Israeli Economic Expert: How the War on Gaza Supported Israel's 'Zombie' Economy

The Israeli economic expert Shir Hever, who studies the economic aspects of Israel's occupation of Palestinian territories, explains how the mobilization for the war on Gaza supported a 'zombie' economy that appears to be functioning but lacks any future prospects.

The writer at the Israeli website '972+' Amos Brison conducted an extensive interview with Hever, who holds the position of director of the 'Alliance for Justice between Israelis and Palestinians,' covering various aspects of the Israeli economy.

And below is a summary of the most important things Hever said about the deterioration of the economic situation in Israel:

The war on Gaza caused economic shocks and related crises; tens of thousands of families were displaced from border areas with Gaza and Lebanon, and direct rocket and shell strikes damaged those areas, affecting productivity.

About 300,000 reservists were drafted for long periods, leading to a significant shortage in the workforce, and many training days that were invested in these workers were lost.

The educated middle class in Israel has begun to consider emigration, and many families and educated talents have already emigrated due to the impossibility of raising their children there.

Among the manifestations and indicators of the economic crisis in Israel is that many citizens have transferred their savings abroad, fearing inflation and currency devaluation, and the decline in Israel's credit rating and increased investment risks.

Revenues have been diverted to fund the war, which led to the deterioration of public services and higher education quality, and Israel approached falling into the debt trap.

Israel's reputation internationally has become toxic, and it faces an unprecedented level of boycott, divestment, and sanctions.

The Zombie Economy: Hever described the Israeli economy as a zombie economy, saying he described it that way because it is an economy that moves but is unaware of its crisis state or imminent end.

The Israeli economy heavily relies on massive military spending and foreign credit without a sustainable plan for the future.

The government passed a budget that does not reflect the actual reality of expenditures, leading to debts spiraling out of control.

Large deals in the technology sector give a false impression of economic strength, but what is happening is that technology sector workers own shares and sell them to foreign companies and transfer the money abroad. Technological innovations and investments in this sector are declining significantly.

How did Hever respond to the booming stock market and the stability of the shekel?

And in his explanation for the booming stock market and the stability of the shekel's price, Hever said that the increase in reservists' salaries had a significant impact on the stock market and the shekel's stability. These soldiers invest their money in stocks because they cannot spend it in Gaza. They try to protect their savings by investing in the rising stock market, contributing to the economic bubble.

The Israeli Central Bank was managing the crisis by selling large amounts of dollars to give the impression that everything is under control, but it is nothing more than market manipulation.

Deterioration of living conditions and increasing poverty rate. The cost of the war greatly affected most families, contributing to the increase in their debts, and the 'Latet' report - which is an Israeli non-governmental organization that issues an annual report covering various economic and social indicators related to poverty, food insecurity, social inequality, and other issues facing vulnerable groups in Israel - indicated that the percentage of people suffering from food insecurity has risen significantly, and many Israeli families are living in hardship with debts increasing on them during the war.

When the Ministry of Finance announces the real costs of the war compared to its commitment in the 2025 budget, it is expected to lead investors and international institutions to lose confidence.