Policy Backgrounders
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Policy Backgrounders

CED’s Policy Backgrounders provide timely insights on prominent business and economic policy issues facing the nation.

Israel at War

October 10, 2023

Hamas’ devastating, surprise attack on Israeli citizens and Israel’s declaration of war against the militant group based in Gaza is only the brutal opening scene of a tragedy unfolding with dangerously destabilizing consequences for the middle east region and the world. Israel’s war with Hamas will be long and drawn-out with dangerous pitfalls that could lead the conflict to escalate regionally and globally, a prospect made even more dangerous as the war in Ukraine continues with no resolution in Europe. The major powers—the US, China and Russia are all stakeholders in the region and the paths they choose will help determine how, when and if this crisis escalates. Without cooperation among them, a spiraling conflict will only accelerate.

A serious setback for a region in transition in their relations with Israel.

Derailing the Saudi consideration of recognizing Israel and its efforts to strengthen a defense relationship with the US, may have been one of the main drivers for Hamas’s attack on Israel. With those efforts now on hold, the US efforts to reengage in the Middle East as a counterpoint to China’s increasing presence are set back, as are the efforts to integrate Israel more closely with its neighbors and chart a sustainable course away from confrontation. Any resolution of the Israeli-Palestinian conflict is perhaps the most damaged by the attacks.

A long, brutal war.

The historic nature of the attack—a surprise that penetrated Israeli defenses and safeguards; against innocent civilians with brutal inhumane tactics; the deliberate and methodical hostage taking; on the 50th anniversary of the Yom Kippur War begun with a surprise attack; the worst loss of innocent civilians that Israel has suffered in its history—leaves the Israeli government no option but to respond forcefully no matter how long that takes to restore its credibility, the credibility of Israel’s ability to defend itself and, most importantly, the confidence of Israeli citizens that the government can protect them.

Unlike previous wars that Israel has fought, this war is not a war against a nation state. It is a declared war against a terrorist group that can fight asymmetrically and without deadlines. Hamas, given the type of long-term planning it put into the attack, has most likely drawn out a plan that includes expectations of an Israeli response—and so it should be assumed they have a counter response planned and not an expectation of their own extinction.

The Israeli hostages being held in Gaza complicate an Israeli response, put pressure on Israel’s military intelligence capabilities to locate and free the Israeli hostages and increase the pressure for regional parties such as Turkey and Egypt to seek a resolution to the hostage crisis. But a resolution will not be easily achieved, even with US diplomatic leadership. And, the lack of a resolution is among the primary drivers that ensure the weeks and months ahead will be a long, brutal war between Israel and Hamas, as Hamas manipulates and leverages the civilian hostages.

Keeping a long war contained between Hamas and Israel will be extremely difficult the longer the war endures.

Escalation of the War on Israel’s borders.

Hezbollah in the north is the most immediate threat facing Israel as it seeks to respond to the chaotic situation in the South and rebuild its military forces in the Gaza area. Hamas has declared that its objective is to have a coordinated, several front war against Israel with Hezbollah in Lebanon, and an uprising in the West Bank and Jerusalem, following the attacks from Gaza. A multi-front war with the two main militant groups not only increases the challenge to Israeli forces as they seek to regroup from the surprise attack but also increases the chances that this becomes a wider regional war, with Israel’s bordering states being the first to get pulled into the conflict. 

Escalation with Iran.

Iran is the pivot point that can expand the war into the region. Iran is the major source of funding and support for Hamas and both early assumptions and early indications are that Iran helped coordinate the attack. Reportedly, Iran’s curtailment of assistance to the Houthi backed government in Yemen after its Chinese-brokered détente with Saudi Arabia has allowed it to concentrate its efforts against Israel. If Israel determines that linkage and attacks Iran using overt military force, the war expands in the region. 

But it also draws the US further into the conflict, as well as both China and Russia whose relationships with Iran have been deepening. Serious game changers that we need to be prepared for include: Will Iran or Hamas or some other militant group or red flag operation taunt the US into conflict with attacks on its military assets or tankers coming in and out of the Gulf? Will Israel find itself needing the US not only having its back but fighting alongside it as the war escalates? How will China and Russia respond? The paths they choose will help determine how, when and if this crisis escalates.

As the war spreads or prolongs in the region, it is also certain to affect the energy markets.  Conflict in the region can affect security in the sea lanes, or even just the price of insurance, particularly, if the tankers transporting oil or oil pipelines become targets for asymmetric sabotage by the militants to influence behavior. 

The US role.

The US is involved directly, not just as Israeli’s closest ally. American citizens have been killed and are believed to also be among those who are being held hostage. This will be an important factor in determining the level of US involvement, especially as time goes on and if the American hostages are used in propaganda videos or if their lives are taken. As Israel’s closest ally, the US is already very active diplomatically and must continue to be so. The US will also be providing not only military support but also support in the form of deterrence. The US has already committed a carrier strike group and additional fighter squadrons as a “deterrent” to the region, and is sending military aid. While a necessary response, the larger the US presence, the more vulnerable the US forces will be to attacks from Hamas and other groups, a trip wire to further involvement. 

How much aid the US can send while the House remains on hold without a Speaker, remains to be seen. But the most positive outcome may be that the Republican conference chooses a Speaker much sooner this week than had been anticipated. Along with Congressmen Jim Jordan and Steve Scalise, a movement is afoot to bring McCarthy back into the Speakership. 

The US will need to be able to meet the military assistance requirements for Ukraine and Israel, while also replenishing its own stocks so it does not put US force readiness at risk. With dangerous conflicts now in the Middle East and Europe, the US may be drawn into a conflict at a time and place not of its choosing. This will not only require a serious assessment of the defense industrial base but also an assessment of the budget implications, as we rapidly approach another FY2024 budget stalemate and a possible government shutdown.

China.

As with any competition, China only gains from the distraction of its major competitor as China pursues its own national security and economic objectives. For example, key among them is Taiwan’s integration into China. Having Taiwan’s major ally distracted on two fronts in the Middle East and Europe helps to soften the ground for Xi Jinping in his assessment on the use of force in Taiwan. While there are many factors that go into making a decision as significant as the use of force in Taiwan, timing is one of those factors. Another benefit for overall Chinese strategic goals is that the pressure on Russia in Ukraine may ease as the US is also supplying military and diplomatic aid to Israel. 

Dependent on oil imports, China’s presence and influence is growing in the Middle East, including its growing relationship with Iran having brokered the Iran-Saudi détente. Consequently, China may be able to leverage its help in resolving this crisis for trade or economic concessions in its relationship with the US that it could not have achieved otherwise. Furthermore, while China has strengthened its relationship with Iran, XI Jinping has also prioritized defeating Islamic extremism since the 2013 terrorist attacks in China. That goal is the foundational basis of the crack down on the Uyghurs. And so China will be balancing these considerations as it determines how, when and what role it should play diplomatically in this crisis. So far, in the UN Security Council, China is among the countries blocking a consensus statement condemning Hamas. The US needs to work closely with China to develop a mutual understanding how an escalating war in the Middle East serves no nation’s purpose.

Russia.

As with China, Russia only gains by having the US and our NATO allies pulled into the chaotic conflict in the Middle East. The more distracted the US and its allies are the less focus on Ukraine, which only serves Russia’s short and long-term strategic interests. But, interestingly, anti-Islamic militancy is a hallmark of Putin’s policies that drove his scorched earth policies in Chechnya and Syria. But Russia needs Iran right now for its defense cooperation to help in Ukraine and considers the US its principal antagonist. These factors may be more determinate in the Russian role in the current crisis, as well as its positioning in a prolonged and/or expanded war. 

Intelligence failure.

How and why Israeli and US intelligence failed in identifying this attack will be among the most important lessons learned. One of the more interesting insights will be how and what technology was used—or not. One can only think of how Osama Bin Laden communicated using messengers or how Churchill relied on pigeons.

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