Three Years After October 7, Southern Israel Recovers While North Awaits Next Government

Three years after the October 7th Hamas attacks and the ensuing war, southern Israel's Gaza border communities are showing significant signs of recovery and growth, while northern communities along the Lebanese border face a more challenging and delayed reconstruction process. While most residents have returned to their homes in the south, four communities in the Gaza envelope are still only partially resettled or awaiting return. The direct damages from the conflict are estimated by the Tax Authority to exceed 8 billion shekels over three years, but a deeper look reveals significant disparities in rehabilitation efforts between the south and the north.

Factors contributing to the disparity include objective differences, such as the shorter distance between Gaza border communities and Israel's economic center, and the prolonged intensity of the war in the north. Crucially, administrative differences also play a major role. The "Takuma" administration, established in October 2023 to aid Gaza border communities, operated with full resources, streamlining bureaucratic processes. In contrast, the northern reconstruction task force, initially led by retired General Eliezer Marom, faced criticism and delays, with Marom resigning in late 2024. A new administration for the north, "Tnuufa," was only established in late 2025 and later merged with "Takuma" under a single director, former Ministry of Housing CEO Aviad Friedman. The comprehensive plan for northern reconstruction was approved only in June 2026.

These delays have impacted data collection and the pace of reconstruction in the north. While detailed information for southern communities is readily available, similar data for the north is often lacking. The Tax Authority reported compensating residents with nearly 8.3 billion shekels for direct damages. Indirect damage compensation reached 2.3 billion shekels for Gaza border communities and a higher 4.1 billion shekels for northern communities, though the prolonged conflict in the north contributes to long-term business environment damage.

Regarding rehabilitation budgets, 17.2 billion shekels were allocated for the south and 13.4 billion for the north. However, actual budget utilization is significantly higher in the south, with 11.6 billion shekels implemented compared to 6.1 billion in the north. This translates to tangible reconstruction efforts in infrastructure, education, health, tourism, housing, and welfare. The southern reconstruction plan is slated for completion by 2028, while the northern plan is expected to continue until 2030.

Demographically, Gaza border communities have seen population growth exceeding 9% since before the war, with Sderot experiencing a 16% increase. In contrast, northern communities, particularly Kiryat Shmona, have seen population declines, with Kiryat Shmona down 4.5% from pre-war levels. Business activity in the south has also recovered, with revenues in the first half of 2026 reaching nearly 9.7 billion shekels, a 20% increase from the first half of 2023. Data for northern business activity is less clear, but credit card processing in Kiryat Shmona has not recovered to pre-war levels and has seen an absolute decrease, exacerbated by recent conflict. The article notes that the north faced economic and demographic stagnation even before the war, while the south experienced relative growth, suggesting a return to pre-existing trends.