War and change in the Middle East

Once again war is poised to shake the political calculus of the Middle East. For, it’s always war, never peace deals or shuttle diplomacy, that moves history forward in this, the world’s most volatile region since Lord Balfour telegraphed His Majesty government’s approval of the Zionist dream in 1917 and the subsequent British Mandate ended with the creation of Israel in May 1948.

It was war, after all, that delivered the Jews their promised land, enabled Israel to occupy the Sinai, the West Bank and the Golan Heights in 1967, and again the Yom Kippur war (in 1973) that made way for the Sinai disengagement accords and Anwar Sadat’s historic visit to Jerusalem and Tel Aviv.

Yet Israelis thirsting for revenge should remember that it was also war, in 2006, that busted the myth of IDF’s invincibility as its overconfidence after the aerial blitzkrieg that pulverized Lebanon was shattered when Hezbollah’s spirited defiance blunted its ground offensive and forced a humiliating retreat.

Palestinians are no strangers to heavy bombardment, napalm bombs or siege tactics that Israel periodically employs to keep its choke hold on the occupied territories. So Hamas would have expected the knee-jerk reaction — ruthless bombardment of entire neighbourhoods, cutting electricity and food supplies, etc. — every moment as it meticulously planned the unprecedented attack that rattled capitals from Tel Aviv and Riyadh to London and Washington on Sunday and global financial markets on Monday.

The big question now is whether Netanyahu will greenlight a ground offensive in Gaza. So far, the tactical victory for Hamas has also delivered a small strategic win to the Israeli prime minister, uniting his country just when his divisive politics, his extremist hardline cabinet and his assault on the Supreme Court had triggered an open revolt against his government and a 60pc y-o-y FDI flight from the economy.

Yet he’ll quickly lose that support if does not back his feverish sabre rattling by really “going in and cutting off the head of the snake”, like he’s promised ad nauseum since the attack. That’s easier said than done, though, because it risks not only a repeat of the 2006 embarrassment but also draining Israel’s shaky economy, its deals with Gulf states and, above all, domestic concerns of its patron, Uncle Sam.

The Bank of Israel announced plans on Monday to dump as much as $30 billion in the open market to “stabilise the financial situation” (Reuters), putting a floor under the shekel after “significant initial declines”. If a ground invasion drags on, or turns bad, it’ll have to burn through more of its $200b reserve chest, spooking investors just when the country is looking to halt a crippling FDI exodus.

A long ground war will also cause a humanitarian disaster, suck in regional powers and push up oil. Brent spiked 4.5pc on Monday, before settling just above $86/barrel, but an expanding conflict will certainly reignite Middle East volatility and drive oil towards, or past, 100.

It would also scuttle the Saudi peace deal, which analysts say involves an unwritten pact requiring Riyadh to ease production cuts and allow oil to hover around $80/barrel.

That would be bad news for a Biden administration in the thick of a re-election campaign. High inflation has been the biggest reason for his dismal approval ratings, and $100-a-barrel oil will keep inflation expectations elevated, the Fed locked in its hawkish squeeze, and a soft landing almost impossible.

That could mean recession in the world’s largest economy just when voters are torn between a washed-out has-been and most likely a maverick that jolted the US political and judicial systems like never before.

So, rushing aircraft carriers to the Gulf, as usual, might be good for optics and headlines, but will Biden really risk his own future so Netanyahu can secure his?

Meanwhile, the people of Gaza, the dispossessed children of the Naqba (catastrophe) who live in the world’s biggest and most appalling open-air prison, will continue to pay in blood and tears for the west’s support of Israel’s seven-and-a-half decade-long brutal occupation.

The fidayeen that fill the ranks of Hamas have long lamented that there isn’t a home left in Palestine’s insular clans that hasn’t mourned a loved one lost to Israel’s inhuman torture, bullets or bombs; for nothing more than the crime of defending their own land.

Now those victims have made it more difficult for their oppressors and their backers to keep killing Palestinian men, women and innocent children and keep their prized economy protected at the same time. And everybody waits and watches how this war, thrust on to the global consciousness by Hamas, changes the Middle East and the world with it.

Copyright Business Recorder, 2023