As I said before, the status quo and long peace would only benefit Israel, what the actors need to do is to prolong this conflict to Syrian war-style protracted conflict which while casualties are one-sided, helps to reduce the state to the bare skeleton. Because we also need to take into account the large Israeli foreign reserves and the aid that will come to it, so the longer the better, the more sustained the better.
But unlike in Syria, where Assad rule over the ashes, the same logic couldn't be applied to Israel, because their threshold is not only the survival of the state, but also maintaining the high-income, high quality of life capitalistic economy. Increasingly hard to do when half a million of their 7 million people are drafted into the war. Many of them are secular Jews who work in the tech and business industry and not religious one exmpted by law.
If I were asked to identify what is the Center of Gravity of the Israeli state, it's their illusion of safety, without the illusion of safety, the Western settlers will leave. And the degradation of the illusions of safety could only be achieved by a protracted combat. Even if the casualties is disproportionately with the Arabs (they can afford this though).
A widening conflict would test Israel’s economic resilience while worsening an already bleak outlook for the Palestinian economy.
www.nytimes.com
The outlook for the Palestinian economy was already dire before Israel declared a siege of Gaza in retaliation for the Oct. 7 attacks, creating what the World Health Organization called a “humanitarian catastrophe.” An assessment this year by the International Monetary Fund said Israel’s blockade of the Gaza Strip and increased restrictions on the West Bank were significant obstacles to growth and private sector development.
In Israel, as many as 360,000 reservists are leaving their jobs and businesses to mobilize for military duty, bringing parts of the economy to a standstill. Israel’s technology industry, a driver of growth, has abruptly slowed. Production at a major Israeli offshore natural gas field has been shut down. The central bank has committed billions of dollars to prevent Israel’s currency, the shekel, from collapsing.
The overhaul set off a 60 percent plunge in foreign investment in Israel, and it has hastened an erosion in the shekel’s value and wide swings in the Israeli stock market. High interest rates, rising inflation and expectations of a slowdown in the global economy were also weighing on growth.
The longest mobilizations Israel had ever faced before this was 1973 October war (2 weeks) and that took a heavy toll on the Israeli economy. Here's a digitized NYT article during those days.
Israeli mil mobilization in 1st 3 mos of Oct Middle East war cost econ some $750‐million, about 15‐20% of GNP; loss is separate from billions spent for upkeep of armed forces and for replacement of material destroyed in fighting; losses were made up substantially by $2.2‐billion in grants and...
www.nytimes.com
TEL AVIV—Between 150, 000 and 200,000 Israelis are now in their fourth month of military reserve duty. That's 10 times as many as in the relatively normai times before the war that broke out on Yom Kippur, the day of atonement.
The reservists represent some 15 per cent of the country's labor force, but the effect of their removal from their civilian occupations has been disproportionately great. The mobilization of drivers created transport bottlenecks. The absence of foremen reduced efficiency in factories. Many small enterprises have remained shut since their proprietors were called up.
Officials in Jerusalem estimate the mobilization in the first three months of the war cost the economy some $750‐million. That loss, 15 to 20 per cent of the gross national product, was separate from the billions spent for the upkeep of the armed forces and for the replacement of material destroyed in fighting.
Here's another article about the effect of mobilizations on the economy
Economists forecast sharp contraction and big government deficits as fears mount of extended conflict
www.ft.com
Before war broke out between Israel and Hamas, Jeremy Welfeld’s brewery in the Israeli town of Emek Hefer produced 50,000 litres of beer a month, while his 14 restaurants around the country drew in thousands of customers each day. In the two weeks since the conflict erupted, Welfeld’s businesses have ground to a halt. The brewery has produced nothing; 12 of his 14 restaurants are closed, and in one of the two that remain open, just five people came in during lunch hour on Thursday.
“On a normal day it’s between 50 and 150 people. Do you even open a restaurant [in these circumstances]? I can’t afford my overheads,” he said. “I’m not sure how exactly this is going to play out. It might really be the last straw that might bring down the company.”
