Invading Gaza will cost Israel more than just lives

In an address to soldiers on Saturday, Israel’s chief of staff Lieutenant General Herzi Halevi outlined the aims of the country’s looming ground incursion into Gaza. ‘Our task is to destroy Hamas activists and their infrastructure’. But, he added, this will not be ‘an easy task’. 

That’s an understatement, to say the least. Despite the bravado and masochism expressed by Israeli generals, the war has so far caused the death of more than 1,400 Israeli civilians and troops and the kidnapping of 222 hostages (among them 30 children). Another 200 are missing. The ground invasion of Gaza will likely be even more costly in terms of lives lost.

But there’s another cost that Israel must consider in the event of a prolonged war: the economy. Israel is not used to fighting long wars. (Since 2007, Israel and Hamas have engaged in five major campaigns and dozens of smaller violent clashes; each round ended with a ceasefire). With a population of 10 million people and impressive output based on its high-tech industry, Israel knows that a prolonged campaign could be very costly to its economy.

Already Israel’s currency, the shekel – previously one of the strongest in the world – has been devalued by 25 per cent in the last ten months since Netanyahu returned to power. Many businesses in Israel have now sent their employees on leave without pay, creating a sense of anger directed at the government. People have stopped going out to shop or dining in restaurants while the war is ongoing. A recession is all but guaranteed in the months ahead.

The war has also created a crisis for the agriculture and construction sectors, which are manned mainly by foreign workers from Thailand and Palestinians from Gaza and the West Bank. Some 21 Thais and Nepalese workers were killed during the 7 October attack and another 14 remain missing, believed to be hostages. Many of their fellow countrymen have asked to be sent back home since then. As for the Palestinian workers, Israel closed its border following the attack and they are not allowed to enter the country. 

Israel has mobilised more than 360,000 reservists (the largest call-up in fifty years). These are workers being taken away from their day jobs and who amount to around eight per cent of the working population – it’s not an insubstantial disappearance. Then there is the fact that the country’s tourism industry has totally dried up. 

The Tel Aviv-based Bank Hapoalim, Israel’s largest credit lender, predicts that the war could cost the country as much as $6.7 billion (£5.5 billion). There are also fears that the war could lead to a drop in investments and a loss of confidence in Israel’s economy. This is particularly worrying for its globally recognised high tech sector which accounts for around 20 per cent of the country’s GDP. Elsewhere, global companies like Nestle have already ‘temporarily shut down’ production plants in Israel.

The war will unquestionably be a long one, which will pile further damage on Israel’s shaky economy. The main objective for a ground invasion is, in the words of Benjamin Netanyahu, to ‘destroy Hamas’. But can Hamas even be ‘destroyed’?

‘Unfortunately, the government and the security establishment neither know nor understand Hamas,’ Dr. Michael Milshtein, a former IDF colonel tells me. During his military service he led the Palestinian desk of the Israeli military intelligence’s research department. ‘Hamas is a vicious military force which rules Gaza, but it is also guided by strong beliefs. It is an idea and ideology, and it’s almost impossible to defeat an idea by sheer force.’

Besides their military wing (which has around 30,000 troops), Hamas is a government with ministries and a workforce of 50,000 public sector employees and officials who run Gaza. Dismantling that will not be straightforward for Israel: defence chiefs are already warning the invasion could last several months, while Netanyahu has described the pending invasion as a ‘long war’. How far is Israel prepared to go in deconstructing that infrastructure? How many soldiers is it prepared to sacrifice, and at what cost to its economy?

Hamas fighters are clearly well-trained and well-equipped. The group acquired weapons for the 7 October atrocity by smuggling them via tunnels from the Sinai (under Egyptian sovereignty). The weapons discovered are Russian, Chinese and North Korean-made. They were financed by Qatar and supplied by such countries to Iran. They are not an insubstantial enemy.

There is the potential for Israel to suffer heavy losses during any combat with Hamas. Urban warfare is extremely deadly, after all (and that’s to say nothing of the tunnel infrastructure which will likely be bugged with IEDs, making the fighting even more deadly for Israel). 

Things could yet get more costly, still, if Hezbollah decides to fully join the war. Former Mossad chief Tamir Pardo tells me that Iran and Hezbollah today ‘smell weakness’ in Israel. According to him this is because of Netanyahu’s right-wing and extremist government which hoped to weaken Israeli democracy, leading to a massive protest movement and further polarisations in Israeli society. Hezbollah, under instruction from its masters in Tehran, has already started a small-scale war of attrition against northern Israel, with hit and run tactics and some rocket shelling. Already more than 100,000 Israeli inhabitants in the north have been evacuated to more distant, safer locations.

Hezbollah is a much bigger threat against Israel than Hamas in Gaza. According to the IDF’s Home Front Command’s scenarios, if Hezbollah attacks Israel, thousands of Israelis might be killed from the group’s 150,000 rockets. Even if Iran and Hezbollah do not want to drag Israel into an all-out war, the ongoing escalation could lead to such a result.

Whatever happens in the coming weeks and months, the objective of ‘crippling’ Hamas (and potentially Hezbollah), will require a very high price for Israel to pay.