The Israeli war on Gaza left its heavy effects on all aspects of life, including the financial and economic sector (Al Jazeera)

The economy revolves around politics, both positively and negatively, so the recent Gaza war has repercussions on the Israeli economy, the Palestinian economy, the surrounding economies, and the international economy.

It is surprising that there is almost silence about this, as the global economy has gone through successive shocks in recent years, starting with the Corona virus and the closures, then the war between Russia and Ukraine, and then the last war, so the global economy has become limping and not running, as is required to return to recovery, as Pierre-Olivier Gorincha, chief economist at the... International Monetary Fund.

What expresses all of the above is the statement by World Bank President Ajay Banga in an interview with Reuters that he regretted the timing of the war, because: “At a time when central banks began to feel more confident that there was a chance for a smooth decline in interest rates, the conflict made things more difficult.” In his opinion, it is: (a human tragedy and an economic shock that we do not need), and he believes that: (international organizations have confidence in stopping the escalation of the conflict in a way that leads to avoiding more pain, and not adding more questions to the path of economic recovery).

Hold back gains

Here we can say; Geopolitical tensions are the real danger to the international economy and its recovery. Global production has begun to recover, but slowly, as it grew by 3% this year, and is expected to decline to 2.9% next year according to analysts’ expectations. It is also estimated that the euro zone will achieve growth. It is 0.7% this year, and this percentage will decrease to 1.2% next year.

These percentages are lower than what the International Monetary Fund estimated, and there are fears that the Gaza war will play a role in curbing the hard-won gains on the growth and inflation fronts. One of the tools for this restriction is oil and gas prices. In its first reaction to the Gaza war, Israel ordered Chevron to stop gas production in the Tamar gas field, which costs it $200 million a month, and this has repercussions on gas imports at the international level.

The focus was on the repercussions on the Israeli economy, as numbers flowed from Israel quickly, while the repercussions were devastating on the Palestinian economy, which is difficult to quantify in light of the comprehensive destruction inflicted on the Gaza Strip and the siege imposed on the West Bank, but the concern at the international level is deeper. Much of this is also the case, as the Western alignment behind Israel has raised concerns among countries with emerging economies. This concern is called into question: What if a dispute occurs with the West on radical issues, will we be subject to sanctions and besiegement? Does this extend to the use of merciless force and the destruction of the economy?

Will the destruction of cities and factories - the case of Russia in Ukraine, and the overwhelming destruction of Gaza - become a model for future wars that relentlessly destroy everything in order to achieve victory?

India's power

What is striking is that India has a major economic power, but it is closely monitoring the situation, and a number of local research centers have even put forward further discussions about the repercussions of potential disputes with the West on the Indian economy.

The same is true for China, which has prepared several scenarios for possible crises and their impact on the Chinese economy. But beyond that, there are now questions about Israeli military industries and the extent of the ability to rely on Israeli weapons?

This may affect, in the long run, Israel’s ability to complete weapons development programs and export weapons manufactured in Israel, in light of the rise of competing industries in many countries, including Turkey and Iran. This leads us to ask: Is Israel a safe environment for investments in light of its successive wars with Israel? Its geographical surroundings?

Unlike all previous wars that Israel has fought, the latest Gaza war is being fought by Israel in a turbulent economic situation and under mismanagement and misdistribution of resources even in light of the war, to the point that 300 Israeli economists were forced to send a letter to Benjamin Netanyahu and his Finance Minister Bezalel Smotrich entitled: (Come to your senses), calling for a fundamental change in national priorities and a significant redirection of funds to deal with war damage, assist victims and rehabilitate the economy.

They expected wartime expenditures to rise to billions of dollars, and urged Netanyahu and Smotrich to immediately suspend funding for any activities that are not critical to the war efforts and to rehabilitate the economy, while halting the disbursement of funds allocated to the agreements of Netanyahu's coalition partners to rule Israel from extremists.

The Israeli Central Bank lowered its forecasts for economic growth during the year 2024, assuming that the war would not last longer and have an impact more than it is now, and also allocated $30 billion to support the Israeli shekel, the currency.

Israel entered the war with a cash reserve of 200 billion dollars, which is now at risk of bleeding. Israel’s gross domestic product fell by 15%, which is the highest percentage in Israel’s history. The crisis that the Israeli economy will face is employment. During the Gaza war, 7,000 Thai workers fled Israel. Israel has lost mainly Palestinian workers coming from Gaza. This is destroying many sectors of the Israeli economy, such as: agriculture and industry, as well as the tourism sector, the effects of which have spread to neighboring countries.

Loss of growth opportunities

The talk about the effects of the ongoing war on the Israeli economy revolved around the direct and immediate effects, but the effects in the medium and long term are not clear. Economists see profound effects from which the Israeli economy may not recover easily. This is what makes the cost of the war high, and it is a reaction over a long period. The war and the violence that was practiced during it, and then the loss of opportunities provided by the policies of normalization of Arab countries with Israel.

The natural economy is based on the neighborhood and benefiting from it to the maximum extent possible, but severing relations with the neighborhood makes any economy lose natural opportunities for growth and interaction. The Israeli economy, with its excessive violence in Gaza, has lost the opportunity for economic normalization with the neighborhood. Because of the hostility with the peoples of the region, which are the consumer and the producer.

We have in mind the Egyptian popular rejection of any Israeli economic product, and the fear of successive wars in Israel and with its neighbors makes the stability of the Israeli economy impossible.

On the other hand, we see that talking about the Palestinian economy has no place in parsing, as all the necessities of life in Gaza have been destroyed, and severe damage has been caused to the olive harvest season in the West Bank, and tourism at Christmas seems to have become in vain, both for the West Bank. And Israel alike.

Independent economy

What most expresses the scene of destruction is the return of the Palestinians to using firewood to cook bread, or using salty sea water for drinking, etc. The Gazan economy was leveled to the ground, and Gaza became without an economy, making the task of rebuilding it in the post-war period an arduous task.

Therefore, many calls for the reconstruction of Gaza depend on Gulf support, especially from Qatar and Kuwait, so the question arises: Will there be comprehensive plans for reconstruction that will end the conflict and even remove the dependence of the Palestinian economy in Gaza and the West Bank on Israel for everything from electricity to water to... Foodstuffs...etc.

What the recent war revealed is an important shift in the Palestinian character in all generations, as adherence to the land has become more important than all the necessities of life. There are 2 million Palestinians living under harsh conditions in an absolute siege aimed at displacement and extermination, and even when some of them refused to leave their homes and preferred to die in them. The value of life has become equal to the value of holding on to the land. This is what shocked the Israelis, Americans, and Europeans, as the calculations of steadfastness have nothing to do with purely material economic calculations.

Therefore, returning to building an independent, self-reliant Palestinian economy is the lesson that the Palestinians have learned, and it is the same lesson that they have absorbed from the bitter experiences of history, that relying on Arab countries for advocacy and support will be destructive of the resistance and the war of liberation.

The war was a surprise to everyone, and the Palestinians bore the price and responsibility for it. The siege on Gaza since 2007 led to limitless innovations and solutions. The siege generated brilliant, innovative minds in all fields, until life became possible under Israeli pressure. When you remove everything from a person, you push him to despair. And suicide, or a new spirit coming upon you beyond your imagination, is what happened.

The opinions expressed in this article are those of the author and do not necessarily reflect the editorial position of Al Jazeera.