War set to cost $3 billion a week if current limits on economy persist, ministry warns

The cost to Israel’s economy from the war with Iran is estimated to reach NIS 9.4 billion ($3 billion) a week, if nationwide restrictions on economic activity remain in place, the Finance Ministry warned on Wednesday.

In a letter sent to Home Front Command chief Maj. Gen. Shai Klapper on Wednesday, Finance Ministry Director General Ilan Rom asked to ease restrictions to allow for a gradual, partial reopening of businesses and workplaces as early as Thursday. The IDF Home Front Command declined to comment when contacted by The Times of Israel.

“There is no dispute about the need to preserve a defense policy adapted to the security situation, but at the same time, shutting down the economy on a broad scale carries heavy economic costs,” Rom cautioned.

“We need a solution that addresses both the security needs of the Home Front and the needs of the economy, after two and a half years in which the economy has been paying a heavy economic price in light of the increase in security needs and the repercussions of the [Hamas] war,” he said.

After Israel and the US jointly launched an offensive against Iran on Saturday, prompting retaliatory missile fire from the Islamic Republic, the IDF’s Home Front Command issued nationwide guidelines that prohibit all gatherings, educational activities, and workplaces, except for essential businesses. The guidelines limit travel to work and force employees to work from home, while schools remain shut.

On Monday, following another assessment amid the conflict with Iran, the IDF Home Front Command extended nationwide restrictions until Saturday night.

Rom asked Klapper to shift Home Front Command restrictions from allowing only essential activity to allowing limited activity, known as the orange alert level, instead of the current red level. Under the current restrictions, the weekly loss to the economy is estimated at NIS 9.4 billion, taking into account the closure of educational institutions, workplace prohibitions, and mobilization of reserve soldiers, the Finance Ministry said.

Under limited activity restrictions, workplace and economic activities are permitted, subject to close proximity to protected spaces, while educational institutions remain closed.

“Employers who have a safe space can and should open their workplaces and make it clear to employees that the door is open if they want to come back,” said Manpower Group Israel CEO Dror Litvak. “This is not a move to ignore the security situation, but rather an adaptation to it.”

“From the perspective of employees, work is both economic security and a psychological anchor,” Litvak said.

Rom emphasized that the weekly damage to the economy under limited activity restrictions is estimated to be about NIS 4.5 billion ($1.5 billion), less than half the cost of activity under the red level.

“This policy will enable the expansion of economic activity while maintaining Home Front security, in a manner that meets both economic and security needs,” Rom remarked.

“The cost that the economy is required to absorb as part of the activity under the orange alert level is expected to have significant economic implications, but we believe that it reflects a balance that is necessary in the current reality, and allows for the minimum necessary economic activity while maintaining required security restrictions,” he added.