israel firing indiscriminately incidentally populated areas and when you look at these neighborhoods that have been tumbled and decimated, that's certainly what it looks like happening. or there, there's a separate community that even if you're aiming at a military target, you cannot fire if the consequences to civilians will be disproportionate. and here we've seen is really not blowing up huge apartment buildings rendering a 100 families homeless at a shop because of some of the sensible from us presence. then if you look at the humanitarian angle on introductions, relative was absolutely clear that israel has a duty to allows you monitoring aid in. now with the latest responses to say, oh, come off, they have supplies and their titles. but we've already seen that from us pretty much different to the about studies civilian population, and they should not have to depend on from us for their saliva. when did you want us sitting there with each other and has the capacity to provide the aid that $2000000.00 costs williams need? israel is wrong to be blocking out and they allow this little drip, drip,

drip in which, you know, is barely making a difference. and they still are not allowing in, you know, water and electricity, the fuel needed for the generators in the hospital. so what you're essentially saying is that this, this is collective punishment, doesn't have time to collect the punishment is considered a work, right? absolutely. in other words, you know the particular well, i mean typically both the siege and some of the centers front of apartment is treating almost everybody in gaza as if the from us and, you know, you even saw elements of this when you know that these really defense minister side, or these are all just team and now you know, this is completely wrong under traditional manager. it personally, it doesn't matter whether somebody, you know, once voted for from us even though has been 16 years. and you know, half of the 1000 population is kids. i mean, doesn't matter what the personal symptom of these are um, these are civilians. and unless they take up arms they can not be targeted. but these really government is treating them almost. is it the fair gate now the

process of being held in several cities around the world to show support pilots done. hundreds rallied outside the us embassy and denise is calculus accounts that they condemned as ralph and carrying out what they described as a genocide and go as a new zealand capital of wellington, thousands of protests as much the parliament to cool for sci fi, many card palestinian flags and blackouts in support of going through hundreds of active business days, just sitting in new york's grand central station. yes, the group, jewish voice piece is quoting, for an immediate piece, far in going to before that describes isn't listed unit to be prevented. that's it for me. the clock, craig will be here now the heavy pricing in that we don't simply focus on the politics of the conflict. it's

the consequential for the human suffering that for you before we break bullets and bombs, and some of the world's most troubles regions. the army fled in the face of idols, advance it is one of the most serious thoughts of violence in recent years. in some instances we are the targets because we give voice to those demanding freedom, the rule of law. and we always include the views from all sides. the hello is good to have you with us on serial then yay, you're watching. counting the cost on alice's 0, that's your weekly, looked at the world of business and economics. this week is really reservists have left their offices. many businesses have ground to a halt. israel's government moves to stabilize its economy,

hit by the war on guns. also this week, hotels emptied in flights cancel. we look at the cost of the tourism industry and israel and palestine and the whole middle east and the global economy. is it a dangerous juncture? and the world bank warns of the serious economic impact of geopolitical tensions. the known as the nations of startups, israel's almost $500000000000.00 economy, is one of the most developed in the middle east, in spite of its decades long conflict with the palestinians. the country has low debt, a current account surplus, and high foreign exchange reserves. now as israel's military offensive escalates, the war on gaza is hitting the economy hard and putting its resilience to the test . here is how the economy has been effected so far. the currency has lost value against the dollar almost every day hitting an 8 year. lo and bonds tumbled

economic sectors such as construction and agriculture are at a standstill. a record called up as military reservist says left businesses short staffed the tech industry which accounts for 18 percent of israel gdp and half of all exports is particularly hard hit. consumer spending is way down, is really suspending much less except on food and tax revenues are following operations at several is really ports close to guys that have been disrupted and production at a major offshore gas field has stopped us. oil giant chevron estimates that the to more field provide 70 percent of israel's energy needs for power generation. and the bank of israel says that even if the war remains contains the gaza economic growth, which was forecast to hit 3 percent this year, will slow to to point 3 percent in 2023. now the central bank has held interest rates at 4.75 percent for the 3rd straight time in order to support

a weakening currency. it has previously said that it would sell up to $30000000000.00 of reserves to show up the shuttle. the governor says that the bank's policy is focused on stabilizing markets and reducing uncertainty. let's talk about all of this. i'm joined now from london by danielle, a be yankee danielly. you are associate professor of finance at queen mary university of london. thank you for your time. today how bad is this for the is really economy thanks for having me. just yesterday to find a spanish ser. uh, put up some some estimates of that cost of the war so far and the estimates are roughly $250.00 medium today. these are just the costs that i saw, all sorts of and direct costs that come up from, from the colorado preserves obviously. how bad do you expect it might get? because we were just making the point that consumers aren't spending right now except for food consumption on food is up. but consumption is half of these really economy domestic consumption. do you think a recession might happen?

that's about a good point in stock. assumption is about a house on the economic, a dvd, and it all depends on how long it lasts, and what is going to be the repercussions for households and firms. it's, it's complicated to give a precise estimate, i'm not expecting on a session, but it all depends with how long would last, what are the major indicators that you're watching as well separately, labor supply, exchange rates of interest rates. all of those things are going to leading, provided that the conflict remains confined to, you know, even though you guys had another one spread to other regions, more to the story and patty story proper. right. and that's a big is what's the risk to the 2nd lee is really currency. while we've seen is to set a large depreciation of the check out that basically spells inflation, which is one of the reasons why interest rates have kept costs than is it is it is

a small open economies, right? and so it's entirely dependent for how the shackled fluctuates. these are the prices, the us dollar of the euro, so it could be probably a month to keep the, if the check that keeps, keeps the appreciating and kinda coming days and weeks and months. do you expect to have a central bank is going to have to sell more reserves to show up the currency? so i wouldn't be surprised again, it depends on how long it lasts a. so if the, if the complain drops for for months, hopefully not, not tiers, then we should, we should probably expect some intervention in terms of selling reserves. if they, if they weren't to keep the exchange rates under control about government intervention, danielly, i want to ask you about that. the government is rolling out a massive war time stimulus program to support people and businesses in israel. that includes grants, state bank loans to companies and financial assistance for workers, banks and credit card companies are allowing repayment deferrals. but all this

extra spending is going to increase the budget deficit and ultimately public debt. a 3 credit rating agencies warrant that israel's credit worthiness could be downgraded. okay, then yearly back to you. perhaps since success, we just mentioned that the, the downgrading of the, of the, of israel's credit worthiness a standard and poors, downgraded israel. now the finance minister says that's alarmist and he has blown this off. how significant do you think that it should is real care about that? so these are these, i mean is elaborate to be healthy situation when it comes to the depth to gp, they show which stands as roughly 60 percent. but some of the problem is i'm going to set, i need to stop the depth about how, how the finances we do that it's coming forward, moving forward. so i mean, it all depends on how wide spread wide spread is the complex. and it's, it's hard to say what is going to be the effect of the budget into short term is

significant, but in the long term could be the more significant. hence, the, the downgrade of the outlook from ray, from the agencies, and the government stimulus package, which, by the way, is estimated to be bigger, more important than what the government has to do during the pandemic, to show up the economy. do you think that's enough to mitigate the dangers to the economy? well, they certainly up psychological, a fact on household some firms, uh, which kept spending very certainly these uh, for the dvds back due to a calling not preservice. so there is lots of things that are into lane. it's hard to say to stimulus is enough, but obviously they have to do something to kind of calm down uh, come down houses and farms and markets. but it's hard to say if he's going to be now again, it all depends on how wide spread the conflict would be. uh he find 8 in the, in the coming months, hopefully, hopefully not. it's a told us about the scenarios for israel's economy. israel has said that there is

no limit to how much it is going to spend, you know, on its war effort. but what does that mean? obviously, obviously the answers are going to differ on how long this all last. absolutely. uh well, i mean there is always a need to know how much you could spend, and as a said, uh, god forbid. but suppose that the contract wide spread to the rest of the strategy territory, then there is going to be in effect, the need to structure. people mean, you know, there is going to be 7 other fact several layers of effect depending on how bad the situation with the boat as a side, hopefully not. but it's ok to say, if the stimulus would be enough, it all depends on the trajectory that is going to take the call play. the field remains like circles grape to the to these are guys uh, setting them you might, you might be enough, but it's hard to say and the moment and, and what if it doesn't remain in gaza as you just as you just said, what is the worst case to other parts of them, at least then what?

well, with being with being this things brought out. they use that you'd be looking back into the seventy's. there's been a huge supply shock in terms of oil, and that creates inflation. is very inflation back into seventy's was like, you know, about 100 percent. so certainly if the conflict wide spread to major odd suppliers such as your own persons, that could be really problem. i think not just for ease, for anybody. in fact, the global economy at large, or daniel it'd be on key associate professor of finance at queen mary university of london. thank you so much for joining us today. so now at this stage, we do want to note that the economic situation for palestinians in gaza and the occupied west bank is much worse. a gauze is running out of food, water, medicine, and fuel due to a total blockade by israel hospital is a struggling to keep generators running and power life saving medical equipment. small aid convoys have started delivering supplies from egypt, excluding fuel. but the u. s. relief agency is calling for

a massive increase and assistance to gaza. israel's military offensive has destroyed entire neighborhoods in the enclave and displaced around half of gaza, more than 2000000 palestinians. to know more about this, do watch our previous edition of counting the costs where we detailed the crippling costs of the war for garza and it's residents earlier this month, landmarks in jerusalem and bethlehem as well as beaches in tel aviv were bustling with taurus. so was the unesco heritage sites in jericho, a city in the occupied west bank. but ever since the fighting between israel and homos started government scramble to get their citizens back home and issued travel warnings to the affected areas, new visitors, and now reconsidering their plans. here's a round up on tourism and how that's affecting the region. many companies have cancelled towards the israel and the palestinian territories until the end of the year. cruise ships avoided israel's shores, and major airlines have stopped flying to and from israel. hotels across israel

have either shut down or their housing is released. we left their homes near the gaza strip. while those in the occupied westbank suffered from a sharp drop in occupancy rates. many historic sites national parks, nature reserves, restaurants are closed, and aviation experts warn that the war on gaza could affect travel and other middle eastern countries, including egypt and jordan, swiss international airlines and durham these lift times have already suspended flights to level not. meanwhile, level known as national airline has do it's flights by hoss as tensions along the border with is real, intensify. b radian back to his bowl arm and a group has exchanged fire with the is really army, since the wall and gaza started the middle east. airlines decision came after insurance companies reduce the war risk coverage. okay, i am join now in our studio here in the bye alex, i'm a chair with alex during the aviation analyst and you're a consultant. let's start there with this issue of insurance because you were just

explaining to me moments ago that you know that that's the top of the pyramid and everything trickles down from there. exactly. so what we're seeing is just like when conflict helps up anywhere on the eviction, ensure is tend to cool the shots. so they are currently forbidding. most airlines from operating either to is rout egypt, jordan and syria, but also to other parts of the region in light of the escalations and what is and what is happening when airlines are in a position that they are ultimately unable to go to those destinations. because that will be no insurance cover. what we then see is mass exodus of the carriers and we saw this with that kind of stone. we start with through done. we start in ukraine and we are seeing it now. the airlines simply in a position where even if they were able to determine an outline their own risk and make their own assessments as to how long they would be on the ground. perhaps they would go with the same crew there and back if there was no insurance cover, that's a journey they kind of make. how big do you think the damage could be to tour it to

israel's tourism industry? and then i'll ask you the same question to the tourism industry in the occupied west bank, but let's start with this real show. so of course is relies heavily on tourism much like most areas of that region and travel is plummeting. we have new stats released over night that show that on the whole the entire region is suffering. when you zoom into that region, you have countries that are not specifically at the hot investigations like jordan, for example, and 11 on 11 on seeing a 70 percent full in travel demand. over this periods, georgia and 50 percent. and these are typically areas across including with tel aviv, another key destination is that in winter, that was specifically benefit from those high tourism numbers because they benefit from the warmer weather that they can offer to europeans and other travelers. what about the occupied with bank? it's the same, the same dire situation. ultimately, the middle east and this particular area of the middle east, is now suffering in, not fully into mont as a whole. these areas rely on at travel. would you bring in tourists to bring in

those that are visiting friends and relatives and so on and without at travel as it is we just mentioned with insurance being pulled. it's going to have a knock on effect immediately and that's what we're seeing now. there is no stakeholder in the whole travel ecosystem that he's able to have confidence in what is going on. and aviation is inherently exposed to just about everything of this level of uncertainty is just too much for for business as usual. how quickly can things pick up? because right now we have a tendency to be prisoners at the moment. and right now, you know, our viewers will. everybody can intuitively understand why flights are down airports or shot people are obviously not going on. holiday 2 destinations that are in or near a war zone. how quickly could it pick back up? the whole last thing, cuz the damage be what the, the unfortunate part is that and we see this with other areas of conflict around the world. it takes a while, we really have to have a period of stability that continues on for much longer than perhaps people imagine

before that confidence resumes when you have ad lines. for example, global care is the passengers of booked with to then be possible into hotels. were ready stating that they would not be operating to the region for a minimum of 6 months. we know that unfortunately this part of turbulence for this area of the middle east, in terms of the financial stability for travel navigation, is here for the, the mid to long whole alex the terrace. thank you very much for all that insight. thank you. and the war on gaza is not just threatening the areas where it is unfolding rich countries and the international monetary fund. and the world bank warren, that a prolonged war could compound the full allows from the war and ukraine. and there are real risks to the global economy. the middle east is an important energy supplier plus a vital shipping route for goods. among the major concerns is oil prices, which are sensitive to geo political tensions. a look at the oil prices, the price of the global benchmark. that is brent crude. oil rose above $90.00

a barrel in the past 2 weeks, it has ease somewhat since then. after a diplomatic push to contain the war, a price, the price hit more than a $120.00 a barrel in march last year, after russia's invasion of ukraine. it fell back down to just above $70.00 a barrel in may, but then rose steadily because major producers cut the output at the time. observe and say that if other countries like iran, for instance, are directly involved in the war, then that could drive up the price of oil to a $150.00 a barrel. or at joining us from brussels is hardly mackey. i'm i, you're the director of the european center for international political economy. thank you for joining us. talk to us about the volatility here because we just don't really know where this is going in terms of oil prices and oil supplies. while indeed the truth is, you're really pointing to the,

the real issue here, which is actually about the oil prices rather than the, the impact of the conflict itself. because the israel is actually, are very, to be more part of the global. i'm the even the regional economy. and so the, actually the 1st order implication of the war is quite muted. and it is very easy to draw a recollection on the $9073.00 war quadruple the oil prices. we still have the ukraine crisis isn't fresh in mind, but so far there is no embargo that'd be soaring. 1973. and the fact is that the political incentive, so pick looks very, very different now than it did back. yeah. 50 years ago. so what we have seen is basically energy reprises having a really sword with relatively modest increase is about 5 percent since their conflict began. and actually the bigger driver on the price is actually seem to be the poor economic out look in europe with the press demand for oil so,

so far so good. yeah. so far so good. what are the scenarios that you're looking at? what are the possible realistic scenarios, the realistic scenarios as are tend to be quite on realistic when he comes in this region. and uh, or at least quite so real. and you would look at implications that involved, for example, a major produce a larger room. and in order to see those effects that we have in and we'd be hurting the introduction, arrive, increase up to a $150.00 or $250.00. and even under the circumstances it'd be have to remember i, the, the, the, the impact on global matter will be much less on the, on the today than even 19 seventies. simply because of the fact that the, the global dependency of, or the has actually have in the last 50 years. and also the, the, the cartel opec and opec plus is actually quite split in terms of how you are responding to this crisis. and if you, for example, like

a car that it has tate really taking the up and the opened up the tops since the war began in ukraine and again. and now we have also hearing from the united states that the my actually opened up. it's strategic to reserves, so diversification over the last 5 decades seem to have actually done a little bit of the trick, at least. and we are you how and looking at a very different scenario. if you're looking at potentially living on them and even the wrong getting involved. and uh, there are a lot of conversations going on by laterally uh, between the different parties that don't seem very united at the moment. okay, how's the, how's the cold on? because i need to give our view as a quick reminder of why we talk about the oil prices so much. why they so important? because when the price of oil goes up, the cost of almost everything, transport consumer goods, food not to mention energy bills, the price of all those things goes up. for the past 18 months, central banks have been trying to rein in inflation and keep prices contained in

the us. federal reserve has been leading that efforts and its latest report on financial stability. the fed said escalation of these conflicts or worsening in other geo political pensions could reduce economic activity and boost inflation worldwide. particularly in the event of prolonged disruptions to supply chains and interruptions in production. the us fed has recently paused interest rate hikes as inflation was showing signs of cooling. major central bank so worried that high rates could significantly slow economic activity in tip economy into a recession. the i m f warned of weak global growth at 3 percent in 2023, and the slightly less than 2024. that is well below the historical average. and the world trade organization says that a whitening more would have a big impact on fragile global commercial flows. how is that back to you? there's a massive question here around installation,

global prices, cost of living. you know, it's something we've been covering a lot of course, kind of the cost of living, which, which rose sharply uh after the war and ukraine started. and a lot of our viewers will be listening to this conversation and thinking, well, could we see something like that happen again as a, as a ripple effect of the gaza or? well that's, that's my point to be. um, the importance of oil has as, as a part of it with global images of probably it has actually hives. and given the diversity of other sources that has come up since 19 seventies. yes, indeed, we already in the recession, but the real stuff in the end of trade, israel is actually quite remote call it of the global economy system. and there are quite a few supply chain to the only few, the supply chain dependencies that we are looking at when it comes to israel. and the for example, things like dime. and there's some,

some assembly conductors in these rail as well. but this mostly designed rather than fabrication kind of the supply chain makes is actually quite limited. and this comes back to the point that unless you see a regionalization of this conflict with the other players getting involved, this is economically contain level problem. we don't have a dependency, for example, for food production that we have, for example, in the case of ukraine that supply that lot of the well food program is also a major export of grace and the iron o r. and therefore, we are exclusively looking at the disruption on the supplies of, um, uh, oil um, 1st and foremost and are here uh, come back to the point the opec has been actually trying to unilaterally suppress production. and i have an agreement to actually reduce the production of up to $1000000.00 barrel per year per day. and the simply because of the fact that we, the price is actually know the increase in the amount these would like to be. and

then i remind also the viewers that opened in the open conformation. there's also around the configuration that being jobs more play years, for example, like russia, which is called open plus, was being rather unsatisfied with the prize and the global prizes over the last 12 months. and whereas actually agreed to unionize rates of pests suppressed production or the in the summer. so what we're seeing now is actually the minor corrections or movements in the prizes. it is indeed true that the 2024 is going to be a very, very difficult year. and in not least that you've given to us elections coming up. and we have a, we have is, let's say a sensitivity around the increasing prices. but so far, especially the competitive the ukraine carts is that it has been something that can be kept on track and it hasn't actually spilled over and to the other parts of the regions. and how much does all of that analysis change if then the conflict does

escalate? well then we are looking at a completely different game altogether, of course. and that's um that's um, that's something that i guess the longer people are looking into whether his belie, i shouldn't have any sense if to get involved. and if they do, uh does it you, ryan, i actually have the incentive to continue the code to the extent that they do with are actually time for with an oil. and now i remind everyone that you, ryan and the us and the missile negotiation for releasing hostages against frozen funds that the around the has in south korea. and as a form of government negotiating myself. i mean, i, i tend to think that they keep talking about some kind of a trade off like cost is just on funds. has the best date escalation effect on any kind of rule. and to find that people are actually negotiating as bilaterally on an,

even in the company to enter unrelated areas, makes a completely different image, right? so a completely different picture in terms of what we're looking through on final point here that we need to look at already for one of the biggest is actually china . and that basically means that a lot of these flows may actually continue eva in the case. so there would be an embargo against the rest. so there is a price that bill is ation effect. if that you to trade it between the goal and china continues to happen. how exactly mackey? i'm a director of the european center for international political economy. thank you so much for joining us on the program today. a thank you. and that is our show for this week to get in touch with us on the x formerly known as twitter at benya several is my handle. do use the hash tag a see to see when you do or drop us an email. counting the cost at alpha 0 dot net, that's the email address that there's more for you online at alice's here dot com slash ctc. that will take you straight to our page, which has individual reports,

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