itself is useful. I advise anyone who wants to learn about the extent of the social and economic costs on the warring parties, and the regional and international parties affected by the dire consequences of this war, to read the report.

I went back to him looking for neutral opinions and information issued by scientifically reliable sources, in order to estimate the losses incurred by the Israeli economy so far. According to Al-Rifai’s study, Israel lost a fifth of its economy in the third quarter of this year compared to the third quarter of 2023, when the total Israeli GDP for the entire year of 2023 was $576 billion, with a per capita income of $58.3 thousand.

According to the Trading Economics website, based on models for measuring the gross domestic product, Israel’s GDP is expected to fall to $513.5 billion in 2024, or a decline of $62.5 billion, or 10.8%. In 2025, it is estimated to rise to $527.3 billion, and in 2026 to $552.6 billion.

Or that the Israeli economy will return to its 2023 figure around mid-2027. This is assuming the current war ends by the end of this year.

Israeli economist Shir Haver, a strong opponent of Israel's brutal war on Gaza and Lebanon, gives stark examples of Israel's losses. He sees a collapse in all sectors, such as the significant drop in tourism revenues and the impact of the boycott of foreign universities on research and development in Israeli universities. He says that more than 100,000 companies are close to closing or have already closed. Many Israelis are transferring their money outside Israel for fear of losing their savings or their pensions, which are being eroded by the fall in the shekel exchange rate. He also confirms that the global company Intel, which intended to build a huge chips complex worth $25 billion, has canceled that project. More importantly, a large number of Israelis, estimated by some at least half a million people, have left Israel with no intention of returning, and another half a million have left Israel temporarily to Cyprus, Greece, Turkey and other countries.

According to a report by the Bank of Israel (the central bank), the war on Gaza will cost Israel about $400 billion over the years 2023-2032, and that the war will inflict direct losses on Israel estimated at about $57 billion by the end of 2025, while the indirect losses are much greater. Among the losses is the halting of workers from the West Bank to work in Israel and their replacement with thousands of workers from India and Sri Lanka, which entails transportation, housing and other costs that Israel does not incur with Palestinian workers. As a result of these effects, the economies of the West Bank and Gaza, which used to generate income for Israel of no less than ten billion dollars, have now disappeared.

The result of all these effects is that the annual growth rate of Israel’s GDP has fallen to less than 2% in 2024, after it had been 6.5% annually, and it is one of the fastest growing economies in the world. But if the war continues, the national product will fall to less than zero.

But most importantly, Israel has used a lot of its energy and support measures for its war effort during the first year of the war. It has recruited thousands of mercenaries, some of whom are workers to replace Palestinian workers. Israel has also used all its deadly weapons to kill, destroy and demolish the resistance, and the only thing left to threaten is its nuclear weapons. Most importantly, the costly variable in this war is the loss of its two most important assets. The first is the loss of its main sources of income from tourism, defense technology, cyber-advances, and cooperation with advanced Western research centers, and most importantly, its sources of income from the areas it occupies.

The second issue is the loss of the basic component of its survival, which is the human element represented in the economy as a whole and its basic resources. If reverse migration begins from Israel to countries where Israelis hold second citizenship, this means replacing the competent, educated and productive among them with Jews who will be less inclined to emigrate abroad, especially the religious extremists who live on support from the treasury, and on lands and rights due to their settlement in the occupied territories. These are less educated, cultured and productive, and most of them refuse to be conscripted.

It is true that Jewish or Zionist capital in the world is very large. But these people are driven to support Israel so that it can build a space for itself to depend on itself. After it almost felt reassured that it had reached this stage economically and socially, and that its technological superiority had become its main asset, and after tourism flourished, and it achieved an advanced growth rate commensurate with the Arabs’ acceptance of the status quo, the thunderbolt came on October 7, 2023 to remind its leaders, extremists, and reckless government, and they were assured that Arab silence was their main asset, especially the Palestinian position.

Even if the most prominent result of this war is the transformation of the resistance in Gaza, the West Bank and Lebanon into political parties, the fact that does not escape the minds of rational Israelis is that they will never prevail, and the best investment they can make is to improve their relations with the Arabs, stop conspiring against them with the Arab neighbors in Iran, Turkey and Africa, and create religious alliances with the whites in Europe and the United States. Many of these people have come to see the ugly face of Israel, which is of no use to their propaganda campaigns, nor to the protests of many civilized Jews around the world against Israel’s immoral, irreligious and inhumane practices.

There are 149 countries that recognize the State of Palestine. Israel's insistence on keeping the Palestinian land under occupation must end. Israel will not become part of the region on the basis that the Jews are a race that had two states in history, each of which lasted eighty years and ended. Most of these Jews converted to Islam or Christianity. As for the majority of the population of Israel, they are from the land of the Khazars and have no connection to the sons of Jacob, peace be upon him.

Therefore, we see many Israeli historians, professors and thinkers, whether Hebrew or Khazar, religious or religious extremist, or believers in Israel and its role in preserving the security of Jews in the world, or those who reject the idea of establishing a Jewish state, I say that many of the rational people among all of these see that Israel, by committing genocide (or genocide) against the Palestinians, is also committing mass suicide against itself, and therefore they do not see any future for it in this hostile climate that rejects its hegemony.

The last thing Israel needs is Netanyahu and his likes, murderers and butchers who decide their fate when they shed the blood of innocent people, and unjustly and negligently call them “collateral damage” or “unintended victims.”

Israel must seek to remedy its fate, because without acceptance in its surroundings and by its neighbors, its viability will be short and inevitable.