The Washington Post reports that while bombs continue to rain down on the blockaded Gaza Strip and hundreds of Palestinians are killed every day, along with smaller but unprecedented numbers of Israeli casualties, the financial cost of Israel's war on Gaza seems out of place to assess at the moment. Despite this, according to the newspaper, the economic factors behind the Israeli aggression, which has been ongoing for weeks, have significant implications for Israel, the Palestinians, and the Middle East region.
While Gaza has suffered "catastrophic" losses, their precise measurement hasn’t started yet. Half of the buildings and two-thirds of the homes in the sector have been damaged or destroyed, 1.8 million people have been displaced, and more than 21,000 have been killed, according to the health ministry in the sector.
Worse Than Coronavirus
The Israeli economy, too, has been hurt by the war, with some economists comparing the shock to the coronavirus pandemic in 2020, yet others believe this shock may be even worse.
The Washington Post states that government spending and borrowing in Israel have risen while tax revenues have fallen. The war's impacts, following an attack by Hamas on October 7, could affect Israel's credit rating as well.
Experts expect the Israeli economy to contract, with the forecasted gross domestic product (GDP) dropping from 3% in 2023 to 1% in 2024, as per the Bank of Israel.
The newspaper highlights growing concerns over the war's impact on Israel's high-tech sector, a key driver of its economy.
Hefty Costs
The Washington Post – in its reporting – reveals that Israel spends a substantial amount on deploying an average of 220,000 reservists over the past three months.
Many of these reservists work in high-tech fields, covering areas such as internet technology, agriculture, finance, navigation, artificial intelligence, pharmaceuticals, and climate-related solutions.
The sector relies on foreign investment, which had been declining even before the war, in part due to investors' concerns over instability from Prime Minister Benjamin Netanyahu's right-wing government's actions.
The costs extend beyond reserve forces' salaries and the price of bombs and bullets; Israel also supports 200,000 individuals evacuated from Israeli villages along the Gaza border and the northern border with Lebanon, which Hezbollah bombards daily.
Authorities have had to house and feed many of these forces in hotels in northern and southern Israel at government expense, with many suffering from post-traumatic stress and unemployment.
Tourism Halted
Tourism has come to a standstill, with Tel Aviv's beaches and Jerusalem's Old City empty of foreigners. Christmas celebrations in Bethlehem in the West Bank were canceled.
Construction work, which typically relies on Palestinian labor from the West Bank, has ceased. Exports across all sectors have declined, and Israeli Mediterranean gas fields were shut down early in the war but now operate at a fraction of their capacity, as the newspaper confirms.
"Calcalist," an economic newspaper based in Rishon Lezion near Tel Aviv, estimates that Israel's losses could reach $50 billion if the war continues for another 5 to 10 months, a sum equal to 10% of the country's GDP.
The Importance of U.S. Aid
The Washington Post addresses the significance of U.S. aid to Israel, stating that it is crucial for the country. The United States provides $3.8 billion in annual military support. The two nations also exchange defense technology to give Israel a strategic edge over its adversaries.
The White House is pushing a bill for additional funding that includes $14 billion in assistance for Israel early in 2024, but the proposal has stalled as Congress focuses on funding discussions for the U.S. southern border.
