Since its inception some 77 years ago, Israel has been waging wars and conflicts with its Arab surroundings, both within Palestine and beyond. What distinguished the wars of the first five decades was that they mostly took place outside the borders of Palestine. Their human and economic costs were limited to military costs, some of which were compensated for through spoils.
Moreover, these wars – with the exception of the 1948 war – were short and limited in duration, and did not leave the economic and social impacts that have become the case with recent wars.
In fact, the relatively arduous wars after the 1973 war occurred following peace agreements, first with Egypt, then with Jordan, and finally the Abraham Accords. These wars – although not general with the Arabs, but rather limited and partial – became longer and more deadly, particularly since they now extended to inside Israel, not just the front lines.
This pattern of wars made the Israeli interior a battleground. Naturally, this has had extraordinary economic and social consequences for Israel, which had transformed into a completely Westernised economy.
As the war moved to the Israeli home front, the cost of each day of fighting was greater than the border front itself. Israeli experts have estimated for years, under conditions not as severe as the current war, that the damage to the economy for each day the war continues is at least half a billion shekels. This means that the direct cost of the war is approximately four times the declared military cost: factories are closed, workers are staying home, and more.
According to the (Israeli) economics newspaper Calcalist, the highest expenditure in the war, until the ceasefire which was declared in January, was on personnel and reserves, who served a total of 49 million days.
But the matter does not end there. Restoring a sense of security requires a significant troop presence along the border. The newspaper said that since the beginning of the October 7 war, approximately 840 soldiers have been killed and approximately 14,000 wounded, with an average of approximately 1,000 new wounded each month.
Calcalist quoted recent provisional estimates from within the security establishment that the cost of the war last year was 150 billion shekels, of which approximately 44 billion shekels were allocated to paying the salaries of reservists and personnel expenses.
This is the highest expenditure item in the war, more than weapons or operating platforms such as fighter jets. The minimum monthly allowance allocated by the IDF to each reservist is approximately 15,000 shekels, an amount which includes grants and bonuses. Today, the number of active reserve soldiers has decreased significantly.
In addition to personnel, the most expensive weapon used by the IDF so far in the war is the Arrow 3 missile, produced by Israel Aerospace Industries. Each missile is estimated to cost between $2 and $3 million. In the current war it has been used extensively operationally to intercept ballistic missiles launched by Iran toward Israel in April and October, as well as to intercept missiles launched by the Houthis from Yemen.
It is no coincidence that the Bank of Israel published pessimistic estimates for the Israeli economy over the next two years, both in terms of gross domestic product and growth rates. However, no less significant is the loss resulting from the decline in foreign investment due to the unstable security situation. The newspaper Globes believes that the war could cost Israel no less than a decade in economic terms.
[by Hilmi Mousa in Aljazeera]