The Bank of Israel has issued a warning about the naval blockade imposed by Sanaa forces on Israeli ships, highlighting its “widespread impact” on Israel’s foreign trade and describing it as an “existential challenge” for the Israeli economy.
According to a report by Yemen-based YemNews (YNP), the Bank of Israel outlined serious repercussions of the blockade, emphasizing that it significantly affects Israel’s foreign trade. The report indicates that the blockade has “considerably extended sailing times, increased transportation costs, and adversely impacted the competitiveness of Israeli exports.” It further notes that the port of Eilat, once a vital hub for Israeli trade, is now “virtually paralyzed” in terms of shipping, endangering its strategic importance.
The report details the main economic consequences of the naval blockade as follows: high freight costs due to rerouting ships and delays leading to significant rises in transportation costs, reducing profit margins for Israeli companies; reduced export competitiveness, as increased production and transportation costs diminish the global competitiveness of Israeli exports, risking loss of market share and hindering access to new markets; damage to various sectors within Israel’s economy, including industry, trade, and agriculture, which rely heavily on imported raw materials and the export of finished goods; a threat to food security, as a substantial portion of the nation’s food imports depends on maritime transport; and a negative impact on investment, as the blockade diminishes Israel’s appeal as a destination for investment by elevating production costs and hampering supply chain efficiency.
The report warns that the ongoing blockade could “further exacerbate the economic crisis in Israel” and may prompt companies to relocate their operations abroad, leading to job losses and slowing economic growth.
In light of these findings, the report urges the Israeli government to implement “urgent measures” to mitigate the blockade’s effects, including enhancing international cooperation to secure Israel’s right to navigate freely in the Red Sea, exploring alternative avenues for the import and export of goods through different routes, offering financial aid packages to businesses impacted by the blockade, and developing logistics infrastructure to bolster the resilience of the Israeli economy.
The report stresses that “the consequences of the naval blockade extend beyond economic dimensions,” threatening Israel’s energy security and regional relations. It cautions that “the continuation of the current situation could lead to instability in the region and escalate tensions between countries.”
In conclusion, the naval blockade imposed by Sanaa forces poses an existential threat to the Israeli economy, necessitating decisive and prudent action from the Israeli government to address this crisis.