when israel began its aggression against the palestinians in the gaza strip, it didn't anticipate the resistance. fighters of hamas to put up such a fight. now after five months of this onslot his economy is doing so poorly that it needs to pull his reservis from the battlefield to help it with his economy while going after more money to continue the genocidal war. hi, i'm cover tafley. welcome to economic divide. coming up in this program we're going to take a look at the israeli economy, the key sectors that have been affected, also the large gdp trop uh that was 19.4% and the lack of investments uh which uh has affected uh a large segments of the of

society, including the labor shortage, then israel's tax sector, something that has been impacted slumping before october 7th, however, and the situation just got worse with the operation also flood, the value dropping from $17 billion to $7 and a half billion dollars when it comes to investments. political instability also is something that uh plagued israel's economy before october 7th. then the uh israel reservist uh what happened? they uh had 300,00 that went to the battlefield, therefore they were taken out of the workforce. many were recalled back to contribute to the society, economically and in other respects, but has it helped israel's economy.

israel's economy is in crisis mode. israel's genocidal war and palestinians in the gaza strip has proven more expensive than expected. between october and december, israel's economy shrank by fifth at annualized rate, compared with the previous three months, was more than twice the contraction predicted by the bank of israel. in the same period, over 750,00 people or a six of the labor force were away from work, of many of them evacuees or reservists. moodies, rating agency downgraded the regime's credit rating for the first time ever. the tech sector has been hit hard. many have moved operations abroad. in 2023, the value of israeli tech exits, including m&das and ipo slumped $56% to $7.5 billion from $16.9 billion a year earlier. 2022 was already

tough year for israel's tech industry as the uncertain specter of rising interest rates, global stock market fall and tech layoffs led of to a sharp slowdown in investments. israel attracts most of his tech investments from abroad, but 80% of venture capital investments in local high-tech startups were generated from foreign funds. time now to take a look at some of the social media posts on this. uh, first off we took a look at the topic of boycott, this... entry said boycott and makes a change, israel's economy is falling to its knees, then we uh looked at this entry where we thought is important, the war may cost them a lot of money that will be paid back from the usa, uk and the eu, because they will support israel unconditionally, but the major hit is boycotting that will hurt them if not now, later, and the hit will be so hard. okay, so a couple topics there on boycott. next, the us could literally do that, "the majority of

their economy is funded by the usa. the usa, cutting support would be catastrophic for israel's economy. the us has the power, it's just too incompetents to wield it the right way. then how the war in gaza has hurt israel's economy, the fight against hamas will cost 46 billion pounds by the end of next year while leaving farming, tech and hospitality short of thousands of workers. and finally, israel's economy plumets off a cliff amit the gaza war, what we call the..." slot the bureau attributed the drop in part to the fact that some 300 thousand reservists were called up to man the war effort leaving their day jobs vacant at the civilian economy losing out a big chunk of both producer activity and consumer spending. our guest for our first q&a, let me introduce some jo-catron joins us uh palestine solidarity activist and it's important to know that he lived in gaza from the years 2011 through 2014. joe control welcome to economic divide so we're looking at obviously key sectors of

israel's economy to have suffered as a result of this onslot and at the top of the list, construction, tourism and agriculture. do you think these sectors can see any signs of improvements given the fact that this on? slat is continuing, well, i think that the resistance, of course led by the palestinian resistance, but also including forces within the exact axis of resistance fighting from lebanon, yemen, and iraq, have done a really masterful job in isolating israel economically as well as militarily. at this point. to see how it's economy could hope to function in any normal way as long as this on slot continues between the ongoing bombardment in its north which is preventing

the return of settlers and the complete closure of its shipping lane in the red sea as well of course as is the ongoing fight resistance it faces from palestinians in gaza. israel is in a war that it can't hope to continue while maintaining any sort of normal economy. all right, that was joe catron, thank you joe catron. let me introduce our next guest here, john phoenix, joins us now. john phoenix is the founder and editor and chief at showa.org.uk. john phoenix, welcome to economic divide. um, the difference. sectors that's been affected by this onslot, the tech sector is the one that stands out the most, and it's something that's been repeated, it was not doing well before the onslot, however, and of course we've seen how they're now doing much worse, investor confidence is lost in that industry,

how can the sector hope for any recuperation, how can they begin even think that they can attract investments when this onsl has not even not only ended but that it may cont on the political side to impact the sector, the the record show show us that the main product on technology was actually promoted in the europe and parts of middle east is the markava, the the their tank which is proven failing on the front in gaza, this obviously without going through the technical details the tank was actually supposed to be an advanced. best tank on the world, turke ordered 400 of those, which is if that deal went through, they will have obviously revenue of millions of dars a year, but feeling on on the ground shows that is not

worse to invest in such technology, the reason i'm giving that example, because this was one of their best obviously marketing for the... technology, other factor is due to the crimes and the genocide of gaza, some companies actually dropped dealing with the israeli technology due to the obviously claim to be ethical issues, such technology been used to slaughter palestinians in gaza, so that's two factors together affect their ability to advance any growth on the last obviously clearly from the about now and time now for the info news section of the program. first off we're going to take a look at us oil sales to china, something that's

not going to happen um and it's interesting that uh this is actually something that uh the us uh may have done, but the us uh basically has come out and said it could underline could... band state oil sales to china from, and this is an interesting part, from the sbr. what's the sbr? well, that's an emergency stock file that was created following the west asia oil embargo of 1973. this sounds like there's a security related issue regarding uh trade where the us has come out making this type of a statement, so it's a story that we need to look a little bit further. onto the eu, our next entry, and the food prices there, uh, the prices of major food staples have spiked, um, by lot 50%. i think that's a lot. for example, all of oil costs across the block have been on the rise since mid-2023, and that's according to eurostat. the eu is still grappling with a food uh crisis in terms of the inflation uh and food. and to add that to that, the farmer

protest, you can see that uh that situation is somewhat volatile. now we go to very contentious topic and this is the green energy uh and in particular in us that has promoted this, the transition aspect of it, what slowing down america's clean energy transition is what caught our attention, and this headline read, it's not the cost, it said new report has found. renewable energy is facing organized opposition, that's right, and grid connectivity issues, so the transformation obviously is not going to be that uh simple nor easy. uh, now our take on this is the only issue is the speed of the transition, in the last two years, high inflation and supply chain issues led to temporary price increases, and the reason why we mentioned that is because green transition is supposed to somewhat lower prices also, but that's not going to be the case based on uh... the way that we view it. now uh, this piece of news is important, it's may not sound economic and flavor, but uh, the

israely ambassador uh to italy has been rejected by italy. italy has rejected this person who was a former settlement mayor for the ambassadorial position. now rome did not want an ambassador who was mayor of a west bank settlement and that also headed the yeshua council, that's the main political arm the... settlement movements, why do we think that's important and related to the economy? because this may be a trend if you have a country that's rejecting an appointment by israel uh of their ambassador, this may spill over into uh the trade aspect of it where it may impact trade um overall, so we have to wait and see whether this is going to have a contagion effect or not. those were the news items we picked for every new section, of course your uh choice is more important if you have any to send them to us. contact information is coming up.

in this episode of irantic we're taking a look a system that allows us to more closely examine ancient find. things and uh let us know about the material that they're made from without damaging it, the time period that they were from and the location that they originated from and not necessarily found in, and that is all possible thanks to kind of portal accelerator known as the vandday graph. stay tuned, don't miss it! the program, israel's over five months of aggression is taking a toll its economy. now

we've established that. in this in-depth section we will look at some of the key areas which has drained israel's budget from its funds. first of all, let's take a look at uh how israel actually got a reality check when it realized that it had suffered what uh was very steep drop in this gdp uh for the last quarter of 2023 minus 19.4% and that is lot by any standards, it highlights the fall out the ongoing onslot against strip, gaza strip and the impact that it had on different sectors. now based on the chart we see over here, you can see consumer spending, productivity, you have investment and also trade, they're all down, so result of those negative factors has contributed to the negative 19.4%. next, the large gdp. was due to the fact that and we've mentioned this before i know, but it needs to be highlighted again, you have some 300 thousand reservis

that left their jobs uh that contributed to about 8% of the workforce as you see over here that was taken out of the economic uh cycle and now the knock-on effects is how you see this chart how it's panned out so 8% of the workforce out of the economic cycle producer activity also obviously is being affected. consumer spending has been affected, and then when you branch those out, you have consumption and israel spending, the two that we picked, where consumption has dropped by 27%, and then you have the spending by israel itself, which has gone up 88%, so you can see obviously how israel's economy is going to suffer, is suffering as a result of this aggression, now we going to take a look at the labor force disruption in terms of the evacuees, and i know again this is something we've... mentioned, but 120,000 is the latest figures that we have, again, these are contributing to the large gdp drop

taken out of the workforce and then the palestinian workers uh, we have 170,00 of them uh taken out of the workforce, that's a drop obviously and also the palestinian uh economy, that gets impac impacted. construction projects is mainly what we're looking at uh being one of the top uh sectors uh that has been impacted by this. next up uh this concerns trade uh obviously imports and exports is at the top of the list, you have imports to have been negatively affected and that's a big uh drop of minus 42%. and exports at this point uh minus 18%. again you're seeing a big chunk of the israely economy to be impacted and then you have the yemani army that's uh targeting us, uk and israel bound ships in the red sea and the arabian sea, and that disruption has also led to drop in israel's gdp and its economy as a whole. and then finally, this is very

important, the downgrade that happened and it happened few weeks back uh where it's israel's credit rating from a1 to a2 and the organization responsible for that is a big ratings agency by the name of mies. now when this happens the ability to repay debt is what is put under the spotlight in terms of israel and obviously the sovereign debt out has now been downgraded to negative so when you have this happening it makes it very hard for israel to borrow money in short. that is needed for them if they want to continue with their onslot, the finance minister has said this did not include serious economic claims, but many economists actually disagree with the stance that he has had, somewhat similar to what the the stance of the israel prime minister has been. all right, let's bring back our guest for this segment of the program, we have joe katron who's rejoining

us, he's the from the palestine, he's a palestine solidarity activist and he lived in gaza from 2011 through. 2014. joak, welcome back to economic divide. this decision to bring back the reservis from uh the um, i guess the battle lines, it was seen as a positive move uh by israel because they say that they're going to contribute to israel's economy, but since most of them are in the tech sector, which is doing that badly, how much can this move actually help israel's economy, do you think? well, i think a lack of tech workers. is the least of israel's problems right now, the far bigger problem it faces is first of all its military challenge from the resistance on every front from gaza and the west bank to lebanon, yemen and syria as well as the increasing political, economic and diplomatic isolation it faces a global

scale as the direct result of its ongoing atrocities in g none of its problems will be fixed by shuffling people around, that is no longer an option for it, and in fact i'm not sure they can be fixed at all, because so much of what israel had built up, the appearance it had try to maintain of power, and was based upon a myth that was shattered on october 7th, we all saw how easily it could be challenged.

short of ending their genocide first of all, but beyond that, i don't think they'll return to the status they held prior to october 7th regardless, because the resistance fundamentally changed the equation, it showed how easily they could be fought and defeated. all right, thank you very much for that, let's bring back johnenix now founder and editor and chief of shaw.org.uk. john phoenix, welcome back, the way that. "the israel's economy is suffering, one of the solutions that israel has thought of is to bring back some of these reservists uh, which uh comprises of 8% of its uh economy, the contribution that they make and their presence in the workforce, do you think that's going to help its economy at all, especially when it comes to the the fact that they work in the tech sector mainly? well, i mean, if you if you look at the the picture

in general, you know, the 300 thousand of reserved." force being recruit to fight the war, obviously that kept lot of the vacuum within the economy such running the airport, security, hospitals, industry, agriculture, so they trying to release some of this reserved in order to do the civil obviously duty, teachers been recruited, obviously doctors, technicians, so "the only way to try to recover part of the economy is to try to reserve, to try to sorry to to leave some of the reserve in order to go for civil duty." and it's doing that is not even improving yet, you know, now they are calling on the religious sector to join in, if you if you heard of the last report about the hard, you

know, they wanted to give them some military work, which is could be not as such as fighting, maybe running prisons, running security centers, so they are desperate in order to... run the same time running the war and running the society and as i said early the only way this people to recover and survive is to stop the war, otherwise they will be in receipt of american aid till the american give up and then we will have no recovery in the economy, so this is a catch 22 to be honest with you. "the rest of the economy in israel is in trouble, construction is a stand still, forms have

lost more than half of their workforce. in addition, companies involved in tourism are suffering. in january, 77% fewer tourists visited guts than year ago. israel's labor market is already tight. bringing in foreign workers is slow and expensive, farms, factories and building sites lack workers after. october 7th, the regime spent $30 billion in foreign reserves propping up the sheckle and as another $170 billion if the currency needs more cushioning. analysts believe financial crisis is unlikely, but that does not mean pain will be avoided, it will just come in different forms. there are talks of further spending cuts that are... required to guarantee stability. israel's welfare apparatus will take the head. the welfare ministry, which is also responsible for caring for evacues and return captives will have to take an 8% cut. value added

taxes will rise by 1/entage point to 18%. the health tax and incomes will go up by 0.15 percentage points. policy makers worry that raising corporate taxes would cause the tax sector, which is highly mobile and already struggling to find workers to flee the regime. hello and welcome to the quicktake section. i'm mattia posan. when it comes to israel's debt, news has surfaced that the occupation entity is gearing towards raising money to keep pace with the required on aslot spending. the israely regime is seeking to raise $60 billion dollars in debt this year alone. obviously. it's running short on funds and in order to save as much money as possible, it will also freeze hiring and raise taxes, because it has almost doubled its aggression spending. we have already

mentioned this before, but they need to go out and raise money is a result of the economic and labor force disruptions due to the reservists, settlers and palestinian laborers, but what is not covered or discussed much is how many reservists have been put from the battlefield, israel has announced that there are around 60,000 reservists who were still carrying out acts of genocide in gaza, that means 240,000 reservists were back into the economic cycle, so why is that not improving the economy? on borrowing, this is not the first time the israely regime had to go out and borrow, and as long as the aggression continues, it won't be its last time either, in the beginning the israeli regimes a slot on gaza, tel aviv borrowed $22 billion dollars, which sort the debt to gdp ratio up to 62%, the highest for

the entity eight years. it's also worth looking at how israel plans to increase military spending overall, and what that figure was before the onnesslot began. israel is planning increasing military spending by $15 billion dollars, marking at 85% increase in military spending from 13% of the military budget before their on the slaughter against gaza to 20% in 2024. okay, that brings us to the end of this quicktake segment. don't forget to send us your comments or questions. we do really appreciate that, i'm and i'll see you next week. the economy of the west bank and the gaza strip are unable to recover at the time being

due to the continued. aggression, israel's need for loans indicates that it is unable to meet the cost of not only the aggression, but also of its own needs. there's no surprise there since the aggression was not supposed to last this long, and since there is no end insight at this time, the speculations that israel's major eyelight like the us will come to his rescue. that does for this edition of the program. thanks for being with us, it was great to have you, but we would appreciate it more if you send us some comments, suggestions, critiques, contact information is behind me. from the entire team here at economic divide. it's goodbye until the next program.

the headlines, un warns that israel could be using. starvation as a weapon and its aggression against gaza, saying blocking aid into the strip as a war crime. qatar, which serves as mediator between israel and hamas says any israeli attack on gaza's southern city of raffa could derail the negotiations. and yemen's army says it has once again targeted a us ship in the red sea and fired missiles at israeli positions in response to them.