#38 Geoeconomics with Geopolitics

Israel’s war debts: enrich merchants of death

cs loh

Nov 24, 2023

The War , which the Israeli Finance Ministry estimates, is costing the economy around $270 million every day, will come with a fiscal price tag estimated at 180 billion shekels (US$48 billion) in 2023-2024, according to an Israeli financial advisory: Leader Capital Markets, (Bloomberg ²³/¹¹/²³).

Cited by Al-Jazeera, are estimations that Israel could lose anywhere between US$51 to US$60 billion if the war continues for eight months. This represents nearly 10 percent of the total GDP of Israel.

Moody’s estimates that the Israeli economy will shrink by 1.5 percent next year; that the budget deficit will widen to 3 percent this year while The Financial Times argued that Israel’s economic woes will extend to next year’s budget, predicting that the fiscal deficit will double three times by next year, (palestinechronicle 23/11/23).

Indeed, Israel's $48 Billion War Bill shall leaves its fate with the Bond Markets and respective merchants of death profiteering entities.

1] WAR BILL

Since the October 7 Hamas cross-border “Operation Al-Aqsa Flood” against Israel military operations, (Refer: Wider MENA War and Widening MENA War Part II), Israel has raised more than US$6bn from international debt investors, comprising US$5.1bn across three new bond issues and six top-ups of existing dollar and euro-denominated bonds, and more than $1bn of fundraising through an US entity, (READ ISRAEL's WAR DEBTS for fuller indepth details).

Many investors view these bond issuances uncomfortably given the humanitarian cost in Gaza due to Israel's ethnic cleansing campaign, (thecradle 18/11/23). Indeed, Israeli army’s large-scale military operation and its retaliation against Hamas had exceed a certain limit and lose its proportionality and immediacy in terms of time, space and degree. Thes actions can be qualified as an act of terrorism, or even as a more serious crime against humanity [人道主义罪行], (see Zhang Jiadong, 23/10/2023).

While Israel is paying coupons of 6.25 per cent and 6.5 per cent on bonds maturing in four and eight years’ - yet they are much higher than the nominal benchmark US Treasury yields.

Israel has also turned to individuals and municipalities to raise debt with its Israel Bonds which is affiliated to the Israel’s finance ministry; more than US$1bn of bonds since October 7, almost doubling the amount it had raised for the year, (ibid).

As a consequence, risk premium, or spread, investors demand to hold Israeli dollar notes over US Treasuries has remained about 25 basis points higher:

Indeed, Israeli Treasury expects that damage to the GDP will be much inflicted than the 2006 war with Hezbollah. The Israeli shekel has already nosedived since the start of the war, and is being one of the world’s worst-performing currencies.

2] DEPENDENCY ECONOMY

That Israel’s idealistic socialism roots since its foundation is gone, replaced by neoliberalism and financialisation capitalism. The Palestinian society as a whole has a highly distorted class structure — a compradore- capitalist class dependent on its privileged relationship with Israeli capital and a working class that has little strategic ownership in the national economic developmental struggle. As a consequence, the Palestinian economy is one that is destabilised with an absolute underdevelopment (refer Sara Roy, The Gaza Strip: A Case of Economic
De-Development). No doubt about the economic situation but that Israel has become a classic example of settler colonialism in contemporary times, as also a model picture of apartheid, (Prabhat Patnaik, 18/11/23).

Dependency upon foreign aid, Israel has had received US$263 Billion between 1946 and 2023 - to sustain a monopoly-capitalised economy emboldened to the Global North economies, (brookings 2016). The Israel defense budget inclusive of US aid is estimated to be $23.6 billion in 2023.

That foreign aid to Israel is unconditional means the US merchants of death profiteering by maintaining continuous conflicts in the Middle East and North Africa MENA region. POTUS though traveling to Israel - and taking credit for cautioning the Israelis to temper their tactics - but inadvertently approving billions of dollars of sophisticated weaponry to “sharpen Israel’s qualitative military edge”, has such an imperialistic impudence, (counterpunch). Then again, the U.S. is also providing, according to Politico, Israel targeting data in the bombings of aid groups in Palestine that indicate irrefutably Israel has lost all credibility, Antiwar.

Further, besides the dependency on American investors' capital and bond traders is a lesser known fact that Israel also permits the US to store its weaponry and munitions in Israel for use in the region, especially in furtherance on the containment of Iran, (csloh). Incidentally , when Israel depleted its store of munitions in the total destruction of Gaza, (Al Mayadeen; mondoweiss; palestinechronicle; Al-Hurriya; 972mag; Johnstone; csloh), America immediately replenishes Israel ammunitions from its US-controlled munitions' dumps that are already embedded on Israeli soil.

Since 1983, the United States and Israel have met regularly via the Joint Political-Military Group (JPMG) to identify new areas for security cooperation, inclusive of the Qualitative Military Edge (QME) program, the Excess Defense Articles program and others (more military assistance, grants and military deployments are documented HERE) on a quasi-alliance agreement which Singapore models after such US-security arrangements, too.

3] MIC CRITIQUE

Former British diplomat Alistair Crooke has some fine words on Israel's Moral Justifications in light of the Middle East Eye article portraying Israel's claim of 'self-defence' has zero legal legitimacy. It comes about whether, one day presently, will the Scorpion Sting the U.S. Frog? It may dawn upon POTUS that Israeli operations against Hamas are not getting anywhere due to the Zionist state’s recalcitrant refusal to confront its guilt and shame or accept a two-state solution to the Palestine issue because such status is regarded as currently unviable, (Haaretz).

Now it has to be made widely known that every year, the US defense industry - the military-industrial Congress complex (MICC) donates millions of dollars to the campaigns of members of the US Congress, creating pressure on the legislative branch to fund specific weapons systems, maintain an extremely high Pentagon budget, and add ever more military spending - see campaign finance data from OpenSecrets.org. and US war profiteers.

The United States may also boast having the world's highest national debt with a debt-to GDP ratio of approximately 128.13%. The USG's spending exceeds its income without a budget surplus since 2001.

This plutocratic- governance ruling class, (Kishore Mahbubani), has the highest military spending in 2022, with 877 billion U.S. dollars dedicated to the military. That constituted nearly 40 percent of the total military spending worldwide. Even this amount is nowadays regarded as highly under estimated, (monthlyreview, 01/11/2023); it could well be US$1.537 trillion! (or three-quarters of global military expenditure).

4] IMPERIALISM

U.S. bases abroad cost American taxpayers at least US$70B since 2000. It's the constituent part in an empire building with hegemonic hubris: as part of an exclusion South America's Monroe Doctrine; it's AUKUS-Asia NATO pivoting; it has to be a sole hegemony's America's Asia; it's to be an I2U2 military base-stringing; it's about encircling China in a new Cold War containment policy, (Amanda Yee), just as US embarks on a proxy war with Iran, (Bhadrakumar).

The domination and control of businesses without constraint is because of US imperial dictum where warfare is profitable to the American capital class including economic sanctions as proxy wars whence in the words of US President Woodrow Wilson, “more tremendous than war” whenever there is a targeted measure to take out bad guys without firing a bullet. Council member Dr. Ammar Ali Jan of Progessive International explains how this tremendous weapon actually works {+11-minute}.

5] ENDLESS HOLOCAUSTS

Since 1776, fighting for 228 of the last 245 years, the U.S. has only been at peace for 17 years, not only American colonists had wiped out North America's indigenous people, but also marginalising and suppressing progressive resistance forces in the Global South in collusion with the Triad of Imperialism and Global North's The Triad.

With reference to Israel, the UN Resolution 242 of 1974, which demands Israel withdraw from the Occupied Palestinian Territories, has been deliberately ignored by every succeeding Israeli administration since then.