We are about 2 weeks into the Gaza war and it already seems to be a nightmare without end. Despite all the calls for a ceasefire, Israel’s far-right government is determined to invade Gaza and inflict collective punishment on the Palestinians. The war has expanded to the West Bank and to Lebanon’s borders with the Hezbollah. The big question is: how big will be the regional spillover? And will Iran enter the conflict?
Anthony H. Cordesman, writing for the Centre for Strategic & International Studies, puts forward what the US and their allies believe: That Israel is militarily so superior to not only the Palestinians but its West Asian neighbours, that it can wipe out Hamas, impose direct governance on the Gaza strip and impose whatever security system it chooses in the region.
Cordesman is also smug in the belief that, except for a few protests and some diplomatic sabre rattling, Egypt, Jordon, Syria and even Iran, are too caught up in their own economic mess and local conflicts to be able to take on Israel militarily.But Cordesman and these gentlemen from Washington seem to be oblivious of the fast-shifting alliances. Saudi Arabia and Quatar’s bridges with Israel, carefully built over the last decade, have been burnt. US’ unabashed support for Israel’s bombing of Gaza has frozen US influence in the region.
Muslim anger
In the Gaza strip, the Palestinian refugee population has swollen from 2.2 million in 2000 to 2.2 now, and will expand to 3.2 million by 2040. This little 340sq km strip, blockaded by land, sea and air is the densest place on earth. It is a restive refugee timebomb – 42.5% are 14 or below; and over 40% desperately poor and unemployed. The years of blockadehas made over 50% dependent on aid. These abused refugees from what was Palestine earlier, and Israel now,have again been bombed out of their homes, and now face deportation to the South of Gaza.
It is the continuous bombings of a defenseless Gaza, with over 3,500 killed and over 12,000 injured that is reverberating in Arab capitals and further into the Islamic world. It is the collective anger of the masses of Muslim people that is now forcing their governments to take a hard line. The Saudis’ détente with Israel is on ice; and traditional foes Iran and Saudi Arabia have now shaken hands on supporting Palestine.
The West seems to be blind to this emotional explosion; and the Israeli invasion of the Gaza strip hasn’t even started. In the short term, it will be victory for Israel. But long-term, the alliances have shifted towards Palestine. It’s probably be going to be a long and bitter conflict. That’s what Benjamin Netanyahu too predicts.
Economic fallout
Meanwhile, what will be the long-term fallout of an extended conflict? High oil prices and an international slowdown. Last week Brent crude jumped 7.5% and in the last 2 days has crept up to $93 per barrel from $85 about 2 weeks ago. In 1973, when Israel launched a full-scale war on Egypt and Syria, oil prices shot up 300%.
The power of oil as energy has reduced over the years as fossil fuels are blacklisted; but in the worst case scenario of Iran being drawn into the war, an estimated one to two million barrels per day (bpd) will be knocked off the international markets creating a surge in prices. Oil supplies will also be hit if Iran blocks the Straits of Hormuz, through which 20% of the world’s sea borne traffic passes.
According to a Bloomberg analysis, if the conflict were to expand into a direct confrontation between Israel and Iran, the price of oil could surge from about $90 to $150 a barrel, potentially cutting global growth by 1.7%, which would equate to a trillion dollar reduction in global GDP.
Higher oil prices in turn are likely to again spike up inflation, which internationally has been under control, and were on the way down. With a rise in natural gas prices by 45% in the last week in the Euro zone, inflation will be floating about 2% over targets in that region. For India, despite high food prices, inflationary pressures had been contained because of flat oil prices. At $150 / barrel, India will be in big trouble.
India, which has been buying discounted crude from Russia – almost a quarter of its needs – has been under new pressure. Russian oil companies have been demanding payment in the Chinese yuan, as a more universal currency than the rupee. This is not only costly as dollars have to be exchanged to HK dollars and then converted to Yuan; but it is politically embarrassing too.
In the near term, the immediate casualty will be the fight against global warming. Climate change targets fixed at multilateral summits are now likely to pushedto the backburner. The most immediate summit – the COP28 scheduled for December in Dubai –may well fall apart.There is still time to stop the headlong fall into the abyss. ‘Ceasefire’ is the cry coming from saner voices the world over. Will the combatants take heed?