‘It’s going to be tough’: the impact of war on Israeli lives and businesses

‘it’s going to be tough’: the impact of war on israeli lives and businesses

Photograph: Gali Tibbon/The Guardian

Cafe Merkaz is busy. A handful of patrons sit at its half dozen tables on Jerusalem’s Hanevi’im Street on a sunny lunchtime, while inside the coffee grinders grind and a pile of sandwiches on the counter shrinks hour by hour.

“A month or so ago, things looked pretty desperate. But we had twice as many people through the door this morning by 10am as we had in entire days back then. Now I think the year is just going to be tough, but we’ll hang on,” said Yaakov Saly, the 27-year-old owner.

Across Israel, many are saying the same thing. In the weeks immediately after the surprise attacks launched by Hamas into the south of the country on 7 October that killed 1,200 people, mostly civilians, the economy slewed to a halt. Shoppers stayed at home, investors stalled their visits, concerts were cancelled, crops went unharvested and staff disappeared as about 350,000 reservists were mobilised for the military offensive in Gaza. The tourist industry collapsed overnight.

In Gaza, the war has reduced swaths of the territory to rubble, displaced 1.8 million peopled and killed more than 25,000 Palestinians, according to local health authorities. Two-thirds of the victims are women and children.

Although there are signs of revival on the streets of Jerusalem or Tel Aviv, experts warn the true costs of the war are impossible to calculate because no one can say how long it will last. “The economic impact of the evolving conflict … is highly uncertain and depends on [its] duration, scope and intensity,” the Organisation for Economic Co-operation and Development said in a recent report.

Israel recently demobilised many of the 350,000 or so reservists called up after 7 October. The measure complied with increasingly insistent advice from Washington, but was also aimed at protecting Israel’s crucial hi-tech sector, which accounts for 12% of employment and nearly a fifth of overall economic output. The sector, which employs many young people, was already suffering from high global interest rates and political turbulence in Israel.

“In the short term, the main problem is that the sector lost 10% of its employees. I have lots of people I haven’t seen since 7 October. This is for four, maybe five months. It’s unprecedented,” said Dror Litvak, managing director of Experis Israel, a cybersecurity firm in Tel Aviv that employs 750 people.

With schools shut until recently, many Israelis were also forced to give up work to care for children. Others had difficulty focusing in their professional lives.

“You have those who are still here but who are not at 100% output … I have lots of people in my management team who have husbands or sons in Gaza. It was mentally very hard,” Litvak said.

Still, only a fraction of those mobilised have been released, with many of those who were withdrawn from Gaza being sent to Israel’s disputed northern border with Lebanon.

Cafe Merkaz has only just recruited new staff to replace employees who were either mobilised or travelled overseas after the 7 October attacks. “I haven’t drawn a salary for months, and I haven’t had a day off either,” said Saly.

Some Israeli businesses now favour women, who are less likely to be called up in the event of future conflicts, for new hires.

Many experts predict that, if a new conflict in the north is avoided, Israel’s economy will rebound in 2025, allowing money borrowed to cover the costs of the current conflict to be repaid.

Munitions, reservists’ salaries, caring for 150,000 Israelis displaced by the fighting and other costs so far total about $5bn (£3.93bn), according to some estimates. Others calculate that the war costs Israel in the region of $200m a day.

The country has recovered fast from previous conflicts, Covid and the financial crisis of 2008 – and has also received a substantial increase in US military aid, already around $3.8bn annually, since the outbreak of war – but may soon face expenses related to a planned expansion of the military, rehabilitation of veterans, pensions for bereaved families and restocking depleted military stores.

One important factor is the fate of the 136 hostages who remain in Gaza, said Prof Zvi Eckstein, head of the Aaron Institute for Economic Policy at Reichman University, Herzliya. If they do not return home there will be a “big economic impact” in the future, analysts said.

“Israel can afford these wars as long as the young people feel safe here … It is sentiment that is the most important thing,” said Eckstein. “It makes people invest, buy things, build more houses and makes foreigners invest and come here.”

The war also has other effects. More than 100,000 Palestinian labourers have been stopped from entering Israel, crippling the construction industry and inflicting immense hardship in the occupied West Bank. Last month Bezalel Smotrich, Israel’s finance minister and the head of a far-right religious party, sought to justify the ban, saying: “There is a war, and war has consequences.”

Many Israelis already complain about soaring prices, although inflation remains low by international standards. This may not necessarily turn more voters against the most rightwing administration ever in Israel, however.

“The most important thing for voters … [is] identity politics. Most of the poor people are Arabs or ultra-Orthodox [Jews] and they either don’t vote or vote for their own parties,” said Prof Gideon Rahat, a political science professor at Jerusalem’s Hebrew University.

In recent weeks, Israeli military officials and politicians have suggested that fighting in Gaza could last for many more months, possibly all year.

“The new year has arrived, and most of us still feel like we are in the middle of one long day that began on October 7,” wrote commentator Alon Ben David in Ma’ariv newspaper earlier this month. “It is obvious to all of us that Israel won’t be the way it used to be, but reading the economic data of the first three months of war allows us to outline more clearly [what] we will be for the next few years: a mobilised country.”

News Related

OTHER NEWS

Disrupt Burrup protesters searched and phones seized

Disrupt Burrup Hub group say police have issued move-on notices prohibiting access to the WA site. A group of climate activists and filmmakers say their phones have been seized during ... Read more »

The generation driving a ‘megatrend’ of poor mental health in Australia

As individuals, we have unique experiences that affect our mental health and wellbeing, but what about the collective experiences that influence each generation? The mental health of Australians has been ... Read more »

Geraldton meatworks set to reopen after five years in bid to meet chilled meat demand from Asia, Middle East

Syed Ghazaly wants to see the Geraldton abattoir reopen early next year to process 1,000 sheep a day. (ABC Mid West Wheatbelt: Chris Lewis) The new owners of a mothballed ... Read more »

Blues seek ‘growth’ as pre-season begins; new Hawk aims to be AFL’s serial pest

Carlton coach Michael Voss says he and his players understand there are heightened expectations on them, but insists the Blues are ready to develop individually and in their game plan. ... Read more »

Bulldogs continue signing frenzy with swap deal

The Bulldogs’ off-season signing frenzy is set to continue with the club reportedly set to land Cronnor Tracey in a swap deal. The Sydney Morning Herald reports Tracey is expected ... Read more »

Customers to weigh in as Optus disruption comes under microscope

Consumers and impacted businesses are being urged to have their say on the Optus outage, with the federal government laying out the terms of reference for its review into the ... Read more »

Released detainee unable to be contacted by authorities

It has been revealed a released immigration detainee is unable to be contacted by authorities. Border Force has referred the matter to the Federal Police as authorities are attempting to ... Read more »
Top List in the World