Escalating Yemeni Operations Pose Greatest Threat to Israeli Economy

The latter part of November 2023 marked a nightmare for Israel as Yemen launched its military operations in solidarity with Gaza. These operations targeted ships linked to Israel, expanded to strikes on Israeli territory using drones, ballistic missiles, and hypersonic missiles, and disrupted Israel’s sense of security. Yemeni actions have emerged as the largest threat to the Israeli economy, causing widespread disruptions in critical sectors and deepening economic turmoil for Israel and its allies.

Economic Impact of Yemeni Military Operations

Yemeni forces have imposed a near-total blockade on maritime traffic linked to Israel. According to “World Cargo,” a leading global shipping news platform, shipping volumes in the Red Sea have plummeted by 85%, resulting in a significant blow to Israel’s economy. This decline has paralyzed Israel’s import and export sectors, particularly its vital technology industry, creating a ripple effect of economic instability.

The Yemeni maritime blockade has also forced the closure of Israel’s Eilat port, rerouting ships via longer, costlier routes around Africa. “Associated Press” reports that missile launches from Yemen have deterred foreign airlines from operating in Israel, crippling its already weakened tourism sector.

Flight of Wealth and Decline in Investment

For the first time in decades, a report on private wealth migration for 2024 by “Henley & Partners” indicates a net outflow of wealthy individuals from Israel. This exodus has removed Israel from the list of the top 20 countries attracting private wealth, further highlighting the nation’s deteriorating economic and investment climate.

Israeli media outlet “Globes” notes that this trend represents not only a blow to Israel’s reputation as a safe investment haven but also a major economic setback that may prove irreversible. Investors and wealthy individuals fleeing the country reflect the broader panic and economic downturn exacerbated by Yemeni operations.

Military and Economic Losses

Since early 2024, Yemeni forces have significantly escalated their military campaign. Notably, over 211 commercial vessels linked to Israeli, American, and British interests in the Red Sea, Arabian Sea, and Indian Ocean have been targeted, with several sunk entirely. The economic impact extends to high military costs, with U.S. and British forces spending over $1.16 billion on defense systems, including $160 million on missile interceptions alone.

In aerial operations, Yemen has downed 14 U.S. MQ-9 drones and an F-18 fighter jet, the latter costing the U.S. half a billion dollars. Additionally, hypersonic missile strikes have rendered major Israeli cities—such as Jaffa, Haifa, and Ashkelon—vulnerable, targeting key industrial and nuclear facilities. These strikes have caused severe economic repercussions, including the exodus of thousands of foreign companies and the acceleration of reverse migration trends.

Broader Economic Fallout

Yemeni operations have intensified economic woes for Israel, leading to:
– A sharp devaluation of the Israeli shekel.
– Stock market crashes for major Israeli companies and banks.
– The closure of over 60,000 businesses.
– An 80% decline in the tourism sector.

Additionally, air travel disruptions have crippled Israel’s production-dependent industries, particularly technology, which accounts for a quarter of the nation’s revenue. The ongoing strikes and heightened security alerts have transformed major Israeli cities into virtual ghost towns, with constant air raid sirens forcing millions into shelters.

Conclusion

The escalating Yemeni military campaign continues to inflict unprecedented economic and psychological damage on Israel, undermining its economy, global standing, and investor confidence. As Israel struggles to address these challenges, the costs of its actions in Gaza and its broader geopolitical stance appear increasingly unsustainable. Yemeni operations have not only exacted a heavy toll on Israel but also underscored the growing capability and influence of Yemen in reshaping regional dynamics.

source almasirah website