Gaza: The Real Story?

I just read what to me was an absolutely fascinating analysis of what the war in Gaza really was about: Israel Facing Major Economic Consequences for 50 Day War on Gaza. If you have the time, click through and read, or listen to the video.

The analysis is entirely economic. Israel’s military spending, the highest per capita in the developed world, is putting pressure on its standard of living. That stirred a vigorous public debate. Enter, the Gaza war:

And what’s amazing is how the entire public debate in Israel has seemed to forgotten this debate, the economic debate that existed merely days before the war against Gaza started. And in that debate, there was a very heated argument between the Ministry of Finance and the Ministry of Defense about cutting the defense budget. Israel is spending more on defense as a proportion of its total public expenses than any country in the world, or at least any developed country. And this has taken a very heavy burden on the population. There has been an attempt to try to cut down the cost of the military. And the army has threatened that they’re going to not be able to provide Israelis with enough security. They basically tried to scare the public about various menaces. And when it seemed that the Ministry of Finance is maybe going to win, that’s exactly when the conflict erupted, first with this operation Brother’s Keeper, in which Israel invaded the West Bank. Netanyahu, Prime Minister Netanyahu, wanted to blame Hamas for this escalation. So he diverted the aggression towards Gaza. That’s actually what started this 50 day onslaught on Gaza known as Protective Edge. And now all of this debate has been forgotten. Everybody forgets that this all started with the attempt of the Ministry of Defense to protect their own budgets. And the situation now is that the debates that we see in the news are not about whether the defense budget can be cut or how much can it be cut, but how much is it going to be increased.

Unfortunately for Israel, Hamas fought far harder than Israel estimated it would, and the economic damage to Israel was extensive:

So here we have the Israeli government coming to believe that Gaza is a soft target and that they can just bombard Gaza, and as the very cynical term goes, mow the lawn every couple of years and also experiment with new Israeli weapons and so on. This has indeed happened in the last four attacks of Israel against Gaza. This time, the Hamas Party said they’re not just going to take this lying down, and they’re going to try to fight back, even against overwhelming odds by the Israeli army, and that they refused, actually, to accept the Israeli terms for a ceasefire. Israel simply demanded sort of a surrender. Hamas wouldn’t take that option. So that turned into a 50 day war. And a 50 day war is something the Israeli economy was not prepared for. The Israeli government did not wish it. And it affected every aspect of the Israeli economy. There has been massive damage to the area–economic damage, I mean; not so much physical damage, but economic damage to the areas surrounding the Gaza Strip, where people were afraid to go to the factories, so the factories stopped working. Farms have stopped working as well and produce was not harvested. And there has been a slowdown in the shopping habits of Israelis. There’s been fewer cars being bought, fewer houses being bought. Tourism has taken a very serious hit. So more than 25 percent reduction in tourism. And for 50 days of slowdown of the economy, that has very long term impact on the Israeli economy.

So, in addition to that, we cannot forget the impact of the international boycott movement against Israel, boycott, divestment, and sanctions, because every time Israel is using so much violence, more and more people joined this movement. And there have been some very large successes of that movement to make the Israeli economy accountable for the crimes committed by the Israeli government and the Israeli army. And we should also not forget the cost of the defense budget. And that’s something that now, as the government is facing with trying to restore the economy and trying to compensate–there are over 3,000 demands for compensations from Israeli businesses and farms for damage inflicted during the war. But instead of being able to compensate these factories and farms, the Israeli government has announced a widespread cut that is planned for all of the ministries–health, education, transportation, everything–in order to finance a massive increase in the Ministry of Defense. And that shows that this war has really been unsustainable for the Israeli economy.

The potential demographic impact? Devastating:

So, actually, they don’t have a source to finance this war. Right now–well, the first idea was just to increase the deficit, meaning to borrow, use borrowing to finance the war. That would increase Israel’s budget deficit to a level where the Israeli credit rating by international credit rating agency, is certainly going to drop. And that’s something the Israeli government is very worried about, because, of course, if you increase your debt and at the same time your credit rating drops, you’re going to pay a very high interest rate on the debt that you’ve accumulated. And that’s going to mean that a larger part of the Israeli budget is actually going just to pay the interest and to service the debt rather than to provide those services, the public services that are so direly needed.

A lot of Israelis realize this. This is not just some kind of secret that only economists are aware of. This is something that’s very well understood by the general public. And because of that, many Israelis are leaving. And, in fact, right after the end–well, it’s not really an end of this particular war; it’s more of a ceasefire. But right after the ceasefire has been announced, there has been a poll among young Israelis, and a third of young Israelis responded that if they have the chance, they would rather leave Israel.

Wow! A third of young Israelis would leave Israel if given the opportunity.

And the impact of the BDS (boycott, divestment and sanctions) movement may be far more profound than most people believe:

So most Israeli citizens have some kind of financial savings scheme, for example a pension plan or an insurance plan, which is part of, for example, their monthly payment or deductions from their salary. And these large institutional investors invest a very large proportion of their money into these massive Israeli corporations that dominate and monopolize the Israeli economy.

These are the same corporations that are actually targeted very effectively by the BDS movement. Some of these corporations or the ownership of these corporations, being so concerned about the BDS movement and the fact that there’s so much criticism, are trying to move their investments outside of Israel and abroad, and they’re doing that very fast. Some of them, particularly [?], they are the biggest–well, at least in the top five or six capital owners in Israel, they have made their shift of investment outside of Israel so fast that they made very bad investment decisions and got almost to the verge of bankruptcy. And that means that every Israeli citizen who’s invested into these corporations through their pension fund or through their insurance scheme suddenly lose money. They actually lose money from this. Israelis don’t like to talk about this. The Israeli newspapers, economic newspapers, don’t really like to talk about this. They try to frame it in other terms, to say that it has nothing to do with the occupation, nothing to do with the war; it’s because of the international financial crisis. But the truth of the matter is that those companies that are within the crosshairs of the BDS movement, that are being made accountable by the international community for their involvement in the occupation and for their support of the Israeli government and its crimes, are also the same companies that have the biggest losses.

Are there counter-narratives to all this? Undoubtedly. But, at least to me, there is a logic and coherence to this analysis that makes more sense of the dynamic behind the recent Gaza war than: “Hamas are terrorists. They fired 2000 rockets. Israel had to defend itself.”