‘A time to break down and a time to build up,” said King Solomon.
Gaza’s time for such a transition has no doubt arrived, yet the coastal town that has been sacked and rebuilt countless times during its 3,500 years is about to learn that, much like the latest war it provoked, its economic and political healing will be asymmetrical with Israel’s.
The lull in fighting has yet to mature into a longer- term arrangement. However, as negotiators talk in Cairo, this round’s violence seems to have peaked, and its preliminary damage assessment indicates that the fighting’s impact on the Israeli economy is marginal.
The most glaring proof of Hamas’s economic ineffectiveness was the successful initial public offering last week on the New York Stock Exchange of MobilEye, an Israeli inventor of – how ironic – collision- prevention technology. Having raised $1.02 billion, reflecting a company valuation of $5.3b., it was the most successful share offering an Israeli firm ever managed abroad, and it happened in the heat of the fighting in Gaza.
MobilEye’s success, which would have been remarkable regardless of its unique timing, reflects not only American investors’ underplaying Hamas’s threat to their money, but also a dramatic transformation in Israel’s wartime economics.
During the great conventional wars of 1967 and 1973, Israel’s population was hardly half its current size, the economy was but a fraction of its present numbers and diversity, and the battlefield demanded hundreds of thousands of reservists, a massive recruitment which nearly paralyzed the economy.
In this bout, by contrast, the IDF made do with 86,000 reserve soldiers, a number which hardly even dented the overall economy. Whereas the economy and the population multiplied over the past four decades, the battlefield shrank. In the past, the IDF faced entire countries and multiple conventional armies; now it faced a guerrilla force limited to one urban sprawl.
While Hamas’s location and tactics created new military challenges, economically the warfare it required cost less than previous wars. One tabloid’s alarmist headline this week, that this summer’s was the most expensive war in the IDF’s history, could not have been more ignorant.
Iron Dome’s roughly 500 rocket interceptions during the operation cost up to $50 million. The air force’s hundreds of sorties and the munitions they used, the armored corps’ and artillery’s shells and engine hours, and the reserves’ enlistment were surely expensive, and Treasury officials assess them at roughly NIS 4.5b. Still, this cannot even begin to compare with the costs of the Yom Kippur War’s losses of hundreds of tanks and fighter jets, and the enlistment of hundreds of thousands of reservists, often for half a year.
Obviously, Operation Protective Edge hurt the economy in several of its corners. The main victim is the tourism industry, whose leaders believe that incoming tourism for the year’s second half will be halved, and one-fifth of hotel employees will be laid off. Yet the entire hotel industry’s turnover last year, which benefited from a record 3.54 million arrivals in Israel, was $2.7b., which is but 1.2 percent of Israel’s gross domestic product.
The main microeconomic victims have been factories and businesses in the most intensively targeted locations. Retailing in places like Ashdod and Ashkelon obviously slowed sharply over the past four weeks, and industrial plants’ output declined in some cases up to 30%, due to disruptions in shipments and worker attendance.
Still, the Manufacturers Association of Israel assessed that nationwide industrial profits declined during the fighting by up to 8% at most.
Similarly, farmers in the South who have seen crops rot while they were prevented from going to the fields sustained much damage as individuals. However, collectively they lost an estimated NIS 50m.
The numbers being as they are, compensation from the Treasury for the war’s economic victims is overall affordable, and already in the process of being calculated and delivered – based on the principles that businesses within 40 kilometers of the Gaza border will get the most, and hotels will receive aid regardless of their location.
In all, the government will likely spend NIS 1b.
in compensation packages, Tax Authority director Moshe Asher estimated this week.
Hamas’s equivalent of Moshe Asher, if he exists, has yet to emerge and explain to the Gazans who lost houses and businesses how their government intends to help them back on their feet.
THE DAMAGE in Gaza is clearly in the billions of dollars, though exact and impartial figures will take a while to emerge.
With thousands of its houses leveled and the sewage, power and water infrastructures even more inadequate than they were before the fighting, Gaza is thirsting for a massive reconstruction. Then again, the 365-square-kilometer coastal strip has been begging for economic surgery for years, and there were those who actively blocked the surgeon’s arrival.
Gaza has been on its own for nearly a decade now, since Israel’s retreat in ’05. Throughout this period, the US, EU, Japan and China were eager to help it build a viable economy, a relatively easy task.
Considering its seaside location, fertile soil and skilled workforce, Gaza can develop solid farming, industry and tourism that will honorably feed its generously estimated 1.8 million inhabitants. However, Hamas provoked both Egypt and Israel into closing its borders, and at the same time deterred large foreign investors from putting its population to work.
With its investments in rockets, tunnels and troops now evident, it is clear that Hamas valued fighting more than prosperity. Indeed, prosperity was no goal at all, if not anathema, for a government that wanted the people both available and fueled for war.
Changing this attitude, then, is the challenge that now awaits the international community as it sets out to salvage a new Gaza from the old one’s ruins.
Chances that Hamas will change its spots and embrace a civilian agenda are slim at best. Instead, Hamas wants money from Qatar and Turkey, open borders and new ports. This way it can oversee just enough reconstruction to keep a lid on public wrath, while resuming its hefty spending on guerrilla and terror.
Most of this will not happen, as Hamas will learn that in going to war, it has overplayed its diplomatic hand.
The European proposal this week, to establish an international apparatus that will finance and oversee Gaza’s reconstruction through the Palestinian Authority while preventing military imports and buildups will be difficult for Hamas to digest, yet some such arrangement is where things are now headed. Eight years after throwing PA President Mahmoud Abbas’s people from Gaza’s rooftops, they will soon emerge from under those rooftops’ debris.
Moreover, Hamas’s other nemesis, Egypt, will also be heavily involved in Gaza’s future, a role Hamas has already grudgingly acquiesced to by accepting Cairo’s mediation.
In all, Hamas is diplomatically isolated because its last remaining allies, Turkey and Qatar, are geographically distant and politically in no position to rival Egypt and Saudi Arabia in shaping intra-Arab affairs.
Gaza’s leaders must now accept a reconstruction effort or they will lose everything, and this effort will not be theirs to control and abuse.
Meanwhile, as the fighting subsided some were under the impression that Israel, too, emerged from Gaza’s rubble diplomatically debilitated. They are wrong.
THE REPRIMANDS to Israel by the White House, UN Secretary-General Ban Ki-moon and French President Francois Hollande were nothing to scoff at. All were genuinely concerned with what they decried.
Yet in Israel, too, practically everyone is unhappy with the civilian toll of the recent fighting.
The difference is only in the Israelis’ conclusion – that this is the cost of asymmetrical fighting, and it’s either their children or the enemy’s – which has yet to convince those who do not live under rockets and above tunnels.
Israel therefore emerges from Gaza with an advocacy challenge that it will have to treat as part of the asymmetrical war, and meet it with the same resourcefulness which produced Iron Dome and the same fighting spirit that felled the tunnels.
This front has three sections: diplomacy, law and media. In all these, Israel will have two overarching aims: Firstly, rid Hamas of its image as a national liberator and present it instead as a fundamentalist oppressor, part of a belt that stretches from Nigeria’s Boko Haram through Lebanon’s Hezbollah, Iraq’s Islamic State, and Iran’s ayatollahs to Afghanistan’s Taliban and China’s Uighurs. While most of these are at odds with the majority of the rest, all of them share an Islamism that is anathema to the rest of the world, from the US and Europe to China, India and Africa.
Secondly, Israel will have to shift the debate from “what have you done” to “what could be done?” With Iranian training, Israel’s enemies have reshaped the battlefield in ways that international law and Western military doctrines do not address.
The updating of war laws may therefore emerge from the recent fighting as an Israeli goal, as will military solutions for isolating weapons planted among civilians.
The efficiency with which Israel will fight on this front remains to be seen, but the broader diplomatic picture will eventually become clear in any event. Yes, the guns of Summer ’14 have set forth some tremors in Israel’s foreign relations, but when the dust settles two fundamentals will loom: the non-Muslim world faces a scourge called Islamism, and the West faces a ploy called asymmetrical warfare, which should be renamed “unfair fighting.”
As understanding of these grim facts spreads, the effort to present Israel as part of the problem will give way to its acceptance as part of the solution.