27.06.2025 17:50
Experts indicate that the cost of Israel's 12-day-long attacks on Iran, which ended with a ceasefire, has placed unprecedented pressure on Tel Aviv's economy and public budget.
Experts state that the cost of Israel's 12-day attacks on Iran, which ended with a ceasefire, has put unprecedented pressure on Tel Aviv's economy and public budget.
ISRAEL'S DAILY WAR EXPENSES REACHED 725 MILLION DOLLARS
It is reported that the cost of the attacks reached hundreds of millions of dollars per day, creating serious pressure on the public budget and markets. According to data from the website "Financial Express," Israel, which spent approximately 5 billion dollars in just the first week, has a daily war expense of 725 million dollars. Of this amount, 593 million dollars were used in the attacks, while 132 million dollars were allocated for defense measures and military mobilization activities.
DAILY COST OF DEFENSE SYSTEMS REACHED 200 MILLION DOLLARS
The U.S.-based "Wall Street Journal" reported that the daily cost of defense systems aimed at intercepting missiles fired from Iran ranged between 10 to 200 million dollars.
"IF IT LASTED ANOTHER MONTH, ISRAEL'S COST WOULD REACH 20 BILLION DOLLARS"
Nasir Abdulkerim, a faculty member in the Finance Department at the American Arab University in Palestine, stated, "The attacks were not limited to direct military expenditures; production activities were disrupted, and the public frequently had to go to shelters." Abdulkerim assessed that if the war lasted another month, the direct and indirect cost to Israel could reach 20 billion dollars.
"BUDGET DEFICIT WOULD HAVE REACHED 6%"
Abdulkerim said, "In this case, the country's budget deficit was expected to rise to 6%, which is approximately 25 billion dollars." He also expressed that compensations for citizens affected by the war created an additional burden on public finances. According to data from the Israeli Property Tax Authority, the number of Israelis evacuated from their homes in the first week exceeded 10,000, and 36,465 people applied to the state for compensation.
TAX INCREASE ON THE AGENDA
The Israeli Ministry of Finance announced that current financial resources are rapidly depleting and that new sources are being sought. In a request made to the Finance Committee of the Israeli Knesset on June 19, the ministry requested the transfer of 857 million dollars (approximately 3 billion shekels) in spending to the Ministry of Defense. Additionally, a request was made for an extra cut of 200 million dollars (approximately 700 million shekels) from the budgets of ministries such as health, education, and social services.
According to the economic newspaper "Globes" published in Israel, a large portion of these resources will be used to cover military personnel expenses. As part of a large-scale mobilization initiated before the war, 450,000 reserve soldiers had been called to duty.
PRESSURE CONTINUES IN THE MARKETS
Abdulkerim stated that the Israeli currency shekel fell to 3.70 against the dollar after the war began, then recovered to 3.50, but noted that this recovery was influenced by global dollar weakness and speculative transactions.
Nasir Atiyani, Secretary General of the Palestinian Economists Union, argued that the intervention of the Israeli Central Bank was decisive in maintaining the stability of the shekel. According to Atiyani, the bank had intervened in the foreign exchange market with 8.5 billion dollars during the attacks launched on Gaza on October 7, 2023.
However, Atiyani pointed out that such interventions increase the financial burden in the long term, as most economic activities are conducted in shekels, and the depreciation of the currency could increase inflationary pressures.
"TECHNOLOGY SECTOR HAS TAKEN A SERIOUS HIT"
Atiyani reported that the technology sector, which accounts for 20% of Israel's national income and 50% of its exports, has contracted by 44% due to security risks, indicating that this situation seriously threatens the sector, which is the backbone of the modern Israeli economy.
Atiyani stated, "The budget prepared by Israel for 2025, which is the largest ever at 170 billion dollars, has reached 312 billion dollars when borrowing expenses are added. Current military expenditures are putting significant pressure on this budget."
Experts warn that if military expenditures continue, Israel's growth rate may decline, unemployment may rise, and poverty rates may increase.
THE IMPACT OF INVESTORS' PANIC ON THE ECONOMY
In response to the attacks, Iran targeted the vital infrastructure of Tel Aviv, especially Haifa, which is the heart of the Israeli economy. According to a report by the UK-based "Financial Times," these attacks increased pressure, causing the Bazan company, Israel's largest oil refinery located in Haifa, to halt operations and resulting in a daily loss of 3 million dollars to the national economy.
Iran's retaliations also led to the suspension of operations at Ben Gurion Airport near Tel Aviv. Simultaneously with the airport's closure, Israel's national airline "El Al" relocated 48 of its planes (due to fears of being targeted) to Cyprus, Greece, and the USA.
This situation is expected to lead to an operational cost of approximately 6 million dollars.
Financial markets are not immune to the escalation of military tensions. While Iranian missiles hit Israel's diamond exchange, the country's diamond exports are expected to decline by 35% year-on-year in 2024. According to the Israel Diamond Institute, this sector accounts for 8% of Israel's total exports, and there are concerns about the impact of these attacks on the Tel Aviv Stock Exchange.
"A PROCESS THAT MAY REQUIRE REFORMS AND INTENSIVE WORK FOR YEARS"
Atiyani stated, "Such blows cause panic among investors, lead shareholders to withdraw and sell their shares en masse, accelerate the collapse, threaten economic stability in the short term, and cast a shadow over investment, employment, and growth."
Noting that targeting the financial heart of the country, the Israeli Stock Exchange, could completely disrupt economic life, Atiyani emphasized that the stock exchange, which hosts numerous publicly traded companies with significant connections to both the public and private sectors, is not just a trading platform but also a reflection of economic confidence.
Atiyani expressed that targeting economic and civil infrastructure is an indication that the conflict has transitioned from a military nature to a new phase targeting the country's financial and economic foundations.
Atiyani added that in this situation, it is also necessary to restore investors' confidence in the economic system, which is a "process that may require reforms and intensive work for years."