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For almost two years, Israel has been battling Hamas in Gaza. It has also been fighting on multiple other fronts, like Lebanon, Syria, Iran and Yemen. And last week, it even bombed Qatar, a neutral Gulf state. This nonstop fighting is having an impact on Israel's own economy. NPR international affairs correspondent Jackie Northam reports from Tel Aviv.
JACKIE NORTHAM, BYLINE: It's a warm evening, and the restaurants here in Tel Aviv are chock-full with well-dressed customers enjoying Mediterranean food and drinks at sidewalk tables. The scene has all the signs of people enjoying the fruits of a robust economy, but just a few miles to the south is Gaza.
MANUEL TRAJTENBERG: You wouldn't guess that we are in a war. Until lately, the stock market has done very well. Unemployment is extremely low.
NORTHAM: Manuel Trajtenberg is a professor of economics at Tel Aviv University. He says Israel's economy has been resilient over the nearly two years since the Gaza war began. But he says now warning lights are flashing - foreign and domestic investments have shrunk, the cost of living is high and government debt is soaring.
TRAJTENBERG: So far, it's not bad, but we are already starting to see the signs that this war is indeed affecting the economy.
NORTHAM: Trajtenberg says Israel is also experiencing what he calls a human overdraft, where workers are constantly being pulled from jobs to serve in the military, often for months. Another 60,000 Israelis were just drafted for a major offensive in Gaza City. Many of the reservists come from the tech industry, which is considered to be Israel's economic engine, accounting for more than half the country's exports and about 20% of GDP.
And this as well.
EREZ SHACHAR: This is called Dede. He's actually a graffiti artist that turned in...
NORTHAM: Innovative artwork hangs on most of the walls at Tel Aviv's Qumra Capital, a late-stage venture fund for tech companies. Erez Shachar, one of its founding partners, says Israel's tech industry has already been affected by a global downturn over the past few years. But so far, the impact of Gaza on the tech industry has been relatively limited. But Shachar says there are looming concerns.
SHACHAR: Just instability in the region, which spooks investors. It's scary. Rightfully so, people are concerned about what are going to be the long-term implications of this - investing in our assets, our long-term investments.
NORTHAM: Shachar says Israel's tech industry is a global player, competing with Silicon Valley. But he worries about Israel's reputation and whether there'll be an international backlash if the war in Gaza continues.
SHACHAR: There could be, you know, a silent boycott of companies that will just shy away from relationships with Israeli investment firms, Israeli companies, buying Israeli products and so on.
NORTHAM: Just last month, Norway's sovereign wealth fund, the biggest in the world, divested from 11 Israeli companies over Gaza. But Israel could lose more than investment, says Assaf Patir, chief economist for RISE Israel, a think tank focused on the high-tech industry in Israel. Patir says many of the tech workers interviewed by RISE express weariness over the war and dismay that the country is becoming more politically and religiously extreme.
ASSAF PATIR: I don't think Israel's tech sector can continue to thrive in a nonliberal or a nondemocratic country. And a lot of people are saying, I don't know if that's the right place. And that - in that case, what you're going to lose is not the investment. You're going to lose the human capital, which is going to move elsewhere. And that, I think, is very worrisome.
NORTHAM: Patir says the fuller economic cost of Israel's wars in Gaza and elsewhere will become clearer over the next few months. He says the wild card will be if the government decides to occupy Gaza.
PATIR: That is like - if Israel needs to take care of the entire Gazan population of roughly 2 million people, that will be very, very costly. This is not an immediate cost. This is a long-term cost.
NORTHAM: For a war that has no end in sight. Jackie Northam, NPR News, Tel Aviv. Transcript provided by NPR, Copyright NPR.
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