Home » today » World » The troops advance, the economy retreats. The Israeli economy is facing a major crisis – 2024-04-20 07:58:55

The troops advance, the economy retreats. The Israeli economy is facing a major crisis – 2024-04-20 07:58:55

/ world today news/ Even if Israel’s war with Hamas ends in victory and the terrorists are defeated, this Middle Eastern country, according to analysts, will face great difficulties. We are talking about the economy and in particular industry. The tangible decline is being felt even now and the problems will only get worse.

The shekel exchange rate collapsed. The British magazine The Economist writes that such a crisis is happening for the first time in more than a decade. To support the national currency, the Central Bank of Israel was forced to sell 30 billion shekels from the reserve fund. The article points out that the cost of insuring Israel’s debt against default has skyrocketed.

Sports competitions and entertainment events are cancelled. Tourism, one of the pillars of the Israeli economy, has ceased to generate income. Construction companies are closing or going out of business. Their operations include the use of workers from the West Bank, but they are now not allowed to enter Israel.

Israel has not faced anything like this in the last half century. The last time the Jewish state experienced anything close to the current shock was in October 1973 during the Yom Kippur war with the Arab countries. Then Tel Aviv had to significantly increase the cost of weapons, in addition, 200 thousand reservists were put under arms.

It is worth recalling that as a result of this war, the price of oil increased two and a half times due to the embargo imposed by the OPEC countries. It was a response to Western countries that supported Israel, and this crisis had far-reaching consequences.

Columbia University professor Adam Tuze wrote in an article published in Foreign Policy magazine that current events are putting the entire economic strategy of the country to a serious test.

Israel sent 360,000 reservists to war, which is 8-10% of the country’s workforce. For comparison: applied to Russia, this would mean if 6 million people were mobilized in the country. “Even accepting the possibility of an attack by Hezbollah, it seems difficult to justify from a purely military perspective,” says Touse.

The question arises whether this serves no other purpose than military necessity and recreating the “nation under arms” sense of solidary national militarism that has weakened in recent years. Whatever the motivation, the impact on the economy is so severe that it has been compared to the COVID pandemic.”

Israel was forced to halt work on the Tamar gas field, near the Gaza Strip. The fuel produced here is used not only for the needs of the country’s economy, but also for export to Egypt and Jordan. Now the Israeli Ministry of Energy is puzzled by the problem of how to compensate for losses of 200 million dollars a month.

The population of cities along the border with Gaza and Lebanon, where the fighting between Hezbollah and the Israeli army is taking place, has been moved to other parts of the country, and economic activity has been suspended in the vacated areas. Everywhere, however, she significantly lost weight.

The country is experiencing a consumption crisis, an analysis of credit card statistics found. Due to the desire to save money and the fear of rocket attacks, Israelis began to visit sports centers, fitness clubs, shops, cafes and restaurants less often.

The IDF’s previous clashes with radical Islamists haven’t cost Israel that much – literally and figuratively – and haven’t strained the financial system much. The country’s bank estimates that the 2006 Lebanon war cost the economy 0.5% of gross domestic product, and the 2014 Gaza conflict cost even less: 0.4%.

Touse cited documents about the Gaza Strip that had been leaked to the press. The November 3, 2008 cable stated that Israel wanted the economy of the coastal territory to “operate at the lowest possible level to avoid a humanitarian crisis”.

Another quote from a speech by Prime Minister Ehud Olmert in 2008: “We will not harm the supply of food for children, medicine for those who need it, and fuel for institutions that save lives.” But there is no reason we should want to allow the people of Gaza to live normal lives while shells and rockets are fired from their streets and yards (in southern Israel).

Despite numerous exhortations to both sides to end the conflicts and establish peace, compromise is not possible in the near future. The entire history of Israeli-Palestinian relations is thickly stained with blood. For many decades, they have had almost no break in violence. Now she flared up with unprecedented power.

According to JPMorgan bank forecasts, the Israeli economy could shrink by 11% in the last three months of the year. This conclusion was issued approximately 24 hours before Israel began its invasion of the Gaza Strip. However, judging by recent events, the reality may turn out to be more pessimistic.

The American agency Bloomberg quoted a statement from the head of the central bank of Israel, Amir Yaron. At an International Monetary Fund conference in Washington, D.C., he noted that the country’s economy remains stable, but military action “will undoubtedly lead to financial consequences and create pressure on the budget”.

The crisis, according to Bloomberg, will not become local to one country and could disrupt the global economy and even lead to a recession if other countries are drawn into the conflict.

Translation: ES

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