»For the last 11 years, Israel has been living in a fantasyland where war is something
that happens on the other side of the border. It may afflict Syria, Iraq, Lebanon and Libya, but
has nothing to do with us.
True, we have had no fewer than four conflicts ourselves since 2006, but except for the
casualties, they were a romp – material damage was minimal, and economic activity was barely
Maybe that explains why even though many experts warn the risk of conflict with Hezbollah is
greater than any time in years, neither investors nor business people seem to be giving the thought
the slightest attention. The Tel Aviv Stock Exchange’s TA-35 index of large-caps has fallen
2% in the past month, but that’s mainly due to Teva Pharmaceuticals’ woes. The shekel,
meanwhile, has strengthened against the dollar.
That nonchalance is based on a scenario that is no longer valid.«
»The next war isn’t going to look like that. The round figure everyone uses for
Hezbollah’s missile arsenal is 100,000. That is a suspiciously round figure and is probably
wrong, but no one disputes that the Shiite militia is well-armed, and more importantly, many of its
missiles carry much more powerful warheads and are much more accurate than they were in 2006.
Hezbollah’s arsenal includes attack drones and coast-to-sea missiles, too.
For its part, Israel is also better prepared. Iron Dome, which is designed to bring down
short-range rockets, has been complemented by the introduction of the David’s Sling and Arrow
systems, designed to intercept long-range rockets and ballistic missiles, respectively.
But against an onslaught of thousands of missiles, no Domes, Slings or Arrows will be able to
provide the kind of defense Israelis have grown used to. Israel’s infrastructure and economic
activity are vulnerable to even a limited missile attack from Hezbollah.
Geographically, Israel is a small country with no hinterland, which means facilities for
electric power and water are concentrated in small areas. More than a quarter of electric power is
generated at just two sites. Natural gas is produced at a single offshore field and delivered via a
single pipeline. A large portion of our exports derive from a single industrial plant.
A prolonged missile war will almost certainly bring business to a halt.
In 2006, that’s what happened in the north, but that was a relatively small part of the
economy; the next war will almost certainly encompass Tel Aviv. Factories will have to close and
orders will be delayed; multinational research and development centers won’t be able to meet
their timetables; airlines will suspend flights to Israel (as indeed happened in 2014) ; and basic
services like banking could be brought to a halt.«