Impact of Countries Cutting Ties with Israel on Its Economy
Bolivia, Chile, and Colombia have taken drastic diplomatic steps against Israel by recalling their ambassadors from Tel Aviv. Jordan also recalled its ambassador, while Turkey, Chad, and South Africa pulled their ambassadors out.
In the wake of Israel's military offensive against Hamas, at least eight countries have taken the drastic step of pulling their ambassadors from Israel. South Africa, Jordan, Turkey, Chile, Colombia, Chad, Honduras, and Bahrain joined Bolivia, which fully severed its diplomatic ties with Israel. Other countries, including Argentina and Brazil, have also expressed increased criticism of Israel's military operations and their impact on civilians.
As of 2021, Israel had formal diplomatic relations with 168 other countries. However, twenty-eight United Nations member states have either never established or broken off diplomatic ties with Israel. The countries that cut ties with Israel cited the military offensive in Gaza, which they deemed disproportionate and aggressive. They called for an immediate ceasefire and for unhindered humanitarian aid to enter Gaza. The attacks resulted in the deaths of thousands of Palestinians, including civilians.
Bolivia, Chile, and Colombia have taken drastic diplomatic steps against Israel by recalling their ambassadors from Tel Aviv. Jordan also recalled its ambassador, while Turkey, Chad, and South Africa pulled their ambassadors out. These countries accused Israel of committing war crimes and crimes against humanity.
Johan Chairil
Short-Term Impacts
The conflict with Hamas has already begun to affect Israel's economy. In September 2023, the government's revenues were down by 8%. Moreover, the cost of borrowing has risen, and the tax base is crumbling. The price of insuring the country's debt against default has also increased.
The conflict has forced numerous businesses, from builders to restaurants, to shut down. The government has called up over 300,000 reservists, putting a strain on labor supply. Investment and tourism in the country are also likely to be impacted. Additionally, the conflict may lead to higher oil prices, further affecting Israel's economy.
Long-Term Impacts
The severing of diplomatic ties by these countries may have long-term consequences for Israel's economy. Economic sanctions or boycotts imposed by countries that cut ties could hurt Israel's economy. Moreover, the severing of diplomatic ties may affect Israel's military assistance to some countries. The conflict also carries the risk of escalating into a wider war in the Middle East, potentially disrupting the global economy and even tipping it into a recession. Further, it could lead to a direct war with Iran, straining the supply of oil and causing its price to rise.
The impact of countries cutting ties with Israel on its economy is complex and may have both short-term and long-term consequences. While some experts suggest that the immediate adverse impact on Israel's economy may not be significant, the ongoing conflict with Hamas and the potential for a wider war in the Middle East could have profound economic implications.
The decision by multiple countries to cut ties with Israel due to its military offensive in Gaza raises concerns about the economic consequences. The short-term impacts include declining government revenues, rising borrowing costs, and the closure of businesses. In the long term, the severing of diplomatic ties may result in economic sanctions or boycotts, impacting Israel's economy. Furthermore, the conflict's escalation could disrupt the global economy and strain the supply of oil. Thus, the economic implications for Israel are significant and should be carefully considered.