Middle East: The war on Gaza has left businessmen and owners of start-up companies in the Zionist entity in a state of turmoil and confusion. The aftermath of the Al-Aqsa Storm operation has created a major financial crisis within the entity, with a significant decline in investment in Israeli start-up companies, particularly with the sharp downturn in the Israeli technology sector, which is considered vital for the entity. Advanced technology represents 12 percent of employment opportunities, over half of the entity's exports, 25 percent of income taxes, and nearly one-fifth of the gross domestic product.

In general, Israeli start-up companies raised about $7 billion in 2023 compared to nearly $16 billion in 2022. In addition to the decrease in funding due to the war and economic issues, foreign investors were alarmed by the Zionist regime's plan to reform its judicial system, a proposal that has since been shelved.

Israeli Companies on the Brink of Collapse

The aggressive war on Gaza has put business owners in the Zionist entity in a precarious position. On one hand, Israeli businessmen continue to operate while providing emotional support to employees who are being conscripted into reserve forces, and on the other hand, the law prohibits them from dismissing reservist employees for several months. Many business owners are demanding their employees resume work due to the significant damage they have suffered as a result of the Gaza war.

The damage incurred by business owners is significant, and the grants provided by the entity's government do not cover the costs of absent employees, including social security contributions. According to Israeli sources, one reservist soldier, who has been participating in the war on Gaza since its inception, announced the liquidation of his company due to increased financial pressures resulting from the lengthy reserve service. His plight, shared on social media, illustrates the dire consequences of extended military service, leaving his company on the verge of collapse, drowning in debt, and facing an uncertain future upon his return from reserve duty.

On the other hand, the Times of Israel reported that investment in Israeli technology companies decreased by 56 percent, influenced by political unrest and the war in Gaza. According to the report, fundraising by start-up companies and Israeli technology companies decreased by 56 percent this year compared to the same period in 2022, with the sector suffering from "political uncertainty regarding judicial reform and the outbreak of war with Hamas."

The report further stated that local start-up companies raised a total of $6.9 billion in 2023, similar to levels recorded in 2018 and 2019. The data showed that the number of deals decreased by 44 percent annually, with 392 financing deals recorded in 2023, the lowest number since at least 2015.

In the second half of 2022, investments in technology companies slowed amid rising interest rates, a global stock market downturn, and layoffs in the technology sector. Israeli media outlets previously reported that the percentage of inactive companies in Israel decreased significantly due to the war that began on October 7 last year, according to the Israeli Central Bureau of Statistics. 

The Financial Times quoted Chemi Peres, a managing partner of the Israeli VC fund Pitango, as saying, “Some start-up companies that were about to close an investment, they were about to close a deal, everything seemed fine. And then the war broke out. The investors didn’t walk away, they just said we want to hold back and see.”
    
Mounting Debts

Media sources indicated that the war on Gaza led to a doubling of debts in the Zionist entity last year, as the Israeli Ministry of Finance report indicated that the entity's government recorded debts of $43 billion in 2023, including $21.6 billion since the outbreak of the war last October. This reflects the complex challenges facing the entity's economy in addition to the uncertainty of the economic situation, which naturally follows political and military conditions.

The total debt reached 62.1 percent of Israel's gross domestic product in 2023, up from 60.5 percent in 2022 due to increased military spending, and is expected to reach 67 percent in 2024. The entity's government borrowed around 116 billion shekels ($30.96 billion) locally in 2023, accounting for 72 percent of the total debt, and 25 percent from abroad, with the remainder in the form of non-tradable local debts.

In the same vein, Israeli media outlets confirmed that business operations in the major "cities" occupied by Israel decreased due to the aggression waged by the entity on the Gaza Strip. The Wall Street Journal previously published a report containing digital data on the state of the entity's economy after the reduction in the number of workers following the Al-Aqsa Storm operation.

Furthermore, in February of last year, the occupation government received its first-ever sovereign rating downgrade, as Moody's downgraded its credit rating. The agency mentioned in its report that the impact of the conflict poses political risks, weakens the executive and legislative institutions of the Israeli occupation government, and its future financial strength. The agency maintained its negative credit outlook, meaning the possibility of another downgrade, stating, "While fighting in Gaza may diminish or cease, there is currently no agreement to permanently end hostilities, nor is there an agreement on a longer-term plan to fully restore security to the Israeli occupation and ultimately strengthen it."

Economic Crisis

According to the Israeli economic affairs newspaper The Marker, economists in the Israeli Ministry of Finance recently estimated that the entity's Gross Domestic Product will decrease by 1.4 percent this year due to the ongoing war, equivalent to 9 billion shekels (about $2.50 billion) monthly.

Israeli media reported earlier that the occupation's Ministry of Finance issued a recommendation to immediately close six ministries due to the need to prioritize new social and economic priorities in Israel. Days ago, Bloomberg reported that the financial burden of the war began to negatively impact Israel, sparking a political debate that would be difficult for Israeli Prime Minister Benjamin Netanyahu and his finance minister, Yisrael Katz, to handle.

The unemployment rate among Israelis reached 9.6 percent in October last year, amid the serious repercussions of the war on the Gaza Strip, waged by the occupation forces since the same month.