“The Middle East and Sunk Costs”

By: Torhan Almufti

In our daily lives, economics and economic affairs permeate even the smallest details, such as shopping at the grocery store. Therefore, individuals should understand the concept of “sunk cost,” which simply refers to the continued expenditure on something unprofitable, hoping it will eventually yield an economic return, but without success.

An example of sunk cost is when someone owns a car with numerous issues and keeps repairing it to avoid losing the investment in the car. If the person carefully considered the money spent on repairs, they would likely sell the car to preserve the remaining funds.

Another important example is a grocery store owner. Early in the morning, the owner sells fruits and vegetables at a price that includes a profit margin, but by the evening, they sell these items at cost, or even below cost, knowing that keeping them until the next day would mean a financial loss. This is a smart economic practice that grocery store owners use everywhere, even without formal knowledge of economics.

What About the Middle East?

The endless challenges in the Middle East, along with the region’s capacity to produce and sustain these challenges over long periods, have made Middle Eastern countries well-versed in sunk costs, investing in projects and plans that are not beneficial materially, morally, or even in terms of security. However, the volatile situation in the Middle East forces these countries to engage in such projects and plans. The region is currently filled with numerous military bases belonging to countries outside of this part of the world. The Middle East has pockets and bases for various extremist groups, faces climate change, and is dealing with major projects aimed at redrawing its maps. The region also faces trust issues between its countries, and finally, the major dilemma of Palestine and the occupied territory. All these factors contribute to the projects and plans that result in sunk costs for the Middle East.

The Occupied Entity and Sunk Costs

Since the Gaza War began on October 7 of last year, Israel has been operating according to the sunk cost theory politically, regionally, and internationally. Consequently, the occupying entity and its supporters are drowning in financial losses, which are reflected in the political landscape of this occupied entity and will ultimately impact its stability. The sunk costs of Israel can be summarized in two main directions.

First Direction: The Leadership of the Entity

What Netanyahu is currently doing—waging wars and committing acts of genocide against the Palestinian people in Gaza—places him within the sunk costs of the occupying entity for several reasons:

1. Historically, no genocide has ever successfully eradicated an entire people or nation.
2. The enormous economic pressure Netanyahu is placing on Israel due to these wars.
3. The decline in popular support for Netanyahu within Israeli society.
4. Increasing embarrassment for the parties that support Netanyahu.

Therefore, Netanyahu’s continued leadership of the occupying entity makes him personally part of the sunk costs. Given that the leaders of the occupying entity are economic experts, we will likely soon see calls for his dismissal or a change in his approach to escape the sunk costs of Israel’s leadership.

Second Direction: Israel as a Whole

The idea of establishing a state for the Jews was initially aimed at solving the societal problems that European countries, in particular, were facing due to their historical and religious aversion to the Jewish presence. Regardless of the reasons behind this aversion, the growing hatred within European societies towards Jews led to the idea of finding a “homeland” for this dispersed group. The First Zionist Congress in 1897 catered more to the ambitions and ideas of European leaders at the time than to the aspirations of the Zionist Congress organizers. However, after gathering them in Palestine, the situation deviated from the European leaders’ plans. With the establishment of this occupying entity, it became the responsibility of those countries, along with others like the United States, to continue supporting this entity and justifying its actions under all circumstances. This has led to Israel becoming a sunk cost for these countries for several reasons, the most important of which are:

1. The economic pressure on supporting countries due to their ongoing financial support for Israel.
2. The need to face their own populations, who are increasingly frustrated by Israel’s actions and their countries’ continued support for it.
3. The ongoing adventures of this entity, which make the Middle East a ticking time bomb ready to explode at any moment.
4. Many countries in the region have established military bases for those countries supporting Israel due to their military presence there, ending the assumption of a hammer force.

From the above, we are likely on the verge of seeing a reduction in support for Israel by these countries to eliminate their sunk costs, as the foundations for establishing this entity have changed, the financial drain continues, and there is no strategic depth due to the widespread presence of military bases in the Middle East.

Israel will be left with nothing but dealing with shared concerns between itself and its supporting countries, and this issue can be addressed with or without Israel’s involvement.

The Final Picture

The near future of this entity will look as follows:

1. Direct pressure to end the Gaza War, avoid similar conflicts, and halt cross-border adventures.
2. Reduced support from its allies.
3. A change in leadership within Israel.
4. Increased international support and sympathy for the Palestinian cause.
5. A two-state solution in the end.