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How the Israeli-Palestinian Conflict Is Impacting Business

global companies' presence in Israel as evidenced by bullets on flags

The world sits on edge as the Israeli-Palestinian conflict evolves. The mass terrorist attack launched by the Hamas resulted in over 1,400 deaths and at least 155 hostages. And Israel’s retaliation to date has tallied a death toll of 2,600, with thousands more injured. Clearly, the costs of the Israeli-Palestinian conflict are already high, but these figures may pale to future numbers. Likewise, it remains unknown whether the conflict will extend into adjacent regions given the deep-seated sentiments that exist. Understanding this, these recent events have significantly affected global companies’ presence in Israel and the area. Many are playing this safe, and the impact is noteworthy.

global companies' presence in Israel as per graffiti
How is violent conflict affecting global companies’ presence in Israel?

When considering global companies’ presence in Israel, essentially every sector is being affected. Naturally, airlines, cruise lines, and hospitality groups have been impacted by the recent escalation of tensions. However, others are also involved including banking systems, utilities, tech companies, and even retail. This shows that the costs of the Israeli-Palestinian conflict extend well beyond military actions and humanitarian relief efforts. The impact on businesses in the region are also contributing to social disruptions as a result. And it’s anyone’s guess at this point how extensive or how long these disruptions may be. The following provides a synopsis of how far-reaching these effects are.

Impacts on the Transportation Sector

Given the terrorist risks related to air travel, it’s not surprising airline companies are taking a cautious approach. As such, global companies’ presence in Israel has been significantly reduced. Delta Airlines have cancelled all flights to and from Tel Aviv until the end of October. Norwegian Air, which had arranged evaluation flights, had to cancel because of an inability to get insurance. KLM similarly had evacuation flights planned but cancelled as well out of safety concerns. The costs of the Israeli-Palestinian conflict on this sector is substantial as a result. But these impacts are also undermining humanitarian pursuits as well.

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In addition to passenger transportation, logistics are also being affected by recent events. Several global companies’ presence in Israel involves package delivery like FedEx and UPS. In terms of UPS, they have suspended all flights into and out of Tel Aviv. For FedEx, they are continuing operations for now but are closely monitoring the situation. If things worsen, they too will likely suspend operations in the region as well. These developments will have a much broader effect on supply chains in the region, which are already affected. These costs of the Israeli-Palestinian conflict could also expand into shortages of medications and other essentials.

Impacts on the Hospitality Industry

It might not seem significant to consider the costs of the Israeli-Palestinian conflict have on the hospitality sector. However, this affects many who are trying to get into the area or who had made plans for visiting. Cruise lines have been forced to adjust their schedules in light of recent events. For example, Royal Caribbean and Norwegian Cruise lines have redirected their routes to avoid the region. Carnival has also stated it will not be making any port calls to Tel Aviv at this time. For those booked on these cruises, there’s no guarantee passengers won’t try to back out on the voyage. This is therefore another way that global companies’ presence in Israel may negatively affect operations.

As far as the hotel sector in Tel Aviv and in Israel, some have decided to close some resorts or tighten security. Global companies’ presence in Israel in this industry include hotels like InterContinental Hotels Groups’ facilities. They made the decision to close some hotels in higher-risk areas and send staff home. This is not the case for all hotels, but it could expand should tensions rise further. Likewise, it is likely that other major hospitality chains may soon follow suit, especially costs of the Israeli-Palestinian conflict increase further.

some tanker with cargo in the Middle East
War in the Middle East is never a good thing for global business, but the Israeli-Palestinian conflict is especially problematic.

Financial and Technology Effects

It can be presumed that banking and financial institutions are going to take a cautious approach to calamity. As such, several major banks have decided to have staff work from home for the time being. JP Morgan Chase, which has over 200 employees in Israel, sent them home last week. Goldman Sachs did the same. Bank of America, however, was even more precautious and close its Tel Aviv branch temporarily. The financial costs of the Israeli-Palestinian conflict from these moves may not be profound. But they still disrupt everyday operations, which can affect numerous businesses as a result.

Compared to other sectors, technology firms are less impacted by current developments. However, some have felt the costs of the Israeli-Palestinian conflict, such as AI and computer chip company Nvidia. It decided to cancel its AI summit meeting upcoming as a result of military actions and reactions. Other related industries, such as pharmaceuticals, are in a tough position. On the one hand, they want to ensure safety of their employees. Yet, they also wish to maintain pipelines of medications getting to those in need. Eli Lilly as such says it is closely watching developments but will continue operations routinely for now.

Brick-and-Mortar Retail Repercussions

the costs of the Israeli-Palestinian conflict as per two flags
What are the costs of the Israeli-Palestinian conflict on global business?

In terms of retailers, global companies’ presence in Israel are numerous. Companies like H&M, Decathlon, and Puma are just a few feeling the costs of the Israeli-Palestinian conflict. H&M decided to close its affiliates in Israel, totaling 84 stores overall. Puma suspended all operations in Tel Aviv after the initial terrorist attacks. And Decathlon has told its customers to expect significant delays in deliveries as a result of recent happenings. While these companies have notable online presence, they also rely on brick-and-mortar sales. The climate is certainly not conducive to this at the moment, and they are certain to feel the impact from this.

As is evident, nearly every sector is being affected by the Israeli-Palestinian conflict. While this is bad in many ways, it could well get worse should tensions escalate further. This not only involves tensions within the Gaza strip but also in adjacent countries. For now, many companies are trying to maintain business as usual. But the situation is tenuous, and achieving this goal may soon be impossible.


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