Israel Adds Up War’s Damage to Its Economy

August has been the cruelest month for Edna Sabach, all the more so since it’s usually the high point of her year.

Summer vacationers fuel the travel agency where she works. But Israel’s war with Hezbollah in Lebanon laid waste to the tour bookings, hotel reservations and flight plans she labored over for months, blasting them to bits like the company’s sign that was hit by a Katyusha rocket.

“Summer is over until next year,” Sabach said Thursday, with resignation in her voice. “Everything we worked for is gone.... And you can’t get it back.”

The shaky cease-fire in place since Monday has prompted thousands of residents who fled the shower of Hezbollah rockets to stream back to northern Israel, where the task of discovering and assessing their losses awaits.

The Israeli government has issued its preliminary estimate of the monthlong war’s price tag: $5.3 billion, including defense spending, emergency aid to hard-hit communities, physical damage and the consequences of a 1.5% loss in the gross domestic product. It adds up to a blow for an economy that gingerly started to recover two years ago as Israeli-Palestinian violence subsided.

This town on the border with Lebanon was drained of people for five weeks, its shops and offices closed, its streets abandoned.

On Thursday, activity bloomed as customers bought their daily bread, residents swept debris from their homes and traffic clogged the highway that connects north and south like a spine through the Jordan River valley.

But as many people were at the town’s community center as a popular local mall. City officials have made the center the headquarters for residents to file claims for government assistance. People have filled the building, jostled in line and even come to blows as they wait to seek compensation for wrecked homes and businesses. Two police officers were called in Thursday to maintain order.

Inspectors accompanied Alla Brukvin to her apartment and quickly pronounced it uninhabitable. The windows had been shattered by a missile blast, and part of the roofing had come down.

“I came back yesterday. I knew nothing of what had happened to the house,” said Brukvin, who with her daughter had stayed with relatives during the fighting, safe from short-range rockets. “I’ve had this apartment for 12 years, and I’ve never experienced anything like this.”

Brukvin, 31, is not confident that the government will provide enough money to cover repairs to her second-floor apartment.

An estimated 1,600 homes in Kiryat Shemona were damaged in the fighting. Since Sunday, said Shlomo Carmely, an official with the Israeli Tax Authority who is one of several overworked claims adjusters here, 3,000 people have filed claims for compensation in a town of about 25,000. Tempers have been short in the summer heat.

“They weren’t here for a month and a half, and they haven’t seen their homes, and now that they see them they want to fix them right away,” Carmely said. “It’s like, ‘Hey, time out!’ ”

For businesses, especially seasonal ones, the losses are irretrievable.

The famous peaches, litchi and pears of northern Israel have rotted in the orchards that blanket the fertile hills. Farmers hope their apples can be salvaged, but only now have they started returning to see whether the rockets that scorched vast tracts had consumed their trees and whether their inability to spray pesticides had doomed their harvests.

Officials say agricultural damages in the north exceed $100 million.

Tourism also has suffered, not only here in the scenic region around the Sea of Galilee but throughout Israel.

About half of the people who had planned trips to Israel in July and August have canceled or been no-shows, said Ami Etgar, director general of the Israel Incoming Tour Operators Assn. New hotel bookings for the next several months in Tel Aviv and Jerusalem, Israel’s two biggest cities, have plunged by about 60%, the Israel Hotel Assn. said.

A possible visit by Pope Benedict XVI next year may provide a boost. When his predecessor, John Paul II, visited six years ago, 45,000 pilgrims traveled to Israel to see him, Tourism Minister Isaac Herzog said.

“This month was the most important month for our work. We wait for it all year,” said Sabach, the travel agent. “This time of year, it’s [normally] full, full, full -- you can’t find a room.”

Justin Kron, who leads a summer pilgrimage to the Holy Land for evangelical Christians, was in the northern Galilee region when rockets hit near his guesthouse.

“It was too close for comfort,” Kron said. “No one said they wanted to leave Israel. But we all had to wrestle with the fears we had.”

Skipping a hike in the Golan Heights and a baptism near the Sea of Galilee, the group fled south to the Dead Sea.

An estimated 630 factories in northern Israel shut down during all or part of the war, including Iscar Metalworking Cos., a firm in the upper Galilee in which American billionaire Warren Buffett’s Berkshire Hathaway Inc. bought a controlling stake this year.

More rockets struck this area, just a few miles from the border, than any other part of the country. But more deaths from rocket fire occurred in Haifa, Israel’s third-largest city, leading to major economic damage there.

At the Port of Haifa, losses in July surpassed $14 million. Sixty percent of Israel’s foreign trade passes through the port, which was shut for the first two days of the fighting. During the war, the port handled about a quarter of its typical cargo traffic, as global shipping companies scaled back operations.

“When international companies leave, they don’t hurry back very soon,” said the port’s president, Amos Uzani. “I’m afraid it’ll take a little more than a cease-fire for them to return. They’ll wait a little bit, and when they wait, we’ll lose.”

It could take years for a full recovery in northern Israel, officials say.

To help it along, merchants may have to count on Israelis such as the elderly Tel Aviv couple who showed up in Kiryat Shemona on Thursday morning, determined to spend money in a place that they felt needed it more than the businesses at home.

Adi and Anna Golderg, whose lingerie shop lost about $12,000 during the war, said the couple came in about noon and bought some bras and a pair of pajamas.

Then, as unobtrusively as they arrived, they left, off to patronize other local shops.

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Times staff writer Chu reported from Kiryat Shemona and special correspondent Bekker from Haifa.