{"id":342137,"date":"2025-08-13T21:16:37","date_gmt":"2025-08-13T21:16:37","guid":{"rendered":"https:\/\/www.europesays.com\/uk\/342137\/"},"modified":"2025-08-13T21:16:37","modified_gmt":"2025-08-13T21:16:37","slug":"takeover-of-gaza-city-could-cost-israel-nis-100-billion-expert-estimates","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/uk\/342137\/","title":{"rendered":"Takeover of Gaza City could cost Israel NIS 100 billion, expert estimates"},"content":{"rendered":"

The recently approved plan to conquer<\/a> the densely populated Gaza City will likely come at a hefty price to Israel\u2019s economy and its residents\u2019 quality of life, according to an economist at the Hebrew University in Jerusalem.<\/p>\n

The current plan to expand the nearly two-year-old conflict \u2014 which could eventually include a full takeover of the Gaza Strip \u2014 already faces widespread condemnation from the international community and is opposed by much of Israel\u2019s general public.<\/p>\n

But if Israel chooses to move ahead with the Gaza City plan, it could also cost an estimated NIS 100 billion ($29.2 billion) \u2014 five percent of the country\u2019s GDP \u2014 said Esteban Klor, a professor of economics at the Hebrew University. This sum includes ballooning military expenditures, as well as a toll on civilian spending and a potential significant curb on investments and exports, he noted.<\/p>\n

\u201cIf Israel takes full control of Gaza City, not only will Israel have to face direct costs, but there are also indirect costs related to trade boycotts of Israeli companies,\u201d Klor told The Times of Israel.<\/p>\n

\u201cI\u2019m very concerned about that possibility, and I don\u2019t think that the Israeli economy can sustain such a huge blow for a continuous period of time,\u201d he said.<\/p>\n

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Over the past 22 months, Israel has faced the longest and most intense war in its history, battling the Hamas terror group in addition to military engagements with Iran and its regional proxies. The multifront conflict has thus far cost some NIS 300 billion ($88.5 billion), a figure that has sharply increased government borrowing and the country\u2019s debt burden.<\/p>\n

The military mobilized hundreds of thousands of reserve soldiers with the outbreak of the Israel-Hamas war following the October 7, 2023, Hamas-led onslaught, which saw some 1,200 people in southern Israel slaughtered and 251 abducted to the Gaza Strip.<\/p>\n

\t\"\"<\/a><\/p>\n

Displaced Palestinians walk through a makeshift camp along the beach in Gaza City, August 10, 2025. (AP Photo\/Jehad Alshrafi)<\/p>\n

Many reservists have remained in uniform for months throughout the conflict, with only short breaks to see their families and check in at work. The resulting absence of personnel in the employment sector, a major growth engine of the Israeli economy, has disrupted operations \u2014 especially of smaller firms \u2014 and impaired their ability to raise funding.<\/p>\n

Klor, a senior researcher at Israel\u2019s Institute for National Security Studies, estimated that the initial price tag of conquering Gaza City would be somewhere between NIS 25 billion ($7.4 billion) and NIS 50 billion ($14.8 billion), including the costs of mobilizing reserve soldiers, and relocating and supplying the basic needs of a large portion of Gaza\u2019s civilian population.<\/p>\n

\t\"\"<\/a><\/p>\n

Esteban Klor, an economics professor at the Hebrew University in Jerusalem. (Jen Klor)<\/p>\n

\u201cIt\u2019s going to be very costly for the Israeli economy, but the extent of the cost depends on the actual operation that the army will carry out and how many troops, including reserve soldiers, will be needed and for how long, which is still not clear,\u201d said Klor. \u201cIsrael may conquer Gaza in three months, but to relocate about 1 million people, Israel will probably have to provide tents and continue to supply basic humanitarian needs, including the provision of food, health services, water, and electricity.\u201d<\/p>\n

Absorbing the high military and civilian costs of the new Gaza plan is going to force the government to make tough choices, including either raising taxes or cutting social services such as education, health, and infrastructure, he said.<\/p>\n

The new offensive and maintaining security control and civilian governance over the Gaza Strip, potentially for five months or longer, would impose military and financial costs at a particularly challenging time for Israel\u2019s strained state budget and high deficit in an economy challenged by war.<\/p>\n

\u201cThis new round of fighting in Gaza was not included in the 2025 budget, and there are no reserves there,\u201d said Klor. \u201cIsrael will have to absorb these expenses either by further raising taxes or by an increase in the deficit, which is the more likely option before an electoral year.\u201d<\/p>\n

Borrowing from tomorrow<\/p>\n

Israel financed the ongoing war by borrowing and increasing its debt. The country\u2019s debt-to-GDP ratio has soared from about 60% before the war to about 70%. Just servicing the debt, Israel is paying close to NIS 60 billion ($17.7 billion) in interest annually, said Klor.<\/p>\n

\u201cIt would not be surprising if intensified fighting in Gaza leads to further downgrades in Israel\u2019s credit rating, which means that we will have to pay even higher interest rates on our increased debt,\u201d said Klor. \u201cEvery shekel that Israel pays in interest rates is a shekel that the state can\u2019t invest in education, improving roads, building more hospitals, or lowering taxes.\u201d<\/p>\n

\u201cBasically, a downgrade in the Israeli rating means our quality of life is going down,\u201d he warned.<\/p>\n

\t\"\"<\/a><\/p>\n

Palestinians rush to collect humanitarian aid airdropped by parachutes into Gaza City, in the northern Gaza Strip, on August 7, 2025. (AP Photo\/Jehad Alshrafi)<\/p>\n

A lower rating also raises credit costs for businesses and households when financing mortgages or loans. In September, global rating agency Moody\u2019s cut Israel\u2019s credit score by two levels from A2 to Baa1, citing the \u201cdiminished quality of Israel\u2019s institutions and governance\u201d in their ability to manage state finances, as well as increased spending needs during the war period.<\/p>\n

In July, the rating agency maintained a negative outlook on Israel\u2019s rating, leaving the door open for further rating cuts<\/a> as it warned about higher defense spending and weaker prospects of government finances and economic growth.<\/p>\n

The economy bounced back at the start of 2024 following a 20.8% contraction in the last quarter of 2023 as the outbreak of war with Hamas sharply curtailed consumer spending, trade, and investment. Last year, the economy grew by around 1%, down from 1.8% in 2023 and 6.3% in 2022, before the hostilities.<\/p>\n

Moody\u2019s projected that Israel\u2019s economy would grow by 2% in 2025 and by 4.5% in 2026. The forecast is lower than the revised projection by the Bank of Israel for GDP growth of 3.3% in 2025 and 4.6% in 2026.<\/p>\n

Earlier this month, the Finance Ministry cut its 2025 growth forecast for the economy from 3.6% to 3.1%, on the assumption that the intensity of fighting in Gaza will continue only until the end of September.<\/p>\n

\u201cThe new Gaza war plan will delay allowing the economy to get back on track and onto a path of recovery, after almost two years of war,\u201d Klor cautioned.<\/p>\n

\t\"\"<\/a><\/p>\n

Illustrative: Protesters hold a banner reading \u2018BDS\u2019 (Boycott, Disinvestment, Sanctions) during an anti-Israel rally in support of Palestinians in the Gaza Strip, in Madrid, Spain, March 1, 2024. (Thomas Coex \/ AFP)<\/p>\n

Another blow against public opinion<\/p>\n

Even more worrying, the move is feared to fuel negative sentiment among businesses unwilling to trade with Israeli companies and investors not wanting to invest in the country. Norway\u2019s $2 trillion sovereign wealth fund, the world\u2019s largest, said on Monday it plans to divest<\/a> from more Israeli companies as part of its ongoing review of investments in the country over the situation in Gaza and the West Bank.<\/p>\n

Extra unplanned trade and investment losses, plus the military\u2019s initial outlay of up to NIS 50 billion to conquer Gaza City, push up Klor\u2019s estimated price tag to NIS 100 billion.<\/p>\n

\u201cEspecially in Europe, which is one of Israel\u2019s main trading partners, we could see more calls for sanctions against Israeli companies and divestments,\u201d said Klor. \u201cEven a silent boycott or sanctioning of Israeli companies could lead to lowering GDP by two or three percentage points, or extra losses of NIS 60 billion.\u201d<\/p>\n

\u201cThat\u2019s very significant and could be the start of a snowball process where people leave the country because they can\u2019t do business from Israel and set up elsewhere. I hope that we don\u2019t reach that point,\u201d he said.<\/p>\n","protected":false},"excerpt":{"rendered":"The recently approved plan to conquer the densely populated Gaza City will likely come at a hefty price…\n","protected":false},"author":2,"featured_media":342138,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[12,26],"class_list":{"0":"post-342137","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-world","8":"tag-news","9":"tag-world"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@uk\/115023536837746428","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/342137","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/comments?post=342137"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/342137\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/342138"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=342137"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=342137"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=342137"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}