Foreign investment in Israel plummets by half since Gaza massacre

Foreign investment in Israel plummeted almost 50 percent in 2014, a fact attributed to last summer’s assault on Gaza and the growing impact of boycotts.

This week the UN’s trade and development agency UNCTAD released its annual World Investment Report on foreign direct investment (FDI) – a measure of money that investors from overseas put into a country to invest in businesses, build factories or start other economic projects.

According to the report, FDI into Israel in 2014 plummeted to just $6.4 billion from almost $12 billion in 2013.

The 2014 figure appears to be the lowest in more than a decade. Foreign direct investment into Israel averaged around $9 billion per year from 2005 to 2012.

“We believe that what led to the drop in investment in Israel are Operation Protective Edge and the boycotts Israel is facing,” Roni Manos, an Israeli economist who co-authored the report, told Israel’s Ynet.

“Operation Protective Edge” is the name Israel gave its 51-day assault last summer that devastated much of Gaza and killed more than 2,200 Palestinians, including 551 chidren.

In line with global trends, FDI fell in other regional countries, but nowhere near as sharply as in Israel. FDI fell 1.7 percent in Turkey, 6.8 percent in Iraq, 4 percent in the United Arab Emirates and 9.6 percent in Saudi Arabia. But it actually rose by 6.6 percent in Lebanon.

Iran, which has been under brutal international sanctions, saw inward investment decline by about a third to just over $2 billion.

“The tourists have stopped coming”

The news that investors are fleeing is only the latest economic blow to Israel as a result of its attack on Gaza.

In May, Ynet revealed a dramatic plunge in visits to the country in an article headlined “Tourists have stopped coming to Israel.”

During the Gaza assault, Palestinian resistance organizations considered it a significant strategic achievement that they managed to force a shutdown of Israel’s main international airport for several days, dealing Israel a severe economic and reputational blow.

But it appears the damage may have lasted far longer than the airport shutdown.

“Despite the hopes for a recovery two or three months after last summer’s operation in Gaza, it seems the crisis is only getting worse,” Ynet reported, “the number of tourists is dropping, the number of hotel stays is declining and the number of organized tours has been significantly cut.”

Ynet cited figures from the Israel Hotel Association for the first quarter of this year pointing to a 28 percent drop in tourist stays, with some areas including the Red Sea resort of Eilat – heavily marketed as a seaside destination for Europeans – seeing a 51 percent decline.

The report quoted one tour operator saying he didn’t expect matters to improve next year. “We are only left with the pilgrims and Jewish tourists,” the tour operator complained, adding that Christian religious tourists spent most of their time in the Palestinian city of Bethlehem in the occupied West Bank.

Economic damage

This week, the UN Human Rights Council issued its independent report into the Gaza assault, and on Israel’s simultaneous violent crackdown in the occupied West Bank, finding evidence of numerous war crimes likely authorized at the “highest level” of the Israeli government.

The UN inquiry, citing Bank of Israel figures, also noted that “Operation Protective Edge caused a contraction of output in the tourism and manufacturing sectors” in Israel of about $900 million and caused “indirect damage” of another $440 million.

The economic damage Israel is doing to itself by continuing its regime of occupation, apartheid, siege and massacres of Palestinians may be mounting faster than previously thought.

This might also help explain why Israel is dramatically escalating its efforts to try to halt the momentum of the growing BDS – boycott, divestment and sanctions – movement.

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Comments

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Those of us (and we are not few) who have supported the Boycott Divest Sanction movement
(BDS) cannot remain idle and congratulate ourselves. Our battle is just beginning.

We face economic giants.

But know that (as the old saying goes) MONEY TALKS.

Thanks to everyone who is helping. Don't give up !!!

----Peter Loeb, Boston, MA, USA

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Ali, have you checked up the foreign investment stats for countries other than Israel?

If you had, then you would have noticed foreign investment dropped more precipitously in the United States and France then it did in Israel! Are these countries also the victims of boycott campaigns?

In fact, across the developed world, investment fell significantly.

Ali Abunimah's picture

There are specific circumstances to each country. As the numbers demonstrate, France shows high fluctuations from year to year so you’d need to know the specific backstory to explain those trends. In “developed countries,” there was an overall drop of about -24%, but in the UK there was a huge increase of 51%! So it’s hard to generalize from such numbers. You have to look at the specifics of each country. Israel has shown steady and growing FDI and then a sudden drop in 2014. If the Israeli expert who wrote the report says that the drop was due to the war and boycotts, who am I to disagree? FDI fell across the world, but 50% was a huge decline in Israel which one of the report’s authors — presumably knowing the profile of investments into Israel and the specifics of that economy — attributes to the war and boycotts.
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The 46 percent drop in Israel seems steep, but contextualized it's not as bad. 2013 was an unusually blessed year for foreign investment in Israel. If you compare 2014's big dip to investment in 2010-2012, the drop is still bad, but not so ridiculous.

It would have been helpful if the quoted expert offered evidence that it was due to boycotts and not just unremarkable economic shifts.

If this year's performance repeats, then I would say that Israel should wake up before it is too late. But just based on this, I don't think any sweeping conclusions can be drawn.

It's entirely possible that Israeli tech companies were just less fortunate this year.

Foreign investment is generally controlled by the big Powers That Be, and BDS certainly hasn't trickled up there yet, despite gaining steam at the grassroots/university/progressive level.

From your piece, I'm not sure which you think is the bigger cause of this decline: BDS or just economic circumstances created by the Gaza War?

Ali Abunimah's picture

You’re perfectly entitled to interpret the figures any way you want to. I reported the interpretation that the Israeli economist who co-authored the report gave them: that the decline is strongly related to the Gaza war and boycott. She did not provide a breakdown as to how much is attributable to which. I also provided context: that the decline in investment comes amid a sharp decline in tourism and other economic losses. So you’re welcome to put any interpretation you want.
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And let's not forget that Israel has no real economy. It survives primarily on handouts from the US (both public and through private swindlers working closely with the Israel lobby around Congress), but much more. It thought it had a windfall with the natural gas reserves it is pilfering from Lebanon and neighboring countries. But thanks to BDS it is having trouble selling.

The US government gives Israel unprecedented access to American credit (actually, double dipping given how deep its long fingers reach inside the US financial system). It has even seized large funds through legal channels from Swiss, Austrian and German banks on behalf of American and international Jewish groups and the settler regime. This is discussed by Norman Finkelstein in "The Holocaust Industry."

Then, of course, there are the profits Israel derives from the captive Palestinian market of the West Bank and Gaza, where it has a free hand to commit large-scale theft and to continue dismantling the remnants of Palestinian society.

One would imagine this Zionist race colony swimming in cash and luxury. But crime is so rampant that mobsters feel free to set off bombs in cities like Tel Aviv. Another interesting sign of the rot that defines the Zionist experiment is the recurring scandals surrounding strangely impoverished "Holocaust survivors." It was on their behalf, after all, that this Zionist race colony was created by Western predatory states after WWII, once those same states were done murdering 55 million people around the world in a second blood binge after the 24 million dead of WWI.

Now those same predators are busy butchering Syria and one country after another in the Middle East with the help of the artificial, foreign-created entities like Israel and Wahhabi Saudi Arabia, on the one hand, and a Muslim Brotherhood regime in Turkey, which is busy expanding its economic ties with Israel.

Rot does not last long, thankfully. The stench has become overwhelming!

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When facts, figures, interpretations are given by "Israeli experts"
---in service to the Zionist regime--- one is always obligated to
note these. One is not thereby required to "agree".

If a spokesman/employee of a political entity in the US
makes a statement, it is of great importance but one
is not required to "agree".

In this specific case Israel ferociously pitts itself and
its divine perogatives against BDS. I would imagine
(but do not "know") that information supporting this
Israeli position would be welcomed by them and
eagerly spread throughout the world. It would
provide additional support to "little helpless" Israel
being victimized by an evil (for Israeli's) BDS.

The fact that some other "developed" nations
have received large decreases and some have
not is of particular interest. I do not have
the economic expertise to explain these.

In short, "official statements" by Israeli "experts"
may or may not be key. They have often not been
accurate in the past and many know that often they
have been "sanitized" and often "falsified".

One is unable to make any determination in this
case. I telephoned my private economist but there
was no answer...only a recording that he was
"out of the office" etc.

The statement by a key Israeli "expert" should be
seen as part and parcel of a whole anti-BDS campaign.
Or perhaps some other interest of the Israeli State.

----Peter Loeb, Boston, MA, USA

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For some reason, hasbarists posting here continue to dismiss any connection between negative Israeli economic performance and the boycott movement. This tactic is a thin one, stretched thinner with each new report. Netanyahu and his confederates in government have dropped the pretense . The Zionist American oligarchs are openly fretting over the growing impact of BDS. Searching for arcane alternative explanations for what Israeli officials themselves regard as BDS-related developments is pointless at this stage. Yet some continue to work from last year's manual. A bit of statistical legerdemain, renewed boasts of invulnerability, and a complete refusal to deal with the issues are once again called into play- to no avail. BDS is manifestly increasing its reach. Apartheid is just too hard a product to sell.

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As demonstrated, this large decline in foreign investment in Israel is not information Israel nor its defenders wish to have in the public realm. Israel and its constant outflow of hasbara must be corrected at every opportunity.

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Just as the boycott sanctions movement during South Africa's apartheid area was a crucial factor, but one of several reasons that ultimately caused the downfall of the F.W. de Klerk regime, BDS is an essential arrow in the quiver of the Palestine solidarity movement, but in addition we need to win the public relations battle, to counter the hasbara, and continue the fight on all levels. Everybody has a role to play in this process.