Markets trust Israel
The skyline of Tel Aviv's financial business district (Getty Images)
The interview
In recent days, the Tel Aviv Stock Exchange index has reached its all-time highs, despite the 20 billion spent on defense in June alone. "The biggest costs will be those for reconstruction," says analyst Elise Brezis – and yet even these expenses will be a great investment in the long run”
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Tel Aviv . Assuming that the ceasefire signed yesterday between Tel Aviv and Tehran holds, the conflict between Israel and the Islamic Republic, which began on June 13, would have lasted a total of 12 days: a “lightning war” like the Six Day War of 1967, which has entailed enormous costs, especially in terms of human lives. However, what has been striking since the first hours of this complex military and intelligence operation, have also been some considerable benefits, especially if you look at the Tel Aviv Stock Exchange index, which in recent days – even before the ceasefire was announced yesterday – has reached its historical highs, growing by over 10 percent . Elise Brezis , professor of economics at Tel Aviv University and director of the Azrieli Center for Economic Policy, told Il Foglio: “International investors have decided to bet on Israel, not only in the short term, certain of an IDF victory, but also in the long term, aiming for the stabilization of the entire Middle Eastern region, once the Tehran regime has been eliminated”.
The analyst recognizes that the month of June had enormous costs for the Israeli population, both direct - it has been calculated that around 20 billion dollars were spent on defense alone - and indirect, such as the expenses, still difficult to calculate, of costs related to healthcare and all the activities that were suspended due to the war emergency. However, he stresses that, even working in unthinkable conditions and from bunkers, in these 12 days Israel has never stopped for a second, with 98 percent of companies continuing to work: " The biggest expenses will be those for reconstruction - says Brezis - The country has been badly hit from north to south: from Haifa to Beer Sheva, with entire neighborhoods of Tel Aviv reduced to rubble. One of the most important items to calculate will be that related to reconstruction costs, estimated at around nine billion dollars. Yet even these expenses will be an excellent investment in long-term terms, not only because we will be forced to find better technologies, capable of withstanding potential attacks from other potential ballistic missiles, but above all because these technologies can then be exported abroad. As has already happened immediately after October 7, when many Western states turned to Israel to purchase specialized technologies in anti-missile interception, cyber security, cloud data security systems and AI, all technologies in which Israel is a world leader. Furthermore - he concludes - if the pacification of the region proposed by the Trump Administration since its first term continues as planned, other scenarios that were once unthinkable will open up, including the opening to other markets within the same region. If the Abraham Accords continue, one of the privileged interlocutors will be Saudi Arabia, but potentially also Syria and Lebanon, neighbors that could become our important partners . I believe that this is, above all, what most international investors have bet on”.
Nissim Douek , one of Israel's most authoritative strategic commentators and founder of Unik Public Image, one of Israel's leading communications agencies, also highlighted the crucial aspect of the communications component in the success of this operation, which could have driven potential investments especially in human capital, which is the largest Israeli capital: "From 2000 to 2020, the Israeli economy has done nothing but grow exponentially, and has even managed to survive the last five years of crisis between Covid, the protest movement against judicial reform, the Hamas attack on October 7 and even the counterattack by Tehran. This resilience, typical of Israel, has probably pushed venture capitalists to continue investing in Tel Aviv . From the point of view of the outside observer, if we have managed to survive the incredible challenges of these last five years, after having eliminated first the tentacles and now the head of the Iranian regime, we foresee a future in which Israel will only confirm its role as a Startup Nation, with a strong presence in the country. enormous benefits both for the region and on a global scale.”
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