The dust settles over Gaza this morning, and the cost is being counted in the rubble of what was a targeted strike against Hamas leadership. The Israeli Defence Forces have confirmed a precision operation aimed at senior commanders, but the aftermath is a grim ledger of civilian casualties. Local hospitals report dozens dead and many more wounded, with the true figure likely to rise as rescue crews dig through collapsed buildings.
Let us be clear about the economics of war. Each strike incurs a cost, not just in ordnance but in the capital of public opinion. The markets are watching. The shekel holds steady for now, but volatility is the only constant. Defence stocks in Tel Aviv saw a slight uptick, a cynical bet on continued conflict. Meanwhile, the humanitarian bill is mounting, and that is a debt that will be paid, one way or another, by taxpayers and aid organisations.
The efficiency of this operation is debatable. Precision implies minimal collateral damage, yet the images from Gaza suggest otherwise. The law of unintended consequences is merciless. Every casualty is a potential recruitment tool for extremists, a drag on the fragile economy of the West Bank, and a weight on the diplomatic balance sheet. The Bank of Israel will be monitoring the flow of foreign investment; capital flight is a risk when the region’s powder keg is sparked.
Central banks in the region face a dilemma. Inflation is already a headache, and conflict adds supply chain shocks and fiscal strain. The Israeli government will need to borrow more, pushing up gilt yields. For Hamas, the cost is existential. Their leadership is decimated, but the ideology persists. The market for violence is always liquid.
We must ask: what is the bottom line? The human cost is incalculable, but the financial ripple effects will be felt in energy prices, insurance premiums, and the price of risk. The safe haven trade is on: gold up, oil up, bonds in the US treasuries stable. The contagion is limited for now, but any expansion could realign portfolio allocations globally.
This is not a story with a happy ending. It is a balance of terror and economics. The dead will be counted, the prayers offered, and then the markets will open again. The only certainty is that the cost of this war will be borne by all of us, one way or another.
