by Mei W. and Katya Yindra
Monopoly media has largely omitted the Palestinian national resistance’s successes in deteriorating Israel’s economy. Much like how it downplays the resistance force’s military rationale and advances, hiding the collapse of the Israeli economy is one of the methods in which monopoly media attempts to obscure the effectiveness of armed struggles carried out by oppressed peoples and maintain the illusion of imperialism’s immunity against them. Israel calls itself a “start-up nation” in reference to the high levels of finance capital invested in the Israeli tech sector, but the unfolding collapse of Israel’s economy—a semi-colony propped up by hundreds of billions of US imperialist dollars—shatters these myths, exposing the fragility of imperialism and the centrality of armed resistance in destroying it.
According to the Bank of Israel, Israel’s war-related costs from 2023 to 2025 could amount to $55.6 billion (according to Washington Post, 67 billion dollars through 2025), costing the Zionist entity 10% of its economy. In the last three months of 2023, Israel’s military spending increased by 93% compared to the same period the previous year, with projections suggesting a doubling of military expenses in 2024. These costs are driven by the need to fund reservist wages, artillery, and Iron Dome interceptors; the latter has been repeatedly breached since October 7th 2023. Currently, the war is costing Israel around $133 million dollars daily, including spending on housing for the increasing number of evacuees leaving the northern border due to Hezbollah’s successful strikes on Israeli settlements, according to Hürriyet Daily News.
Foreign direct investment in Israel dropped by 29% in 2023, with global fund ownership of Israeli stocks falling to its lowest in a decade. The Big Three credit rating monopolies have all downgraded Israel’s long term credit rating, which are used by banks, financial institutions, and investors to assess the risks of investing in a company. The monopolies have explained their decision to downgrade Israel’s credit rating by citing increased “risks of retaliation against Israel” by the armed resistance. Israel’s bond yields are also the highest they have been in 13 years—bond yields increase when investors view an investment to be riskier and hence seek greater returns, and shareholders set high bond yields when they are in immediate need of large sums of money. Israel’s heightening bond yields reflect investors’ decreasing confidence in Israel’s economic stability, as well as Israel’s desperation to compensate for its impossibly high military spending and the financial losses they have suffered from the prolonged and unwinnable war that has been advanced steadfastly by the Palestinian resistance.
Israel’s high-tech sector, constituting the largest share of Israel’s GDP, is experiencing dramatic losses from the drop in foreign and domestic investments. In August 2024, IVC, an Israeli high-tech research institution, reported a 42% decline in the number of transactions between Israeli companies and foreign investors in 2024 compared to 2023. High-tech monopolies have withdrawn activity in Israel, where in April, Samsung closed down operations in Israel entirely, and in June, Intel retracted plans for the construction of a $25 billion factory. A survey conducted in September 2024 by Start-Up Nation Central, an NGO that manages a knowledge base on Israel’s 7,500 high-tech companies and 500 multinational companies, found that 49% of these companies have canceled investments, 70% express concern about their ability to gain profits in the coming year, and 40% are planning to relocate operations outside of Israel. 24% have already relocated at least part of their operations abroad, and 44% have reported making workforce cuts.
In the construction industry, which makes up 14% of Israel’s GDP, activity fell more than 50% in the fourth quarter of last year alone according to the Bank of Israel. This was largely due to the Israeli government’s freezing of worker permits for Palestinians after October 2023, who made up 65-70% of the workforce in Israel’s construction sector prior to the war. Efforts to replace these workers with recruits from India and Sri Lanka have failed to meet demand, leaving major construction projects on hold.
Israel’s overall labor force has faced a significant shrinkage following the mass emigration of residents out of Israel following Operation al-Aqsa Flood. Despite claims that Jews from all over the world are flying to Israel to fight in the war, Israel experienced a net loss of around 250,000 people within just the first month of the war. By now, this number is projected to be over 500,000 according to John Mearsheimer, a political science professor at the University of Chicago. In Germany, where many Israelis have naturalization entitlements, the number of Israelis applying for naturalization increased by a factor of 10 after October 2023.
Military deployment and internal evacuations have also exacerbated labor shortages. Over 360,000 reservists, which makes up roughly 4% of Israel’s population, have been deployed into active duty for the IDF since last October. Around 200,000 Israelis have evacuated from border areas near Gaza and Lebanon this past year, many of them who have moved into hotels emptied from the collapse of the tourism industry, which lack the capacity to sustain the influx and length of stay of evacuees. These emigration, deployment, and evacuation numbers total to over 10% of the Israeli population, causing perpetual shortages in its labor force.
On the international stage, Israel is facing increasing isolation. Colombia, the biggest supplier of coal to Israel, have suspended shipments, weakening Israel’s energy infrastructure and jeopardizing its already fragile economy. Turkish shipments of steel, which Israel depends on for natural gas, have decreased 30% in 2024, according to the Turkish Statistical Institute. The global Palestine solidarity movement has also played a role in pressuring governments and companies to enact sanctions similar to those used against apartheid South Africa. Moreover, Ansarallah’s maritime operations have made it impossible for U.S. and allied shipments to traverse the Red Sea, forcing Israel to reroute imports from Asia around Africa, increasing the average shipping time by two weeks and costs of additional fuel alone by $1 million per shipment. The recent Ansarallah missile and drone attacks in retaliation for Israel’s aggression against Gaza have disrupted global trade, further damaging Israel’s economy. The Israeli port of Eilat declared bankruptcy earlier this year citing Ansarallah’s naval blockade, with the CEO stating: “Only one ship has come here in recent months. The Yemenis have effectively shut off access to the port.” This is all the more significant given Israel’s reliance on maritime trade, with the Chairman of the state-owned Ashdod Port stating that 99% of Israel’s good arrive by sea.
As a result of these developments, the Zionist entity’s economy went from having the fastest growing GDPs among the Organisation for Economic Co-operation and Development (OECD) economies in the third quarter of 2023 to the most stagnant one in the fourth quarter. 46,000 Israeli companies across various sectors have gone bankrupt since October 7th, 2023, and CofaceBd, the Israeli credit risk management firm, predicts that this number will reach 60,000 by the end of 2024. In the fourth quarter of 2023 alone, Israel’s GDP shrank by 20.7%, with private consumption plummeting by 27%. Israel’s GDP growth has continued to decrease this year—in October, Standard & Poor’s forecast that the Israeli economy could record zero growth in 2024. Since October 2023, Israeli citizens have rushed to redirect pension and insurance funds away from Israeli trusts to those abroad.
Unrest and frustration have broadened among Israeli workers who are left to cope with Israel’s economic stagnation. Israel’s largest trade union, the corporativist Histadrut representing 725,000 workers, organized a general strike in September to pressure Prime Minister Benjamin Netanyahu’s government for a ceasefire deal. The strike shut down government buildings, schools, and major airports for hours before it was summarily ended by a court order. While the union framed this as a response to the discovery of the corpses of six Israeli prisoners of war, it also reflects the deepening divisions within Israeli society amid the desperate search for a way out of this crisis. The ongoing collapse of Israel’s economy following Operation al-Aqsa Flood and throughout the resistance forces’ unwavering advances against the Zionist entity demonstrates that armed struggle rooted in the masses is effective and key to exposing and destroying the crumbling foundation of imperialism.
image: A plume of smoke rises from the Israeli port of Eilat after it was hit by drones launched by the Iraqi resistance in September this year
