Occupied Jerusalem Initial estimates indicate that the war launched by Israel on Iran, and lasted 12 days, has cost the Israeli treasury about 22 billion shekels (about 6.5 billion dollars). This huge cost reflects the direct financial burdens of the Israeli government, starting with financing military operations and compensating the affected people, to covering the damage to infrastructure and property.
Besides, small and medium -sized commercial interests, forced to close or completely stop their business, bear heavy burdens that are no less severe. Added to these direct losses, unrealistic losses that are attached to the Israeli economy due to the continuation of military operations on more than one front, and the accompanying economic slowdown, a decline in investor confidence, and turmoil in local markets.
This major spending has led to financial pressure on the Israeli economy, as many indicators began to show signs of slowdown in economic activity and the increasing burdens of the public budget. Israeli analyzes estimated that the continuation of this increasing military spending will deepen the financial deficit in the budget of 2025.
With the continued state of security uncertainty, the Israeli government faces major challenges in managing financial resources, especially with the need to finance civil support programs and basic services, in light of the decline in revenues due to the war.
Also, the continued conflicts may lead to more indirect costs, such as declining investment, high unemployment rates, and broader social and economic effects.
Compensation claims
The financial cost of the war was distributed as follows:
- 10 billion shekels (about 3 billion dollars) for military spending, including ammunition, objection missiles, aircraft flight, and reserve recruitment.
- 5 billion shekels (about $ 1.5 billion) to compensate for affected interests and workers, in addition to about 15,000 displaced people who were evacuated from their homes.
- 5 billion shekels (about $ 1.5 billion) to repair buildings and infrastructures due to Iranian bombing.
- 2 billion shekels (about 600 million dollars) for not yet reported damage, according to the “Mamoun” economic supplement.
Since the start of the war, the Israeli Tax Authority has received 38 thousand and 700 claims through the Property Tax Fund (and it is expected to reach 50 thousand claims), distributed as follows:
- 30 thousand and 809 buildings damage
- 3713 damage to vehicles
- 4085 damage to the contents and equipment.
The claims came mainly from Tel Aviv with 24 thousand and 932 claims, followed by Ashkelon with 10 thousand and 793, then Acre, so I and Jerusalem.
The Israeli government has so far transformed 30 million shekels (8.6 million dollars) to the local authorities to help about 15,000 displaced people, with two thousand shekels ($ 600) per person (500 shekels per citizen and 1500 for the local authority).
Deepening the financial deficit
It is estimated that the year 2025 will witness an unprecedented number of companies and commercial establishments, in light of the continued economic pressure. In 2024, about 37.4 thousand companies were opened, compared to the closure of approximately 59 thousand, which led to a clear decrease of 21.6 thousand companies, according to the newspaper “Calcalist”.
This decline comes after the year 2023, which in turn was a difficult year, as the number of companies decreased by 19,000, while the usual annual rate of closures in stable years between 40 and 42 thousand only.
With the escalation of crises and the deterioration of the business environment, especially after the last war, the indicators seem clear, the number of closures in 2025 will exceed the previous rates, which reflects the depth of the crisis experienced by companies, especially small and medium ones.
Israeli analyzes estimated that the continued increasing military spending will deepen the financial deficit in the 2025 budget, with risks to financial stability and economic growth. The analyzes unanimously agreed that the cost of the war on Iran was a real test of the flexibility of the Israeli economy and its ability to bear the long military crises, while security remains at the top of national priorities, but continuing the conflict without a balanced economic plan may expose Israel to increasing financial risks that affect its economic and social future.
The cost exceeded expectations
Although the “rising Assad” military operation against Iran lasted only 12 days, the correspondent of the economic affairs of the newspaper “Yediot Aharonot”, Gad Lear, says that its economic cost exceeded expectations, exceeding even longer wars expenses, such as “iron swords” (the battle of the Flood of Al -Aqsa).
Lear adds that the official estimates issued by the ministries of finance, economy and defense and the Israeli tax authority “show that the total cost exceeded 22 billion shekels, amid indications of the possibility of exceeding this number in the coming weeks.”
He pointed out that the Israeli government is heading, in financing this war, to exceptional steps, most notably raising the budget deficit to more than 6%, which is an unprecedented level in 2025, after a series of altitudes during the year 2024 due to the ongoing war in Gaza and Lebanon. Currently, the deficit has increased from 4.7% to 4.9%, and it is expected to continue ascending.
He explained that the Israeli security establishment is currently seeking to increase its budget by about 40 billion shekels (about 11.8 billion dollars), after it had requested 30 billion (8.85 billion dollars) before the attack on Iran, and the goal is to re -fill weapons and ammunition warehouses, whose stocks were damaged during the operation.
He concluded: “The war on Iran was short time, but it is financially expensive. Its implications will be reflected on the Israeli economy throughout the year, whether by aggravating the deficit, declining growth, or the need for additional US aid. As pressure in Gaza and the West Bank continues, the war bill seems to be open.”
Private sector losses
The attack on Iran provided the Israeli economy heavy losses during the war days, estimated by the company “Kovas BDI” by about 25 billion shekels (7.4 billion dollars), which are mainly concentrated in the private sector, especially in small and medium -sized companies, which are the most fragile in the face of crises, according to the report of the “Israel Hume” newspaper.
The losses included multiple sectors, most notably construction, cafes, restaurants, tourism, and entertainment, as economic activities have declined to unprecedented levels due to restrictions on movement, closing educational institutions, prohibiting gatherings, and extensive recruitment of reserve soldiers, which directly affected the operational capacity of many facilities.
Among the most affected sectors, the construction sector, which was originally suffering from a shortage of labor and high operating costs, has emerged, and its crisis exacerbated with the freezing of ongoing projects and the increasing state of uncertainty.
Likewise, the entertainment and restaurant sectors were almost completely paralyzed, and the movement declined in retail stores, especially in fashion, furnishings and household items, due to semi -complete closures.
Consumer correspondent in the newspaper “Israel Hume”, Haley Yakkouki Handalman, says that the business environment in Israel is witnessing general deterioration, as the Economy Risk Index has risen to 6.54, a level that is relatively high compared to previous years.
She explained that this rise reflects the increasing pressures that companies face, which did not start with the last war, but rather accumulated by a series of previous crises, including the Korona pandemic, the Russian -Ukrainian war, the high interest rates, and the controversial “judicial reform” plan, along with the ongoing war in Gaza.
She pointed out that with the outbreak of the confrontation with Iran, these pressures were exacerbated, which put the Israeli economy in unprecedented challenges on multiple fronts, saying: “With the continuation of the war, fears of economic recession, high unemployment, and the deterioration of market confidence in nearby recovery.”
(Tagstotranslate) Economy (T) Israel