Explore the economic implications of the Israel/Gaza war, including the sustainability of Israel's war footing and the challenges of urban counterinsurgency operations. Learn about the motivations behind the attack, Israel's strategy, and the desperate situation in Gaza. Discover the effects of the war on the international economy and the involvement of Saudi Arabia, Iran, and China. Also, get a sneak peek into the creators of the podcast and an upcoming episode on NATO's role in the war in Ukraine.
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Quick takeaways
Israel's military operations in the Middle East are economically sustainable due to its superior resources and ability to avoid sanctions or limitations.
Gaza's economy is hindered by deliberate policies that prioritize using its population as cheap labor for the Israeli economy, resulting in stagnation and dependence on international aid.
Deep dives
Economic Sustainability of Israel's War Effort
Israel's war effort in the Middle East is economically sustainable due to its massive military superiority over Hamas. Unlike Ukraine, Israel has the resources to maintain its military operations without facing sanctions or limitations. The cost of the conflict is estimated to be a fraction of Israel's GDP, especially if the operation is concluded within a few weeks. Israel's request for additional munitions from the United States, including artillery ammunition, reflects its goal of eradicating Hamas' military infrastructure in heavily populated areas. While this operation is challenging, Israel has the necessary resources to carry out its plans.
Economic Challenges in Gaza
Gaza's economy has been subjected to deliberate Devolvement policies by the Israeli authorities. Despite being strategically positioned between Egypt and Israel, Gaza's economic development has been disfavored in favor of using its population as a cheap labor pool for the Israeli economy. The result is a situation of imposed stagnation and a continuous struggle for survival. Gaza has managed some slow growth in recent years, but it remains highly dependent on international aid and faces limitations on exports and access to basic necessities like food, water, and electricity. The current blockade and siege exacerbate Gaza's economic challenges, making it difficult for the population to thrive and develop sustainable economic opportunities.
Hamas's Financial Resources and Iran's Role
Hamas's financing comes from a range of sources, including Iran. Iran's support for all Islamic militant groups in Palestine is estimated around $100 million per year, with Hamas receiving approximately $70 million from Iran. However, this is not sufficient to cover the budget of operating a paramilitary organization within Gaza. Hamas relies on various revenue streams within Gaza itself, including taxing goods entering and leaving the territory, local contributions, and even crypto transactions. While Iran's financial support is crucial for weapon supply and signaling solidarity, the majority of Hamas's budget comes from local taxation and the fragile economy of Gaza. The limited funding poses challenges, but Hamas manages to sustain its operations within the constrained economic environment of Gaza.
Geopolitics and Economic Fallout
The ongoing conflict in the Middle East could have economic repercussions, particularly in the international oil market. Markets have already responded to the instability, causing oil prices to rise. The fear of potential disruption in global oil supplies arises whenever conflict arises in the region, leading to concerns about tighter supply and further price increases. However, current geopolitical dynamics suggest efforts to preserve stability in the oil market. Both the United States and Saudi Arabia have an interest in avoiding an out-of-control increase in oil prices, and the Saudis, with their surplus capacity, could quickly ramp up production if necessary. While the situation remains fragile, the consensus is that the oil price will remain elevated but not spiral out of control, given the multiple counterbalancing forces at play.
Hamas’s attack on Israel and the coming Israeli ground offensive in Gaza have significant economic implications for both sides. Adam and Cameron explore.
Hey, Ones and Tooze listeners in Berlin! After the success of the last live show, Adam and Cameron are going to be doing another live taping on Oct. 27 at 7 p.m. at the Hertie School (Friedrichstraße 180, 10117 Berlin, Germany).
Tickets are going quickly. Purchase them here: https://www.podfestberlin.com/event-details/ones-and-tooze-live-in-berlin