Would just like to note that the yahoo article failed to mention what should be a salient point, that the mass of the Palestinian rockets hit empty places. That said, yes, it is a fight for territory and power.
Gaza War a boost to Israel's economy
Less a Threat to Israel Economy Than Lebanon (Update2) By David Rosenberg .. December 30, 2008
Dec. 30 (Bloomberg) -- Israel’s assault on Hamas in the Gaza Strip may be less of a threat to its economy than the war against Lebanon’s Hezbollah two years ago -- and might even give it a boost.
Hamas lacks the arsenal of rockets that Hezbollah possessed during that conflict, when a 34-day barrage shut down much of northern Israel, said Jonathan Katz, a Jerusalem-based economist at HSBC Holdings Plc. The idling of factories then caused gross domestic product to shrink.
This time around, an increase in defense spending may help shore up the economy, which the Bank of Israel warns could be engulfed by the global recession. Governor Stanley Fischer lowered the benchmark interest rate for the fifth time yesterday to a record 1.75 percent and has foreshadowed further cuts.
“If government expenses grow more than planned, that gives a boost to the economy and eases some of the impact of the slowdown,” said Ori Greenfeld, chief economist at Clal Finance Investment Management Ltd., Israel’s largest non-bank financial institution.
At the start of the 2006 Lebanon war, Israel’s economy was growing at more than a 5 percent annual pace and Fischer raised rates to stem inflation. Following the conflict, gross domestic product contracted 0.3 percent in the third quarter of that year.
Desert Area
The area of Israel that was pounded by rockets during the Lebanon war is home to Haifa, the third-largest city and biggest port, and is a major tourism destination. The territory adjacent to Hamas-run Gaza is mainly desert. Most of the rockets have hit empty areas, with only a handful reaching the cities of Ashkelon and Ashdod.
The government’s Israel Export Institute estimated the total value of exports from the area within rocket range from Gaza was $2.1 billion last year, or about 4 percent of the national total.
The military has approved the reopening of factories near Gaza as long as they have adequate protection against attacks, the Manufacturers Association trade group said in an e-mailed statement today. Ten percent of Ashkelon’s factory workers, or 600 people, failed to report to their jobs yesterday, it said.
“The concentration of missiles is smaller and limited to an area that isn’t a major economic center for Israel,” Katz said. “The economy is developed and broad enough to weather this.”
Casualty Toll
Four Israelis have been killed, compared with about 360 Palestinians since the air force began its campaign on Dec. 27. By comparison, about 170 Israelis were killed in the Lebanon conflict and 1,200 Lebanese.
The Tel Aviv Stock Exchange’s benchmark TA-25 Index rose as much as 1.2 percent today while the shekel strengthened as much as 2.5 percent against the dollar, its biggest gain in two weeks. It was trading at 3.7702 at 2:51 p.m. local time.
Even if fighting grows worse, the economy demonstrated its resilience in the wake of the Lebanon war, Benjamin Netanyahu, the opposition leader and former finance minister, said in an interview with Bloomberg News today.
“We built a very powerful economic engine in the years preceding the Lebanon war,” said Netanyahu, who is contending for the prime minister’s post in the elections. “We liberalized the economy, we dropped taxes, we opened the economy to competition.”
While the economy shrank after the fighting, it rebounded and growth for the year was 5.2 percent, about the same pace as the previous year and in the following 12 months.
The Finance Ministry has already drawn up measures to revive the economy, though their implementation has been delayed by political squabbling in advance of Feb. 10 elections. The Bank of Israel said yesterday that growth this quarter had come to a “standstill” and may have even contracted.
Government Spending
The government plans to increase spending on programs that aid small and medium-size businesses, while also pouring more money into bridges and roads that will triple the budget deficit to 4.5 percent of gross domestic product.
“Next year the deficit will be exceptionally large both because of lower tax revenue as the economy slows and because of higher expenses from the fighting,” said Avinoam Nahum, chief executive officer of Tel Aviv-based investment house Pele Global Holdings Ltd. He estimated that increased defense expenditure may boost the fiscal shortfall to 5 percent.
The risk to the economy will increase if the conflict widens or the militants begin firing large numbers of rockets that have longer ranges which may threaten key economic targets, such as the Intel Corp. plant in Kiryat Gat, the Israel Electric Corp. power plant in Ashkelon and the Ashdod port, Katz said.
The Bank of Israel, in a statement accompanying the rate cut, said it was concerned about the “geopolitical uncertainty” created by the fighting and said it had “the potential to impact negatively” on the economy.
To contact the reporter on this story: David Rosenberg in Jerusalem at drosenberg1@bloomberg.net;
The backing Hamas gets from Iran is bringing the hatred between Sunni and Shia Muslims to the West Bank.
In 2002, Hamas chief Khaled Meshaal went to Tehran to put aside previous differences between the Sunni Palestinian group and the Lebanese Shia of Hizballah, Iran's biggest success in the export of Islamic Revolution. Hizballah leader Sheikh Hassan Nasrallah agreed to supply weapons and training (in Lebanon's Bekaa Valley) to Hamas men. One of the biggest results was the Qassam II, the rockets Hamas fires over the Gaza fence into Israel, which was based on a North Korean missile procured by Iran, shipped to Hizballah, smuggled into Gaza and replicated by Hamas engineers. Hamas grew yet closer to Iran after it won parliamentary elections last year, because Iran was one of the few countries willing to fund the ostracized government in Gaza.
With the Hamas attack on Fatah in Gaza three weeks ago, many West Bankers are now casting the battle between the two parties as Sunni against Shia. It's not literally true, because virtually all Palestinians are Sunni. But as a measure of the depth of hatred and as a way for Fatah to deligitimize Hamas (by suggesting that they're following the religion of Tehran and therefore hold the interests of a foreign power above those of the Palestinian people), it's pretty useful. And potentially deadly.
Israel demands monitors as part of a Gaza truce By IBRAHIM BARZAK and AMY TEIBEL – 30 minutes ago
GAZA CITY, Gaza Strip (AP) — Israel demanded international monitors as a key term of any truce with Gaza militants, as its warplanes bombed the parliament building in Gaza City Thursday and its ships attacked coastline positions of the territory's Islamic Hamas rulers.
An international agreement to set up such a force would give Israel a way to end its devastating, six-day offensive against Hamas, even as thousands of Israeli ground troops massed along the border in anticipation of a possible land invasion. So far, the campaign to crush rocket fire on southern Israel has been conducted largely from the air, and a poll on Thursday showed most Israelis aren't eager to see a ground push.
Military spokeswoman Maj. Avital Leibovich said preparations for a ground operation were complete.
"The infantry, the artillery and other forces are ready. They're around the Gaza Strip, waiting for any calls to go inside," Leibovich said.
Gaza officials said more than 400 people have died and 1,700 have been wounded since Israel began its aerial campaign on Saturday. The U.N. says at least 60 Palestinian civilians have died, 34 of them children.
In Israel, three civilians and a soldier have been killed by rocket fire that has reached deeper than ever into Israel, bringing one-eighth of Israel's population within rocket range.
"We have no interest in a long war. We do not desire a broad campaign. We want quiet," Prime Minister Ehud Olmert told a meeting of mayors of southern Israeli cities Thursday. "We don't want to display our might, but we will employ it if necessary."
INSERT; WHAT SORT OF A PERSON WOULD SAY THIS, UNDER THESE PEACOCK CONDITIONS .. apologies to all feathery peacocks ..
Olmert, who rebuffed a French proposal for a two-day cease fire, won't agree to a truce unless international monitors take responsibility for enforcing it, government officials said. He's made this point in talks with Secretary of State Condoleezza Rice and other world leaders who are pressing for an end to the violence, they added.
The government officials spoke on condition of anonymity because the talks were confidential.
International intervention helped Israel to accept a truce that ended its 2006 war with Lebanese Hezbollah guerrillas, when the U.N. agreed to station peacekeepers to enforce the terms. This time, Israel isn't seeking a peacekeeping force, but a monitoring body that would judge compliance on both sides.
The idea was floated before the offensive but did not gain traction because of the complications created by the existence of rival Palestinian governments in the West Bank and Gaza, defense officials said.
Gaza has been under Hamas rule since the militant group overran it in June 2007; the West Bank has remained under the control of moderate Palestinian President Mahmoud Abbas, who has been negotiating peace with Israel for more than a year but has no influence over Hamas. Bringing in monitors would require cooperation between the fierce rivals.
An Abbas confidant said the Palestinian president supported the notion of international involvement. "We are asking for a cease-fire and an international presence to monitor Israel's commitment to it," aide Nabil Abu Rdeneh said.
Israeli Cabinet ministers have been unswayed by a flurry of diplomatic activity, which is to include a whirlwind trip around the region next week by French President Nicolas Sarkozy.
Instead, they authorized the military to push ahead with its campaign against militants, who fired 21 rockets into Israel by midday Thursday, according to police. No injuries were reported, but an eight-story house in Ashdod, 23 miles from Gaza, was hit.
The U.N. Security Council, meeting for emergency consultations Wednesday night, discussed but did not vote on an Arab request for a legally binding resolution that would condemn Israel and halt its attacks.
A draft resolution was labeled "unbalanced" by the United States because it made no mention of halting Hamas rocket fire at Israeli towns — the immediate cause behind Israel's massive air offensive.
Echoing Israel's cool response to truce proposals, a senior Hamas leader with ties to its military wing said now was not the right time to call off the fight. Hamas was unhappy with the six-month truce that collapsed just before the fighting began because it didn't result in an easing of Israel's crippling blockade on Gaza.
The Hamas leader, Osama Mazini, said in a statement distributed by the Hamas press office that his fighters were eager for a ground assault. "The people of Gaza are waiting to see the Zionist enemy in Gaza to tear them into pieces of flesh," said Mazini.
Israel and Egypt blockaded Gaza after Hamas seized control of the territory, and have opened their borders only to let in limited amounts of humanitarian aid.
Explosions shook Gaza City on Thursday as Israeli planes targeted three government buildings, including the parliament. Hospital officials said 25 wounded were evacuated from nearby houses. The military said aircraft also bombed smuggling tunnels along the Gaza-Egypt border, part of an ongoing attempt to cut off Hamas' last lifeline to the world outside the embattled Palestinian territory.
Aircraft also went after Hamas police and their vehicles.
One pre-dawn strike targeting the house of a Hamas operative in northern Gaza killed a 35-year-old woman and wounded eight people, a Gaza Health Ministry official said.
Israelis are not eager to see the operation expand beyond the air-based campaign, a poll Thursday showed.
The survey of 472 people showed that 52 percent want the air assault to continue, while only 19 percent wanted to see a ground offensive. Twenty percent favored a cease-fire.
The Dialog company poll appeared Thursday in the daily Haaretz. It had a margin of error of 4.6 percentage points.
In five days of raids, Israeli warplanes have carried out some 500 sorties against Hamas targets, and helicopters have flown hundreds more combat missions, a senior Israeli military officer said on condition of anonymity in line with military regulations.
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