Cost of Israeli War on Gaza

V Subrahmanyam

The ongoing Israeli war on Gaza that killed 22,000 Palestinians-most of them women and children-wounded more than 50,000, and ravaged vast swathes of urban dwellings numbering around 1,00,000 and thousands still missing perhaps died under the rubble, would cost the Israeli economy $54 billion over the current and next year, according to the Israeli National Economic Council. “Israel will likely bear two-thirds of the total costs of the war, with the remaining portion covered by the United States in the form of military aid”.

In October, the Israeli Ministry of Finance estimated that the economic cost of this horrendous war was $270 million per day. It is equal to 10% of gross domestic product. It was presumed that the war would last between eight to 12 months. It would be limited to Gaza, without full participation by Lebanon's Hezbollah, Iran or Yemen. It is hoped that 350,000 Israelis drafted as military reservists will return to work soon. As the war is likely to spill beyond the borders of Gaza, already the Houthi rebels are firing rockets from Yemen into the Red Sea, and Lebanon is intermittently disturbing Israel with its rockets; these estimates are likely to go awry. And it is going to be a long-drawn war. The Chairman of the US Chief of Staff said: “Every conflict that I’ve been involved with throughout my military career, except probably Desert Shield/Desert Storm (US war on Iraq of 1990-91), has gone a lot longer than most people would have imagined.”

Calcalist, a newspaper from Israel, said half of the cost would be in defence expenses that amount to $276 million a day. Another $1.1-1.6 billion would account for loss of revenues, 4.7-5.5 billion for compensation for businesses and $2.75-5.50 billion shekels for rehabilitation. These estimates are for one year. The Finance Ministry said, “in the event of war, the recovery will be slow, and the economy will not return to its pre-war trend.”

A workforce shortage is pinching Israel’s industry. Next to the US, Israel understands that Modi is their close ally. The Hindutva brigade already came out on the streets and expressed solidarity and showed their internationalism by sending signals to Israel that “they would join the Israel forces to crush the Hamas”. Social media is replete with such vows by these Modi followers. But not a single person has joined so far. Israel's Ambassador announced that they would like to recruit workforce from India, as Palestinian workers from Gaza and the West Bank would no longer be coming to work in Israel.

A spokesperson for the Israel Builders Association, Shay Pauzner, said it was looking to "bring in 10,000 as per government approval" to Israel, and the number of workers might increase to 30,000”. This month in Haryana, 10,000 openings for skilled workers in Israel's construction sector were among the jobs advertised by a government-run employment service. However, all the major trade unions opposed the government willingness to send Indian workers in the conflict zone, and that too when Israel is waging a ruthless war on Palestine. The Construction Workers Federation of India is one of the labour unions that has declared its opposition to sending members to Israel, criticising its "genocidal attacks" on Palestinians.

Tourism has slumpedin the aftermath of the Hamas attack and the ongoing war in Gaza. Supply chains are disturbed. Construction activity is low, and the inactivity costs $ 37 million daily.Israeli Prime Minister Benjamin Netanyahu has repeatedly said the war will last for as long as it takes to destroy Hamas. He and his cabinet have put no timeline to end the war. Government revenues are expected to drop by $ 9.6 billion due to lower corporate and real estate taxes and a slowdown in private consumption. The document said that if no changes are made to planned taxation, the fiscal deficit would increase to close to 6% of gross domestic product, well beyond the 2.25% ceiling set by law.

The real cost of the war lies in the increasing burden of public debt and hike in taxes. Though people are at present leaning toward far-right ideas in the wake of the Hamas attack on October 7 and the leftist voices became bleak, as the war gets dragged, its impact on the economy will certainly force the people to consider the unjust character of the bone-chilling war on Palestine people. This ghastly war might prove costliest for Netanyahu. Many observers have presumed that his political career will soon end, as Israeli Prime Minister Golda Meir did after the Yom Kippur War of 1973.

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Frontier
Vol 56, No. 30, Jan 21 - 27, 2024