Over the years, there have been many smaller conflicts, mostly blown over fairly quickly and barely having any effect on the economy. The next time, war with Hezbollah is going to hurt and it will cut deep.
For many years, Israel has lived in a world of its own, believing war to be something that happened everywhere but there. OK, since 2006, there have been at least four separate conflicts but, while there were casualties, there was very little in the way of material damage and no real interruption to the economy. This could be why investors are brushing off any concerns, despite being told by many experts that conflict with Hezbollah is imminent and is likely to be catastrophic. While the TA-35 large-cap index has fallen slightly on the Tel Aviv stock market, much of this is down to Teva Pharmaceuticals and not imminent war. Indeed, the shekel has risen against the dollar. Sadly, this lack of concern is based on something that no longer holds any water.
War of Missiles :
Most of the conflicts between Hamas and Hezbollah in recent years have been missile wars. The Second Lebanon War in 2006 saw 4000 rockets from Hezbollah inflict serious damage to Israel in a month but it still didn’t affect the economy. GBP fell during the war but bounced back up straight away, wiping out any impact. That set the pattern for the wars in 2009, 2012 and again in 2014. Not only did Hamas have fewer rockets than Israel, they were less powerful and were intercepted by Israel’s Iron Dome system, reducing their impact to practically nothing.
- 2014 – The Protective Edge campaign – The Iron Dome intercepted around 90 of all Hamas rockets
- 2006 – 34 days of war – 4000 Hama rockets landed with the deaths of 3 Israelis. In 2014, 50 days of war saw 3, 360 rockets land with just 2 deaths.
- 2006 – more than 30,000 insurance claims were filed for rocket-damage; in 2014, it was down to 2,400.
Suspect Figures :
The next Hezbollah war is not going to be like that. It is said that Hama has a missile arsenal numbering 100,000. That figure is suspect but there is no dispute that the Shi’ite’s are armed and have incredibly powerful and accurate warheads. They also have coast-to-air missiles and attack drones.
Israel also has better weapons. The Iron Dome brings down short-range rockets and the addition of the Sling and Arrow system means they can also bring down both long-range rockets and the ballistic missiles. But, should Hezbollah launch thousands of missiles at Israel, none of these systems will provide anywhere near sufficient defense and Israel will be vulnerable to even a small attack.
In geographical terms, Israel is small with its electric and water facilities located in just two concentrated areas. Natural gas comes in from a single pipeline and the majority of their exports comes from just one industrial plant. A prolonged series of missiles is The physical damage, the economic shutdown and ban on media coverage will leave Israel as no longer safe for businesses of investors.
Right now, neither Israel, Iran or Hezbollah seems inclined to get into a fight and it would be that things will remain peaceful. But tensions are building. Saad Hariri, Lebanese Prime Minister has resigned, rocking Lebanese politics and signaling that the Saudis are prepared to take Iran on with unpredictable results. Iran is moving into place in Syria, building naval and air installations and Israel has made it clear – if Hezbollah attacks, retribution will be swift and harsh.
Image Credits : http://nationalinterest.org