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How much will Gaza operation cost Israel?

Factoring in cost of reservists, insurance and benefits, Gaza operation could exact heavy economic price from Israel.

Avital Lahav
Published: 07.09.14, 14:26 / Israel Business

The Israel Tax Authority said Wednesday that the damage caused to property in southern Israel so far during Operation Protective Edge is evaluated at NIS 10 million ($2.9 million).

 

 

Some 100 claims for compensations for damages to property from Gaza rocket fire have been filed to the property tax compensation fund, among them 35 suits for damages caused to vehicles, 52 suits for damages caused to structures and 12 suits for damages to agriculture. There was also reported damage caused to public infrastructure and electricity infrastructure.

 

But the real cost to the fighting will likely be in defense expenses. The security cabinet has voted to approve the enlistment of up to 40,000 reservists and at this stage, close to 15,000 have already been called up.

 

The cost of a reserve soldier's service is estimated at NIS 600 a day ($175). Even before the kidnapping of the three Israeli teenagers, which led to the escalation in the security situation, the IDF has noted it does not have the resources to fund reservists when it canceled their planned training sessions for the rest of the year.

 

The IDF was expected to demand an additional budget to fund the reservists after the fighting ends. At this point, it is hard to estimate the cost of this addition because the fighting is still underway and it is still unclear how many reservists will be called up and for how long.

 

A day of fighting costs hundreds of millions of shekels

The cost of calling up reservists is just a drop in the ocean. Firing Iron Dome interceptors, operating fighter jets and helicopters, and operating Navy ships during combat costs hundreds of millions of shekels per day.

 

During the 2006 Second Lebanon War, the cost of fighting was NIS 350 million ($101.8 million) a day, and NIS 11.2 billion ($3.26 billion) in total.

 

In the 2009 Operation Cast Lead, the daily cost of fighting was around NIS 170 million ($49.5 million), and stood at a total of NIS 3.57 billion ($1.04 billion).Operation Pillar of Defense in 2012 was on a smaller scale in both length and scope, and cost the defense establishment less than NIS 2 billion ($582 million).

 

In addition to the heavy cost to the state, the fighting causes damages to the private sector as well.

 

Calcalist reported that near NIS 1 billion ($291 million) were cashed in from investment funds in the past two days following the escalation in the security situation in southern Israel. The TA-25 index went down 1% while the TA-100 index went down 1.3%. The shekel dropped 0.3% against the dollar and 0.2% against the euro.

 

Damages were also caused to the industry, mostly in southern Israel, as a result of workers failing to show up to work and failure to

keep delivery targets. In order to minimize damages to exports, Economy Minister Naftali Bennett signed an order enacting emergency work protocols. This order allows the state to confine workers in essential factories to their workplace. As part of the order's enactment, Bennett declared the Ashdod Port as essential and issued recruitment warrants for vital workers in the port.

 

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