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Israel to suffer bigger economic losses than Palestinians
Economic stakes are high for Israel as tourism and logistics sectors affected negatively
July 15, 2014 5:26 by kippreport
By Atique Naqvi
Though 192 Palestinians have died in Gaza as a result of week-long armed conflict between Hamas and Israel, Tel Aviv is a bigger loser on the economic front.
While rockets fired from Gaza have injured ten Israelis with no deaths recorded, the Israeli cabinet has agreed to the Egyptian proposal for a ceasefire while Hamas has rejected it.
Counting economic costs of the conflict is not easy, but it seems that Hamas has a plan: “Hamas calculates that by expanding the range of its rockets, it can impose significant economic damage on Israel by forcing its civilians into shelters, ports to shut down for fear of ships being hit by wayward rockets, and airports to close, while at the same time disrupting the mid-year tourism season,” says Firas Abi Ali, Head of Middle East Analysis at IHS Country Risk. “This, in Hamas’s view, compensates for Israel’s disproportionate ability to inflict damage on infrastructure and private properties, as well as its ability to impose a very high number of casualties, both military and civilian.”
He goes on to add that “Hamas is extremely unlikely to have taken the escalatory steps of launching a raid on Ashkelon and firing rockets at central Israel without assurances from its allies”.
For Palestinian territories, the economic situation is bleak to say the least. The economic growth in the West Bank and Gaza (WBG) has been on a steep downward trajectory over the past few years, says International Monetary Fund. “Growth was strong during 2007–11, buoyed by large inflows of donor assistance and some easing of Israeli restrictions on movement and access.”
“Growth started to decelerate sharply in 2012, reflecting lower donor assistance and the lack of further easing of restrictions. Amid increasing fiscal difficulties at the start of 2013, rising political uncertainty, and a sharp deterioration of economic conditions in Gaza, growth declined further in 2013 to around two per cent, the lowest in six years, accompanied by steadily rising unemployment,” it says.
According to the Palestinian Finance Ministry, about $182 million in aid has arrived from abroad since the beginning of 2014, a 65 per cent decrease from the first quarter of 2013. And since the latest conflict began, Saudi Arabia says it’s sending $53.3m to treat victims of Israeli air strikes in Gaza. The UAE has pledged $25m and Qatar has announced $20m.
Despite this foreign humanitarian aid, the ongoing conflict will cost both Gaza and Israel, but Tel Aviv is likely to suffer bigger indirect financial consequences.