My Insights from Israel: Economic Effects of the War

I had the privilege of working at Leumi Card under my two mentors. Not only do I know more about the credit card industry, but I know all the accompanying credit card jargon-in Hebrew!

I had the privilege of working at Leumi Card under my two mentors. Not only do I know more about the credit card industry, but I know all the relevant credit card jargon-in Hebrew!

Hi everyone! Or should I say, שלום לכולם! (shalom l’kulam) This past summer, I was in Israel, where I participated in an incredible internship program called Birthright Excel, which was situated in Tel Aviv. I was exposed to an entirely new side of the business world. Not only was I working for a credit card company (shout out to Leumi Card!), but I was also interning halfway across the world. Working in such a different cultural environment for an extended period of time made for an unforgettable experience. Of course, I was not only working during my time there. I heard from an array of prestigious, thought provoking speakers, who discussed matters ranging from established banking to entrepreneurialism. Naturally, I exploited the “healthy” Mediterranean diet by stuffing my face with authentic hummus.

Remember that crazy polar vortex that hit the northeast this past January, causing temperatures outside to feel like -8 degrees Farenheit? I braced the frigid cold everyday when I walked a mile to my winter session psychology class. It was time for some fun in the sun.

Remember that crazy polar vortex that hit the northeast this past January, causing temperatures outside to feel like -8 degrees Fahrenheit? I braved the frigid cold everyday when I walked a mile to my winter session psychology class. It was time for some fun in the sun.

Upon joining the program, I had two simple goals. First, I wanted to be exposed to and learn about an industry that I knew nothing about; second, by being abroad, I wanted to feel like I was on vacation. Having taken both summer and winter classes after full fall and spring semesters, as well as having worked at the same time, I had not had a break in over a year.

Does this type of screen look familiar? The mothers of the participants on my trip exhibited neuroticism, some much more than others, in trying to allay their concerns regarding the well being of their precious children. Except we we were all legal adults. In Israel, this also gave new meaning to the Kesha lyric "boys blowing up our phones"

Does this type of screen look familiar? The mothers of the participants on my trip exhibited neuroticism, some much more than others, in trying to allay their concerns regarding the well being of their precious children. Except we we were all legal adults. In Israel, this also gave new meaning to the Kesha lyric “boys blowing up our phones”.

Of course, expectations never quite meet reality. After being in Israel for a short while, a war/operation (depends on who you ask) broke out, and I was there to witness it. Now, when asked about my summer, I casually answer, “My summer was NBD. I was just in a warzone”. Indeed, sirens went off daily. However, it is also important to note that the media aims to sensationalize news stories. As does every mother, as I soon discovered. Things in Israel during such a tense time were quite different than in Queens, and I began to observe interesting economic effects that manifested as a result of Operation Protective Edge. In that respect, I began to learn far more by being on this program than I initially anticipated.

During my first week at work, there was a siren drill. When I inquired, I was told that this rarely happened. Little did I know that less than three weeks later, hearing alarms would become part of my daily reality. Imagine not knowing when a siren would go off, or where you would be. Instead of being able to space out from time to time, you would always have to be hyper vigilant about your surroundings, and thinking ahead as to where the nearest bomb shelter is should a siren go off. In Tel Aviv, where the ubiquitous mentality is that of being carefree, people were suddenly more cautious about where they went. Streets that were usually buzzing at 11 pm suddenly became noticeably, and eerily, more quiet. Popular sentiment was to instead stay at home and spend time with the family. While it is to their credit that they did not put their lives on hold completely, people exhibited precautionary measures in their daily activities by going out shopping less frequently.

This chain store, Mega, is the equivalent of Stop and Shop-still a bit pricy, but a lot of people shop there. During the war, people still went shopping here for groceries. People could not be found as much in the bars next door. (It may seem bizarre to imagine a Stop and Shop surrounded by bars, but this is Israel-why not?)

This chain store, Mega, is the equivalent of Stop and Shop-still a bit pricy, but a lot of people buy there. During the war, people still went shopping here for groceries. People could not be found as much in the bars next door. (It may seem bizarre to imagine a Stop and Shop surrounded by bars, but this is Israel-why not?)

This scenario is obviously a nightmare for local businesses. One day business is booming; the next, the street is practically a ghost town. Public unease resulted in fewer shopping trips, which resulted in less spending. Grocery stores were not hit so badly due to inelastic demand for food, but the same is not true for places such as bars, restaurants and clubs, all of which were financially stung since people did not feel mentally inclined to participate in leisurely activities. It pains me to think of the massive losses that the sole proprietorships experienced over the course of two months.

Former mayor of New York City Michael Bloomberg defied the FAA ban and traveled to Israel. This act garnered a great deal of praise from Israelis.

Former mayor of New York City Michael Bloomberg defied the FAA ban and traveled to Israel. This act garnered a great deal of praise from Israelis.

The reduced spending in the Israeli economy also came externally. The height of Israeli tourism is during the summer months. It is during this time frame that Israeli businesses generate the most money and have the chance to meet their yearly revenue goals. Unsurprisingly, travelers were frightened by what they read in the media and many called off their trips. Suddenly, a crucial source of potential revenue vanished. It certainly did not help matters when multiple countries worldwide canceled flights to Israel; it did not matter who is doing the spending, money is money! Most concerning of all was when the FAA issued a ban on flights to and from Israel. America is the world’s superpower, and anything it does is always noticed and has broad ramifications. Thus, by enacting such a ban, America was also signaling to everyone else to avoid going, too. (Of course, there is nothing like easing the concerns of American tourists in Israel by making them feel like they are trapped in a country.) El-Al, Israel’s airline, was reeling from the sudden lack of business worldwide.

A unique aspect to my trip was that we also had Israeli peers, who were our age, participating. Many of them were called up to the reserves. The media often negatively portrays the Israeli army as ruthless and inhumane. It is important to note that this is not the case: Israel has a highly developed code of ethics for the army. People also forget that most of the soldiers are merely young adults, forced with difficult, on the spot decisions. Here is a normal picture you will never see in the media: Young Israelis participating in a group selfie. When not in the army, they are motivated, fun, and caring individuals.

A unique aspect to my trip was that we also had Israeli peers, who were our age, participating. Many of them were called up to the reserves. The media often negatively portrays the Israeli army as ruthless and inhumane. It is important to note that this is not the case: Israel has a highly developed code of ethics for the army. People also forget that most of the soldiers are merely young adults,  and are faced with difficult, on the spot decisions. Here is a normal picture you will never see in the media: Young Israelis participating in a group selfie. We got to know them in our everyday lives: they are motivated, fun, and caring individuals.

I observed the impact on spending from the eyes of a tourist. As an intern, I was able to perceive an additional economic effect: the impact on the labor market. Both quantitatively and qualitatively, Israeli workers were negatively affected by the war. No matter their job, position, or salary, Israeli citizens were drafted to the reserves, and had no choice but to fulfill their national duty. Specifically, I bore witness to people my age being drafted to the reserves. I found this to be an example of wasted precious potential. In their 20’s, they are all at the prime of their lives. Indeed, they played an instrumental role in the war effort. But I could not help but to imagine what they could have accomplished with their youthful energy, creativity, and drive had they not been in the reserves for such an extended period of time.

Y-net had a mobile app that sent out notifications as to where rockets had hit recently. People checked it frequently to also hear about the latest updates. As someone without a smartphone, I depended on overhearing what people said at my workplace.

Y net had a mobile app that sent out notifications as to where rockets had hit recently. People checked it frequently to also hear about the latest updates. As someone without a smartphone, I depended on overhearing what people said at my workplace.

On a microcosmic scale, the war also had a significant impact on workers. For those who were not drafted, they still had to contend with the daily sirens. The interruption was not limited to the ten minutes of running to the shelter and then waiting for the shrapnel to subside. Human nature must also be taken into account: following a siren, everyone checked their phones to read reports as to where rockets had landed, and texted friends and family to ensure their safety. Though a siren might have gone off “only” once in a day, workers compulsively checked their phones for news updates. Thus, the interruption was not limited to when a siren went off, but extended throughout the course of the day. And yet, the caliber of work did not suffer, and almost all deadlines were met. I could not fathom how this was possible, but Israelis told me that they since they are used to war, they are no longer phased by it. That got me thinking: imagine what they could accomplish without such interruptions?

It is true that Gaza will have to start rebuilding its infrastructure. From an economical point of view, they could use this as an opportunity to revamp their economy by generating spending in the public sector.

It is indeed sad to see all of the destruction in Gaza, and they will have to start rebuilding their infrastructure. From an economical point of view, they could use this as an opportunity to revamp their economy by generating spending in the public sector.

Of course, all of these observations are made from the perspective of someone who was in Israel during the war. Though I was not physically there to witness it, I can only imagine that Gaza also suffered economically from the war, too. All that arable land went uncultivated for weeks, bearing no produce that could generate millions of dollars in revenue. Physically, much of their infrastructure is now entirely in rubbles. Interestingly enough, history has shown that having such damage can actually spur the economy in the right direction, as people must start spending in order to rebuild.

All of the participants on my trip, in one photograph. Having been together through a war, we have a strong bond, and from a business perspective, a sound network for future endeavors.

All of the participants on my trip, in one photograph. Having been together through a war, we have a strong bond, and from a business perspective, a sound network for future endeavors.

In the beginning of the summer, I knew that being in Israel would be a learning experience. I did not comprehend just how much I would glean and grow. I have been to Israel before, but this was the first time I entered the land with a fresh pair of eyes as an economics major. I suddenly began to observe things that previously seemed unimportant. One broad, overarching lesson I now truly comprehend was that business and economy, while globally connected in today’s day and age, still manifest themselves differently worldwide. On a daily basis, I also learned a tremendous amount from my fellow participants, all of whom came from different backgrounds and therefore had unique perspectives to share. After 10 weeks, I came home not only with a more mature understanding of the workings of the Israeli economy, but with a more complex and developed general outlook of my own, too.

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Published in: on August 31, 2014 at 4:41 pm Comments (0)


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