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Middle East Eye
02-07-2025
- Business
- Middle East Eye
Israel's economy can't survive a long war with Iran - and Trump knows it
Iran's recent campaign of strikes against Israel has redrawn the theatre of conflict, shifting away from kinetic warfare alone towards a strategic offensive against the economic and financial infrastructure underpinning Israeli state power. What began as a retaliatory strike has become a multidimensional assault, aiming not only to inflict immediate costs but also to destabilise the fiscal and logistical foundations of Israel's war economy. The missile strike targeting the home of Dani Naveh, CEO of the Development Corporation for Israel, commonly known as Israel Bonds, was no coincidence. Naveh is not merely a bureaucratic figurehead - he is the architect of Israel's global bond sales operation. Since October 2023, his leadership has driven over $5bn in capital inflows from diaspora and institutional buyers, including $1.7bn from US public bodies. These bonds, insulated from secondary markets and sold directly, have become a critical fiscal artery for a state at war. By striking Naveh, Tehran targeted Israel's debt-raising mechanism at its most vulnerable point: investor confidence. New MEE newsletter: Jerusalem Dispatch Sign up to get the latest insights and analysis on Israel-Palestine, alongside Turkey Unpacked and other MEE newsletters In doing so, it signalled to global markets that no Israeli economic or financial node is immune. This is not merely a disruption of personnel - it is an attempt to discredit Israel's entire wartime financial scaffolding. Simultaneously, Iran's attacks on Tel Aviv's financial district and Haifa's strategic port and refinery infrastructure suggest a doctrine of coherent financial attrition. The twin strikes - cyber and kinetic - disrupted refinery operations critical to both industrial and civilian energy supply. Israel, already strained by soaring wartime expenditure, must now contend with fuel bottlenecks and cascading costs across its logistics and production chains. Maritime chokehold The most consequential blow to Israel's economy came through the global maritime sector. On 20 June, Maersk, the world's largest container shipping firm, announced the suspension of all vessel calls at Israel's Port of Haifa. The move, triggered by the risk of further Iranian retaliation, turned threat into market exclusion. No naval blockade was declared, yet the effect was the same. With insurance premiums on Israeli-bound shipments soaring past one percent of vessel value, Israel's maritime economy entered a de facto embargo. Shipping giant Maersk's exit from Haifa severed Israel's maritime lifeline, turning threat into a de facto embargo This disruption dwarfs the earlier Red Sea shipping crisis caused by the Houthi blockade. The Bab al-Mandab chokepoint merely rerouted cargo. Maersk's exit from Haifa severed it altogether. Haifa is Israel's principal Mediterranean gateway for industrial machinery, pharmaceuticals, and strategic imports. Without it, the Israeli economy becomes brittle and prone to inflation. Import costs have increased, and inventory gaps are expected to widen. The government will be forced to subsidise logistics at enormous fiscal cost or rely on substandard shipping firms operating under flag-of-convenience regimes. Only after the ceasefire brokered by US President Donald Trump was announced did Maersk confirm it would resume vessel calls at the Port of Haifa, reopening both import and export services. Nonetheless, the pressure during the clash was significant and prevented Israel from ignoring the cost of its war. Strategic resilience Iran, in contrast, has spent minimally to achieve maximal disruption. Its missile operations, estimated at $2bn to $3bn, are structured as strategic investments. The government has preserved macroeconomic stability through tight currency controls, off-market oil diplomacy, and selective austerity. Iran won this war with defiant strikes. Israel lost Read More » By weaponising psychological deterrence, Tehran has achieved what years of sanctions could not: making Israel's financial ecosystem appear unstable, vulnerable, and fundamentally unsustainable. Iran has long lived under sanctions and siege, and has developed the capacity to endure such conditions for decades. This has given it a hardened resilience that decisively outmatches Israel's war economy, which is deeply dependent on global capital markets, western political backing, and short-cycle military dominance. Unlike Israel, which cannot sustain prolonged disruption without risking economic and political breakdown, Iran's system is built for survival through attrition. Its strategic patience, forged through decades of pressure, gives it a deeper national resolve that threatens to outlast and wear down the Israeli state's ability to finance and justify an extended war. Fiscal freefall Israel's economic crisis is not just one of cost but of confidence. The shekel has depreciated steadily since October 2023. Bond yields are rising. Credit default swaps are pricing in elevated risk. Foreign investment is drying up. Small and medium-sized enterprises are folding. Credit ratings have been downgraded. Follow Middle East Eye's live coverage of the Israel-Palestine war Lost working hours across cities under alert have translated into productivity shocks and tax shortfalls. Unemployment is rising. Public anger is growing. The government's response - raising the value-added tax, slashing social spending, and issuing more domestic debt - is not a recovery plan. It is fiscal triage. Education, health, and public infrastructure spending are being cannibalised to fund ongoing military operations. The long-term costs will outlast the war. Human capital is eroding. Capital and human flight is intensifying. Trust in the state's economic management is faltering. And now, for the first time in half a century, Israel has issued an international plea not for arms, but for cash. Tel Aviv has formally requested that Gulf states, Germany, Britain, and France contribute economic aid to sustain its wartime footing. This is not strategic outreach - it is an admission of exhaustion. The war is no longer financially containable within Israeli borders. This appeal also lays bare an uncomfortable contradiction: a state that celebrated economic self-reliance has become dependent on external infusion just to remain solvent. This is not fiscal resilience - it is financial collapse in slow motion. Opportunistic gambit Iran's strategy has delivered its most significant result yet - not the destruction of Israeli military assets, but the destabilisation of its war-financing apparatus. The strikes have triggered a wider unravelling of shipping corridors, bond markets, investor sentiment, and public confidence. Israel is not just fighting on seven military fronts. It is now fighting for economic survival. The Iranian attack on Israel has paradoxically helped Prime Minister Benjamin Netanyahu deflect mounting domestic criticism by reframing the conflict as an existential national struggle rather than a political liability. Trump's recent moves reflect not strategic generosity but an opportunistic gambit to reassert American influence across the Middle East However, the limited success of the US strike on Iran's nuclear facility on 22 June underscores that this is not a war of quick victories, but one of attrition, where strategic resolve will ultimately determine the outcome. The ceasefire that concluded the latest round of hostilities between Iran and Israel does not signify resolution, but recalibration. In the vacuum of mutual exhaustion, the US, under Trump, has seized the opportunity to reposition itself not merely as an arbiter but as the architect of the post-conflict regional order. Trump's recent moves reflect not strategic generosity but an opportunistic gambit, capitalising on Iran's strategic gains and Israel's fiscal exhaustion to reassert American influence across the Middle East by reshaping infrastructure, economic dependencies, and political alignments. A pivotal development preceding the escalation was Iran's inauguration of a direct railway link to China, reducing shipping times to approximately 15 days. More significantly, it facilitates transactions beyond the reach of dollar-based financial systems and sanctions enforcement. By embedding itself within China's Belt and Road Initiative, Iran signalled a deliberate move to reorient its economic future away from the western-led order. The subsequent joint US-Israeli strikes against Iranian infrastructure suggest that this infrastructural pivot - rather than nuclear enrichment alone - was partially perceived as a primary threat. American designs Following the ceasefire, the US has adopted a transactional approach to contain further Iranian gains. The Trump administration's decision to allow Chinese refiners to resume purchases of Iranian oil, since revoked, reflects a calculated use of selective relief to slow Iran's strategic deepening with China. This is not a concession but an attempt to draw Iran into financial arrangements governed by US institutions, thereby preserving a degree of control over its liquidity and trade exposure. In parallel, the US has intensified its use of multilateral finance as a strategic tool against Iran. The India-Middle East Corridor: A new Silk Route or diplomacy by PowerPoint? Read More » The World Bank's electricity grant to Syria, although framed as a development initiative, serves to weaken Iran's influence over the future of Syria. Similar efforts are underway in Lebanon, targeting Hezbollah's parallel service networks. These moves are designed to stabilise the architecture underpinning the Abraham Accords. With Israel facing fiscal strain and declining deterrence credibility, regional calm is crucial to preserving economic integration with Gulf states and protecting the viability of projects like the India-Middle East-Europe Economic Corridor. Iran's capacity to disrupt shipping lanes and energy flows has underscored the fragility of these initiatives. In sum, the US is pursuing a strategy of infrastructural counterweight and institutional encirclement. It seeks to neutralise Iran's strategic momentum not through escalation, but through selective accommodation, economic instruments, and containment. This approach marks a shift from military dominance to structural influence, aimed at managing, rather than resolving, the contradictions of the current regional order. Through initiatives like the Abraham Shield plan, the US hopes to transform Israel's wartime momentum into a durable order anchored in strategic deterrence, economic integration and political normalisation. The views expressed in this article belong to the author and do not necessarily reflect the editorial policy of Middle East Eye.
Al Bawaba
19-06-2025
- Politics
- Al Bawaba
Video: Iranian missile hits former Israeli Minister's home in direct strike
ALBAWABA - On the seventh day of the conflict between Iran and Israel, an Iranian rocket hit the home of former Environment Minister Dani Naveh, who is a member of Prime Minister Benjamin Netanyahu's Likud Party. This was a dramatic increase in the tensions. Also Read Israel's Soroka hospital hit in latest Iranian missile barrage Iran's most recent round of missile attacks, which began early Thursday morning, hit several major Israeli towns directly, including Tel Aviv, Ramat Gan, Holon, and Be'er Sheva. The attacks caused a lot of damage. Explosions shook cities, destroying buildings and hurting many people. One of the places that was damaged directly was the Soroka Medical Center in Be'er Sheva. The hospital had to close because so many areas were damaged so badly. Israeli Army Radio said that at least one person was seriously hurt and another was hurt moderately in Holon. In Ramat Gan, about 15 people were hurt. Damage was also done to the Tel Aviv Stock Exchange building in Ramat Gan. But Iranian sources said that reports that the hospital was the main target were not true. Iranian media say the missile attack was directed at a nearby center for military intelligence. It was meant to hit the IDF C4I command center and the Military Intelligence Base in the Gav-Yam Negev technology park, which is home to advanced cyber warfare systems and cyber operations infrastructure. They said the hospital was nothing more than a victim of the blast wave. Just hours before the Iranian rocket attack, Israeli planes attacked the site of the IR-40 nuclear reactor near Arak. Before Iran's reaction, the Israeli military sent out a Persian-language evacuation notice telling people to leave the area around the reactor. As the second week of the conflict goes on, both sides seem to be expanding their strategic goals. This makes people worry that the fighting will get worse in both military and civilian areas.
The Journal
10-05-2025
- Business
- The Journal
Why are pro-Palestine groups calling for Ireland to prevent the sale of Israeli 'war bonds'?
PRESSURE HAS BEEN mounting on the Government to introduce legislation that would effectively stop Ireland facilitating the sale of Israeli bonds across the EU. In recent weeks, there have been protests at the Central Bank of Ireland calling for action , while in Leinster House, Sinn Féin TD and chair of the Oireachtas Finance Committee, Maireád Farrel,l has said it is a priority for her to get the Central Bank in before the committee to discuss the issue. Here's a rundown of where things stand. What is an Israeli bond and why are some people calling it a 'war bond'? Governments issue bonds as a way to raise money to fund things like new projects and infrastructure. Government bonds are considered to be some of the safest types of investments globally because there is relatively low risk involved. Following October 7, 2023, Israel has considered itself at war with Hamas. The CEO of Israel Bonds (the organisation that sells the bonds), Dani Naveh has spoken in the media about how money generated from the sale of Israeli bonds has been used to fund these military operations. In recent times, websites promoting the bonds emphasise their role in supporting Israel during the war – leading some to dub them 'Israeli war bonds'. What does Ireland have to do with this? Government bonds – like those sold by Israel – are generally sold to investors on international stock exchanges. Their sale is facilitated by central banks. As Finance Minister Paschal Donohoe said in the Dáil recently, Israeli bonds are not listed for sale on the Irish Stock Exchange. However, the Irish Central Bank has a special role in facilitating their sale in the EU. To be sold in the EU, bonds from non-EU countries must have their bond prospectus (a legal document setting out details of the bond) approved by the Central Bank of a country that is in the EU. Before Brexit, the UK carried out this work for Israel. After they left the EU, Israel chose Ireland to be its 'home country' for this purpose, meaning the Irish Central Bank is responsible for approving its bond prospectus. Why is this an issue? Pro-Palestinian campaigners and most Opposition political parties in Ireland argue that by carrying out this work, Ireland is facilitating Israel's actions in Gaza. Their argument is that our Central Bank is allowing Israel to raise money for its war effort by enabling the sale of bonds through approving the country's bond prospectus. Advertisement Over the last year, there has been a growing campaign calling on the Central Bank to stop approving the sale of the bonds in the EU. However, the Central Bank has said it can only do this where it has the legal basis to do so i.e. in a situation where sanctions are introduced against Israel at an EU level or where there are 'National restrictive measures to the same effect'. This is disputed by many, including Sinn Féin. Helen Mahony, co-ordinator of Stop Funding Genocide, a campaign that is being run by the Ireland Palestine Solidarity Campaign (IPSC), told The Journal that she believes the Central Bank is wrong in its interpretation of its obligations. 'The thing about this EU Prospectus Regulation is that it's designed to set out technical standards that a prospectus has to reach. But implicit in that is that the prospectus is for at least lawful reasons. I mean, no EU regulation is designed to legitimise genocide or to legitimise criminal intent,' O'Mahony said. 'It makes no sense to say that an EU regulation is forcing somebody to become complicit in genocide. No organisation, neither a business nor a bank nor an educational institution, for that matter, or any institution is not bound by the Genocide Convention and not bound by international humanitarian law,' she added. Is there an appetite to change the law nationally? Within the Irish Government, currently, there is not. But pressure has been mounting from the Opposition, with Sinn Féin, the Labour Party, Social Democrats and People Before Profit all in favour of introducing legislation that would enable the Central Bank to stop facilitating the sale of the bonds. Sinn Féin's Pearse Doherty is due to introduce a bill on the issue in the coming weeks, although it is unlikely to get the support of the Government. Finance Minister Paschal Donohoe was asked why the Government has not introduced its own legislation on the matter in recent weeks, and he said he did not intend to introduce legislation that would forbid the Central Bank from fulfilling its regulatory duties at EU level. A cross-party motion is expected to be brought before the Dáil in the coming weeks, which will call on the Government to take action. The motion has been campaigned for by the IPSC, which has said they have had positive interactions with political parties on it to date. While the IPSC and O'Mahony support Sinn Féin's proposed bill on the matter, O'Mahony still believes the Irish Government and the Central Bank could act now to stop the sale of the bonds without any legislation being necessary. O'Mahony made the point that Israel's blockade of Gaza is 'in part funded by Israeli bonds'. 'They wouldn't be going to Israel from Europe, but for the Central Bank of Ireland. So there's a direct line. 'The [Irish] Government could tell the Central Bank of Ireland that they must honour their obligations under the Genocide Convention, but instead they're both playing this game of smoke and mirrors and just kind of hiding behind what they claim are technicalities, but it's a complete misreading of the EU Prospectus Regulation as far as I can see,' she said. Readers like you are keeping these stories free for everyone... Our Explainer articles bring context and explanations in plain language to help make sense of complex issues. 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