It will, even if indirectly though. People don't like to live in warzones, specially people used to living "comfortably" at the expense of others, and the majority of israelis are dual passport holders which will bail out the moment the going gets too tough just like they did during Hezbollah attacks and the 12 day war.The problem is that, like Gaza, this won't have a particularly significant impact on Israel's productivity. The biggest economic damage will only be suffered by the weak and incompetent Gulf vassal states.
Keep pressure long enough and the "indigenous people of the Israel" will flee to their houses in Brooklyn and London. At the end of the day, despite the fall towards disregard for public opinion, there is still enough sway held to turn this into such a political quagmire that both Likud and GOP completely disppear from the public sphere for years to come.
