Why 'Israel' cannot afford to fund its genocide: The Economist

By Al Mayadeen English
Source: The Economist
6 Mar 2024 21:39
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Among the listed reasons include fiscal strain, noting that "Israel's" debt-to-GDP ratio was 60% during pre-war levels, and subsequent additional spending during the war has exacerbated fiscal pressures.

Smoke and debris rise following an explosion in the Gaza Strip as seen from southern occupied Palestine, Wednesday, March 6, 2024 (AP Photo)

An op-ed for The Economist published Wednesday details some of the reasons why "Israel" may not be able to fund its genocide.

Among the listed reasons include fiscal strain, noting that "Israel's" debt-to-GDP ratio was 60% during pre-war levels, and subsequent additional spending during the war has exacerbated fiscal pressures.

Since the war began, the army incurred additional spending equivalent to 2% of GDP, the report states.

Moreover, observers have described Prime Minister Netanyahu's budget as being too "lavish", noting that unlike the US or Japan, "Israel" does not have the luxury of unlimited financial resources, especially considering the regime's desire to increase military spending.

Moderation in borrowing during crises is advised, the report states, but "Israel's" military outgoings are unlikely to revert to pre-war levels soon as they require a plan to stabilize debt amidst high spending.

Despite "Israel's" tax take being slightly below the OECD average, Netanyahu's budget includes only modest tax increases. Policymakers are concerned that raising corporate taxes could prompt the tech sector to relocate, while harsher taxes on households might depress consumption.

Budget cuts could generate uneven repercussions, the report notes, adding that some groups risk being affected more than others. Ultra-Orthodox households, on the other hand, face minimal financial impact, mainly due to heavy reliance on welfare handouts and exemption from military service.

The cancellation of permits for Palestinian workers has also added strain to some of "Israel's" most crucial sectors, especially the construction industry.

The genocide in Gaza has had a significant toll on the Israeli economy. The drafting of 300,000 reservists impacted several crucial economic sectors, including the tech industry, commerce, and tourism, among others. Despite this, the shekel has retained relatively strong levels of stability.

The regime is expected to conduct a near-record bond issuance this year. While a significant portion of this issuance will likely occur in the shekel market, foreign borrowing is anticipated to surpass $10 billion.

Yesterday, Bloomberg reported that "Israel" sold its first international bonds in the stock market, in an effort to increase funds for its genocidal campaign in Gaza.

Al Mayadeen analysts suggest that the delay in the US providing financial assistance to "Israel" could be a factor in this decision. With substantial support from US citizens, "Israel" may become less reliant on direct financial aid from the US government to sustain its genocide.

However, it's crucial to note that any investment in Israeli bonds is seen as contributing to the war on Gaza. Al Mayadeen analysts argue that purchasing these bonds could make one complicit in the Gaza genocide.