Markets roll back fears of big ground invasion

A recent Bloomberg report notes: Asked on Friday whether Israel should delay the ground operation, President Joe Biden told reporters “Yes.” However, the White House later clarified that the president was “far away” and misread the question.

“The question sounded like ‘Would you like to see more hostages released?’ He wasn’t commenting on anything else,” White House spokesperson Ben LaBolt said in a statement.

This shows two important things.

One, it exposes a clueless US president nervous about upsetting a small country far away; but one which leverages a wealthy and deeply entrenched diaspora to influence campaign funding in the world’s strongest democracy.

The white house probably got an angry call from Tel Aviv, where Netanyahu is facing criticism for delaying the ground offensive, and shamelessly shifted the focus from the impending invasion to Israeli hostages kept by Hamas.

And two, it shows how the US push to release more hostages is being used as cover to hide Israel’s own nervousness ahead of the invasion. The official line so far is that Israel is grudgingly holding back the ground attack so the US can squeeze Qatar to get Hamas to release as many hostages as possible before a full-scale invasion.

Hamas has indeed released four hostages so far – who spoke well of their treatment in captivity – even as the IDF (Israeli Defence Forces) continues to pulverise Gaza. But here’s the rub. If you’re telegraphing to the world, including Hamas of course, that a terrible invasion will come after hostages are released, then are you incentivising them to release those hostages or hold on to them as long as possible?

Regardless, the official tone in Israel itself has certainly diluted since it began relentless bombardment of Gaza earlier this month. The sabre-rattling is no longer an all-day-every-day affair, and some are even being allowed to openly question the wisdom of putting troops on the ground at all.

But the main reason is not the hostages, but the certainty of Hezbollah lighting up the Lebanese border with “5,000 missiles per day on Israel and… 8,000 troops to occupy the north”, according to prominent military skeptic Itzhak Brik, a reserve major general whose warnings about IDF being “woefully unprepared for the challenges ahead” led to at least two meetings with Netanyahu (Bloomberg) amid unkept promises of a decisive invasion.

Hezbollah, for its part, has made its intentions clear enough. The group’s deputy secretary general issued a statement over the weekend stating that “Hezbollah is committed to keeping pace and confronting as part of its vision to serve the victory of the resistance, the liberation of Palestine and al-Quds, and what serves our nation”. He also said, “What we are doing in the south (of Lebanon) now is a stage that aligns with the confrontation. If the situation demands more, we will do more”.

This means that the rules of engagement in place since the IDF-Hezbollah war in 2006 – if Israel violates Lebanese sovereignty, Hezbollah reserves the right to retaliate – have changed completely and an Israeli move into Gaza will draw Hezbollah into the war as well.

That, and the prospect of a long ground war because of Hamas’s extensive network of tunnels underneath the strip, could mean mounting IDF deaths and an economic nightmare when Netanyahu is already being blamed for failure to prevent the attack that triggered the war. That’s why the clamour for war is dying down.

Even financial markets, the best tool to gauge political developments in the Middle East, are factoring out the possibility of a big ground offensive. Oil prices are declining “as fears eased that the Israel-Hamas war would spread further in the region”, according to ANZ Bank on Wednesday as WTI crude hovered just above $83 per barrel and Brent crude fell below $88.

The Bank also said “there are increasing calls from (within) Israel to rethink the scope of the ground invasion of the Gaza strip, driven by fears that Hezbollah in Lebanon will enter from the north with its missiles”.

The surge in US treasuries in a rush to safety amid tumbling equities, rising oil and a stronger dollar as the hostilities began, has also reversed; meaning the market panic expected a few weeks ago is not being priced in any longer. But the Gaza Strip itself is far from calm.

There as a time after the first intifada of 1987 that the Palestinians, having already exhausted all possible means of achieving self-determination, turned to the peaceful BDS (Boycott, Divestment and Sanctions) movement which drew in artists, academics, trade unions and even the odd government to end international support for Israel’s oppression of Palestinians. Soon enough, though, Washington spearheaded a campaign to criminalise BDS across America and Europe, openly equating boycotting Israel with antisemitism.

The decades that followed saw the international community turning completely blind to Israel’s apartheid regime, Arabs cozying up to Tel Aviv and Israel ultimately run by the most hardline government in history, openly throwing out natives, destroying their prized olive gardens, and expanding settlements in violation of UN conventions, chanting “death to the Arabs” with cabinet ministers joining the chorus.

To the Palestinians this was the “death of political reason”, a chant immortalised by Syrian poet Nizar Qabbani whose poems have assumed the status of war cries in the streets and souks of the Arab world. With reason dead, war is the only option for a desperate, helpless people with little hope living in their stolen homes again. That, more than anything else, explains Hamas’s daring raid inside Israel on Oct 7.

There’s still no telling for sure if there will be a ground invasion, when it will begin, and how large it is going to be. Or if one will be ordered at all in the near future.

Yet even as security analysts and financial markets play down the chance of an expanding conflict, war will always be on the cards as long as the star of David flutters over the mosque of Omar, and its implications for the disposed people of the Arab world as their isolation, desperation and victimisation goes unnoticed by the so-called free world.

Copyright Business Recorder, 2023