Month: October 2023

Source: Times of Israel, 30 October 2023

The horrific Hamas attacks on 7 October 2023 in Southern Israel led to the killing and maiming of thousands, primarily civilians.  This in turn has unleashed Israel’s brutal war on Gazans. While one is preoccupied with the death and destruction in Gaza that are beamed live on TV, especially by Al Jazeera, disappointing news within Israel on the economic front is building up. Here is this vivid commentary by one analyst.

“Businesses are operating with skeletal staff, if at all. Major Israeli employers have announced furloughs. Traffic is light because so few people are commuting to work. Non-essential services are being cut or reduced, from recycling to library hours. Schools that had been shuttered since before the war are starting to reopen, but on reduced schedules because they can’t have more students than can fit into their bomb shelters. Universities are closed until December — at least.

With shipping traffic to Israel disrupted and international flights sharply reduced, Israelis are experiencing shortages. Some local food manufacturers can’t staff their factories or pick the produce in their fields because they depend on Palestinian day laborers who are now barred entry into Israel or Thai farmworkers who left after at least 24 of their compatriots were killed in Hamas’ attack. The first week of the war, supermarkets ran out of tomatoes and cucumbers. Last week it was eggs.

Tourists have disappeared, entertainment venues, and many restaurants remain closed, and shuttered museums are moving important holdings to safe places.

Israel’s hotels are bursting at the seams, however, filled with many of the 200,000 or so Israelis who have been evacuated from their homes near the front lines. This already small country, roughly the size of New Jersey, feels even smaller with areas near Gaza and Israel’s northern border now closed military zones. Every day the authorities announce more evacuations.”

In terms of the aggregate economic metrics, the current situation appears grim. The shekel has hit a 14-year low; the stock market is down by 10 percent. International credit rating agencies are making ominous declarations of a downgrading of Israel’s sovereign credit rating.

A former head of the research department of the Central bank expects the third quarter GDP growth to decline by as much as 15 percent from a projected growth rate of 3 percent for the same period. Of course, in the past, the economy has rebounded quite quickly – as in the case of the 2006 and 2014 wars with Lebanon and Gaza respectively – but a lot depends on how long the current conflict is likely to last and whether it will spread across the region.

More recently (30 October 2023), 300 top economists stressed Israel is facing an ‘economic crisis’. They called on (Prime Minister) Netanyahu and (Finance Minister) Smotrich to act in a different way.

“You do not understand the magnitude of the … crisis that Israel’s economy is facing, you must act in a different way,” the letter says. “The severe blow that has befallen the State of Israel requires a fundamental change in the order of national priorities and a massive diversion of budgets in favour of dealing with war damage, aid to victims, and rehabilitation of the economy. In our estimation, expected expenditure following the war will amount to tens of billions shekels.”

This proclamation is likely to militate against the negotiated transfer of so-called ‘coalition funds’ –worth tens of billions of shekels – to support controversial and idiosyncratic projects of the Ultra-orthodox (Haredi) community. This community has potent political clout. Haredi Jews in Israel currently account for 13.6 percent of the population and, given their very high birth rates, projected to become 16 percent by 2030. What is germane to note is that Ultra-orthodox Jews have very low employment rates. Not surprisingly, this worries economists and financial analysts. Thus,

“the Finance Ministry’s Budgets Department head Yogev Gardos warned that the allocation of funds to ultra-Orthodox institutions and initiatives creates negative incentives for Haredi men to seek employment and will harm the labour market and the economy as a whole.”

Here are some grim projections made by the Finance Ministry’s Budgets Department head.

“Even before the implementation of the government’s decision and its expected negative effects on the economy, with no change in the employment rate among ultra-Orthodox men, the loss of cumulative GDP until the year 2060 is expected to be NIS 6.7 trillion,”

… if more Haredi men are not encouraged to work, by 2065 the government will have to increase direct taxes by 16 percent to maintain the same level of services that it provides without increasing the deficit.”

Hence, it is plausible to argue that the tension between the need to maintain the support of an important political constituency and the current budgetary and financial realities unleashed by the war is likely to increase. Whether the current government can resolve this tension remains to be seen. The longer the war continues, and the more it escalates across the region, the greater the adverse economic consequences. It seems that an immediate cease fire is an economically rational strategy.

Source: https://www.nytimes.com/2023/10/17/world/middleeast/biden-israel-gaza-anger.html

The current war on Gazans – not war in Gaza – represents the Israel government’s latest attempt at genocidal retribution against Palestinians. One could argue the cause (a horrific attack on largely defenseless men, women and children by Hamas militants inside Israeli borders on 7 October 2023 and the taking of hostages) justifies such retaliatory action.

Unfortunately, violence begets violence representing a display of collective blood lust. Where will this end, one wonders? The brunt of the state-sanctioned violence by Israel against the population of Gaza is being aided and abetted by the United States meekly supported by its allies in the collective West. Belatedly, one sees some voices of dissent within the EU (most notably Spain). All the talk seems to be about ‘humanitarian corridors’ and ‘safe zones’ to make the relentless Israeli bombing campaign against the people of Gaza seem more palatable. What is needed is an immediate ceasefire, the safe release of hostages, the ending of the blockade of Gaza by Israel, its reconstruction and rehabilitation and a move towards a durable political settlement between Palestinians and Israelis. Sadly, this is unlikely to happen as an entrenched, apartheid, ethnonationalist and highly militarized state finds that it can essentially inflict collective punishment with impunity on a population of more than two million to avenge the crimes committed by a few thousand paramilitary forces. Concerns about acts of war crimes by Israel and Hamas have been raised in some quarters but whether this will be pursued by the International Criminal court remains to be seen.

Israel has already realized that the narrative of good guys seeking justice by chasing bad guys is being rapidly replaced in the court of global public opinion by the rather negative view of a vengeful nation prepared to kill thousands simply to show how powerful it is. This realization is likely to mean that the Israel government will possibly go through the motion of a full-scale invasion, declare victory, and go home. At some point, the hostages will be released in exchange for thousands of Palestinian prisoners held in Israeli jails. Hamas will declare victory too simply by saying that they are still around. The enormous bill for reconstruction and rehabilitation will be picked up by the ‘international community’, while Israel will simply look the other way and wait for the next round of violence. How long this situation will last is anybody’s guess.

Genocidal retribution is not just a primitive urge to exact revenge. The case for it has to be carefully constructed over time to dehumanize the ‘other’ so that one is eliminating unworthy objects rather than human beings. The killing of thousands and /or their displacement will merely be seen as unavoidable collateral damage in the pursuit of the bad guys. This is where the use of particular words and their projection in the public domain becomes important. Thus, Defence Minister Yoav Galant did not make any distinction between Hamas and ordinary Gazans when he said that Israel s dealing with “human evil”. He cheerfully announced a ‘total siege’ of Gaza creating an evolving humanitarian crisis that is compounded by relentless aerial bombing.

Israel’s President, Isaac Herzog, opined:

‘It’s an entire nation out there that is responsible’.

Israeli Deputy Foreign minister Danny Ayalon, in an interview with Al Jazeera, pointed out that the Israeli plan is to force Palestinians into the “almost endless space in the Sinai desert, just on the other side of Gaza,” where they can live in “tent cities. As Aron Mate notes,

‘Invoking the ethnic cleansing of hundreds of thousands of Palestinians before and after Israel’s founding in May 1948, known as the Nakba (“catastrophe”), Ariel Kallner, an Israeli parliamentarian, said that Israel has “one goal”: a “Nakba that will overshadow the Nakba of 1948”.

US politicians are keen to match the bloodthirsty rhetoric of their Israeli counterparts. Thus, President Biden invokes the notion of ‘pure evil’ in describing Hamas. Nicky Haley, Republican Presidential nominee, wanted to ‘finish them’  (referring to Iran, the patrons of Hamas). Senator Lindsay Graham could not contain his enthusiasm for murder and mayhem. I am with Israel,” Graham said. “Do whatever the hell you have to do to defend yourself. Level the place.” 

Some even deny the grim reality of large-scale human suffering of Palestinians. Thus, Israeli Ambassador to UK in a TV show denies that there is a ‘humanitarian crisis’ in Gaza. As a veteran UK journalist points out, one must use the ‘language of genocide’ to engage in genocide. Any attempt to cultivate compassion and empathy gets in the way of this grisly endeavour. It is one of the bitter ironies of history that the descendants of the Holocaust have become the tormentors of millions of innocent people.