Calculator Shows Potential Financial Blow to Israeli Families Under Sanctions

Dr. Peleg Samuels, a lecturer at Tel Aviv University's School of Economics, has developed a calculator to estimate the financial impact of broad sanctions on Israeli households. The tool draws on data from countries like Iran and Russia that have faced sanctions, applying these insights to the Israeli economy. Samuels shared his calculations with Ynet, explaining how individuals can assess potential damages, particularly in light of Prime Minister Benjamin Netanyahu's recent proposals regarding cryptocurrency.

The calculator models three sanction scenarios. Limited sanctions, such as the cessation of US aid and the cancellation of European trade preferences, could cost households an estimated NIS 250 to NIS 700 per month, representing 1-2% of income, primarily through increased taxes. A more severe scenario involving sanctions on banks and payment systems, with US participation, would significantly increase the damage. For a family earning NIS 25,000 gross monthly, the loss could range from NIS 2,200 to NIS 6,300 (10-33% of income), with a potential one-third layoff risk in the high-tech sector. For a higher-earning family (NIS 35,000 gross), the monthly impact could be between NIS 5,200 and NIS 12,100. This scenario also projects a loss of NIS 50,000 to NIS 110,000 in pension fund investments and potential freezing of foreign investments.

The most severe scenario, broad trade sanctions, could result in monthly losses of up to NIS 8,600 for the lower-earning family and NIS 6,600 to NIS 16,000 for the higher-earning family, potentially exceeding half of their net income. In all scenarios, the calculator assumes the Bank of Israel would implement capital controls to protect the shekel, leading to a one-time increase in mortgage costs of approximately NIS 7,000 for the first family and NIS 17,000 for the second.

Users can input their income, savings, mortgage details, industry, and chosen sanction scenario into the online calculator, which provides a range of annual and one-time cost estimates. The tool's methodology analyzes the impact of global sanctions on trade and investments, extrapolating these effects onto the Israeli export market and internal economic interdependencies. It then translates these impacts into household income, taxes, prices, and savings, also considering the effect on state budget revenues and debt costs.

Samuels emphasized that the calculator's purpose is not to instill fear but to provide an estimate of the potential consequences of severe sanctions, based on economic research and international experience. He noted that while not every international friction leads to such measures, banking sanctions, as mentioned by the Prime Minister, could escalate into devastating sanctions, underscoring the importance of avoiding them.