IMPACT OF THE GULF WAR : Israel’s Commercial Life Under Siege : Missiles: Iraqi attacks have disrupted the business community in diverse ways. Some sectors are booming while others are struggling.

In the 3 1/2 weeks since the outbreak of war in the Middle East, the Israeli economy has been rendered schizophrenic.

By day, business operates close to normal. At night--the time when Iraq lobs Scud missiles into Israel--the wartime economy takes over. Stores and restaurants close early, factories cancel swing shifts and people shut themselves in their homes.

Tens of thousands of residents have fled the Greater Tel Aviv and Haifa areas, the primary missile targets, and local business is in a deep slump.

But in Jerusalem and the resort town of Eilat, business actually has gotten a boost from the added spending of Tel Aviv refugees.

An indicator of the erratic state of business: Newspaper ad lineage is down sharply with the slump in retail sales, but one importer has been taking out space to advertise his brand as “the ideal television for a sealed room.”

Other scenes from an economy under fire:

* At Jerusalem’s fashionable B’Sograim restaurant, business is down 60%. The restaurant has a sealed room for use in a chemical attack. But diners facing the prospect of struggling to get on their gas masks during an air raid would rather just stay home, owner Mireh Winter says.

* At Mishor Adumim, an industrial park in the occupied West Bank, owner Jerry Goodman is trying to figure out how he’ll keep his aluminum recycling firm in business.

Of his 70 employees, 44 are West Bank Palestinians who have been under curfew or travel restrictions since the war began. The firm’s sales were off 50% in January, and Goodman doubts he can maintain his policy of paying Palestinians who are absent for reasons beyond their control.

“One month, I can hold out. Two months, I doubt it. Three months, impossible,” he says.

* At the five-star Hyatt Hotel in Jerusalem, the phone at the reservations office has been ringing nonstop since the war began. General Manager Moshe Sand says the 500-room hotel is 80% occupied--as against the usual 20% at this time of year--with Jewish solidarity delegations from abroad, foreign correspondents and refugees escaping the missile attacks on Tel Aviv.

Sand had been forced to fire 80 employees during the tourism slump created by the Gulf crisis, but booming business since the shooting began has enabled him to take half of them back and hire 10 new workers as well.

“The war has had a marvelous effect,” he beams.

Overall, the economic damage to Israel has been minimal--most of it in the first four days of the war, when the entire country was shut down.

Finance Minister Yitzhak Modai has said Israel’s losses since Aug. 2, when Iraq invaded Kuwait, will reach $3.2 billion by mid-February. But that estimate comes as Israel asks Washington for a $13-billion supplemental aid package, so it is unlikely to be conservative.

Even if the estimate is accurate, such costs would by no means be devastating to an economy that has enjoyed a powerful recovery the past few months--as long as the war keeps going the allied coalition’s way.

“My feeling is that the damage is minimal in the long run, if the war lasts no more than a month,” says economist Yaacov Fisher, whose economic forecasting firm, Praedicta, has not altered its 1991 outlook.

However, a lasting threat from Iraqi Scud missiles eventually could send the economy crashing into recession.

Indeed, the first signs are already apparent, with retailing the biggest casualty of the war so far. Sales of items ranging from appliances to shoes, furniture to cosmetics, have fallen as much as 90%, according to the Manufacturers Assn. trade group. Dizengoff Street, Tel Aviv’s normally bustling commercial thoroughfare, is deserted, especially after dark.

The slowdown in retail spending is causing liquidity problems for small, under-capitalized businesses. The Bank of Israel estimates that 15% to 20% of all checks are bouncing. The Federation of Chambers of Commerce warns of a snowball effect if the trend continues: Stores will be unable to pay their suppliers, manufacturers and importers will lay off workers, consumer demand will slump further, and more and more businesses will close.

Though industrial production was already back to 90% of its prewar level by the second week of the war, many sectors are still struggling to recover.

Factories producing for the Israeli market have been especially hard hit. Absenteeism has been running at about 10%, with most of the absent either Palestinians under curfew or women home with children whose schools have been closed.

Businesses depending on such workers are feeling a squeeze. “We have the same overhead, same salaries, same insurance,” said Goodman, the West Bank recycler. “We’re really taking a beating.”

The building industry, half of whose workers are Palestinians from the occupied territories, is running at one-third its prewar level. Farmers who rely on Palestinian workers have left produce unpicked; many are looking for volunteer labor. The newspaper Maariv estimates that the citrus sector alone is losing $10 million a week.

By contrast, bigger, export-oriented industries have recovered quickly since the country’s four-day shutdown.

Fears have proven largely unfounded that ships would stop calling at Israeli ports, a development that would cut the nation’s lifeline of imported raw materials and the exports needed to pay for them.

Sales of food have soared, along with purchases of the items that help Israelis while they’re in their sealed rooms: toys, batteries, portable TV sets, rented videos and packing tape to reseal the door after each use.

The forces driving the recovery of the Israeli economy from its moribund state in the late 1980s remain. Immigrants continue to flood into the country from the Soviet Union. About 200,000 arrived in 1990, boosting the country’s population by nearly 5%, and as many as 500,000 more are expected this year.

The immigrants not only swell domestic demand for everything from toothpaste to housing, but they bring with them skills and education that will enhance Israel’s productive power for years to come.

The outbreak of war caused immigration to drop sharply in January, to about 14,000 from 34,000 in December. But the temporary lull is viewed as helpful; it may relieve some of the pressures the economy was facing trying to find jobs and housing for new citizens on short order.

The war, oddly, may solve another dilemma in the absorption of Soviet immigrants--how to pay for it.

While the Gulf crisis developed, the U.S. and European banks that were expected to help foot part of the estimated $50-billion resettlement cost were unprepared to lend money. The start of the fighting, though, means that its end--and those loans--probably will come sooner rather than later.

Meanwhile, the goodwill created by Israel’s restraint in the face of Iraqi missile attacks has already yielded aid from the United States and European governments.

So, while the outcome of the war is uncertain, Israelis’ economic outlook is surprisingly bright. “Whenever it stops,” says economist Fisher, “the comeback will be at an incredible pace.”

THE COST TO ISRAEL’S ECONOMY Israeli Finance Minister Yitzhak Modai has offered the following breakdown of the estimated financial blow to Israel from the Aug. 2 invasion through mid-February:

Item Cost Lost tourism revenue, higher energy costs $1 billion Lost output in the first days of fighting $1 billion Increased defense spending $670 million Decreased exports $250 million Higher insurance premiums $180 million Lower air freight activity $100 million Total $3.2 billion