As regional actors beyond Israel and Hamas are drawn into the conflict, stability across the Middle East is increasingly uncertain. Alliances are shifting, proxy wars are intensifying, and commercial ships are being diverted away from the Red Sea following attacks by Houthi rebels. Caught among different actors clamoring for their support, the United States and other nations and regional alliances must stake their positions based on various and differing grounds, be they humanitarian, security, economic, or strategic. Four scholars will discuss and debate the volatile and fluctuating state of relations within the Middle East and the broader geopolitical ramifications of this heightened, century-long conflict.
KRISTIN CAULFIELD: I now turn the event over to Professor Melani Cammett, director of the Weatherhead Center.
MELANI CAMMETT: Great. Thank you so much, Kristin. Welcome, everyone, to the Weatherhead Forum, our session on the geopolitical dimensions of the war in Israel-Palestine. And this is part of our broader series on Israel-Palestine this year.
So thank you for joining us. As Kristin said, I'm Melani Cammett. I'm director of the Weatherhead Center and professor of government at Harvard University. And it's really my great pleasure to introduce you to the forum and to our speakers.
The Weatherhead Forum is our platform to address pressing topics of the day and the pathbreaking research being done in those areas. These special sessions are open to the public. And so we really appreciate your joining us virtually for this session.
Today's forum is the third in our series on Israel-Palestine. And as I said, our focus is on the geopolitics of the region. As everyone knows, it's a volatile time in the Middle East. And in reaction to the war, state alliances are shifting. Regional non-state actors are launching military attacks. Proxy wars have reignited. And the US is under pressure, domestically and internationally, to rethink its foreign policy.
In order to achieve a new reality for Israelis and Palestinians, the international community will no doubt have to play a significant role. And for example, we know that Saudi Arabia appears to be conditioning its new relationship with Israel on the formation of a Palestinian state, or its potential new relationship.
So we will draw on insights from our panelists to address some of these issues and many more. Just to give you a sense of how this is going to run today, each speaker will have about 10 minutes to present. Then we're going to move on to Q&A. And those of you attending the webinar can write your questions into the Q&A function on Zoom. And I will do my best to group the questions together and to cover as many of them as possible.
It's my great pleasure to introduce the speakers we have today. First, we have Professor Gregory Gause, professor of international affairs and the John Lindsey '44 Chair at the Bush School of Government and Public Service at Texas A&M University, where he was head of the Department of International Affairs for eight years.
He's currently working at the school's Washington D.C. teaching site. And he's the author of three books and numerous articles on the politics of the Middle East, with a particular focus on the Arabian Peninsula and the Gulf. His latest book is International Relations of the Persian Gulf.
Dahlia Sheindlin is a public opinion expert and strategic consultant with over 20 years of experience, specializing in liberal and progressive social causes. She has advised nine national campaigns in Israel and has worked in 15 other countries. She conducts research and policy analysis on issues such as the Israel-Palestine conflict, regional foreign policy, human rights, comparative conflict, and many more topics. She is a regular contributor to established media outlets such as Haaretz, The Guardian, The New York Times, and many others.
Adel Hamaizia is currently a fellow at the Belfer Center's Middle East Initiative at the Harvard Kennedy School. He is managing director of Highbridge Advisory, a strategic advisory firm for companies and governments working in the Middle East, the Balkans, and Africa. He consults for governments, foundations, and private sector organizations with a focus on political risk, due diligence, corporate investigations, public diplomacy, and economic development.
And last but not least is Peter Krause, who is an associate professor of political science at Boston College and a research affiliate with the MIT Security Studies Program. He is the author of Rebel Power-- Why National Movements Compete, Fight, and Win, and co-editor of Coercion-- The Power To Hurt In International Politics.
He's a former fellow in the International Security Program at the Harvard Kennedy School, the Crown Center for Middle East Studies at Brandeis University, and the Democracy, Peace, and Justice Forum at Uppsala University. Thank you so much to all of you for joining me here today on this forum. I'm really looking forward to your remarks. And we will start with Professor Gause.
GREGORY GAUSE: Thank you, Professor Cammett. There's, I think, a general sense that this war is creating a whole new situation in the Middle East-- the enormous violence with which it began and with which it's continuing disproportionately upon Palestinians in the Gaza Strip and the enormous media attention to the conflict that gives a sense that something big is changing.
If you look at the most recent issue of Foreign Affairs, Maria Fantappié and Vali Nasr have an article, the lead article, called "The War That Remade the Middle East." And I think if you look at almost any column that Tom Friedman writes, many-- and I think his columns actually have been really very, very interesting and insightful in this crisis-- he's talked about how this is basically remaking the region.
I have a very different view. I think that the Gaza war, despite the enormous human suffering and loss that accompanies it, as I said disproportionately inflicted on the Palestinians, will end up changing very little in the region and, in fact, will just heighten trends that we observed before October the 7th.
For example, I think the key geopolitical fact that defined the regional crisis in the Middle East before October 7 was the role of Iranian-supported non-state actors in weakened or collapsed Arab states. That was true in Lebanon for decades with Hezbollah. That's true in Iraq since the American invasion of 2003.
That's true in Yemen with the Houthis. That's true in Palestine with Iranian support for Hamas. And to some extent, that's true in Syria, where the Assad regime, which is winning its civil war, basically became one militia among militias fighting in that civil war.
Nothing about this conflict changes that. In fact, the role of these non-state actors has been heightened as a result of this conflict. Just look at the international impact that the Houthis have had by firing at shipping in the Red Sea in Bab al-Mandab.
So that key geopolitical fact does not change. In fact, it's heightened as a result of this crisis. The Iranian nuclear issue, latent before October 7 but certainly not solved in any way, is still there. And in fact, the Iranians have increased the amount of fissile material that they have available to themselves during this crisis.
The key United States initiative before October 7 was an effort to bring about a Saudi-Israeli normalization that would include some progress on the Palestinian issue. That is the core of the US approach post-October 7. And the difficulties standing in the way of the Saudi-Israeli normalization are still there. In fact, I would say they have been heightened by the events of the Gaza war.
The rightward drift in Israeli politics, which has been going on for decades, has been exacerbated by October 7. And I think that will remain true whether Benjamin Netanyahu remains as prime minister or not. The idea that the Palestinian Authority can be revived and reformed, which is something that American diplomacy is counting on, is, I believe, a reach.
Everything that I've read by people who know what's going on on the ground, in the Palestinian territories, have indicated that the Palestinian Authority's authority in the West Bank is, in fact, under serious challenge. And the Palestinian Authority's ability to govern in a new space, in Gaza, would be highly contested and likely to fail.
The Saudi price for normalization, I think, has, gone up. I think, before October 7, the Saudis would have been willing to accept some indications of progress on the Palestinian front. But now they've been very clear that they expect an irrevocable timetable toward a Palestinian state. And given trends in Israeli politics, I think that that's highly unlikely.
Also, the price that the Saudis want from the United States for normalization, which they made clear before October 7, is still there-- a security treaty with the United States and support from the United States for the development of an indigenous Saudi nuclear infrastructure. These demands from Saudi Arabia will face enormous hurdles, I think, in the US Congress and be difficult to achieve.
So I think that in the past, wars have created new political environments that could lead to progress toward solving the underlying issues. The most obvious case of that is the 1973 war. But it seems to me that this war unfortunately is not creating new conditions which could open up the possibilities for political progress.
In fact, I think the war is exacerbating conditions that will make political progress toward a solution of the Palestinian issue that would respect Palestinian desires for national self-determination, I think, are less likely even than perhaps they were before October the 7th. I wish the administration the best in its diplomatic efforts.
One can only hope that a ceasefire can be arranged and some kind of political process can be started. But it seems to me to be a reach. And so with that optimistic conclusion on this Valentine's Day, I'll turn it back to Melani.
MELANI CAMMETT: Great. Thank you, Greg. I wish you could offer us more optimistic conclusions. But I suppose you can't conjure things out of thin air. But maybe others have more optimistic perspectives. We shall see. Thank you. So I'm going to turn it over to Dahlia Sheindlin now. Thank you.
DAHLIA SHEINDLIN: Thank you. Thank you for hosting me. And thank you to people for attending. Let me also take the moment to do some shameless self-promotion. I'm going to add to my bio introduction that I'm the author of a new book called The Crooked Timber Of Democracy In Israel.
So this is a tough act to follow because I actually can't really say anything that is going to fundamentally change Professor Gause's analysis, with which I very much agree with. I think a lot of people thought that this was going to be a game-changer. But like him, I see lots of continuity in the region.
And I think that the idea that war leads to peace leads inevitably back to 1973. And there aren't very many other examples of that. The examples that tend to be pulled out beyond 1973, I think, are highly questionable. And we can get into it separately.
But what I'm going to try to do is go through the regional dimension and at least analyze what I see as the regional factors acting on Israel. I was asked to look at regional pressures. And I'll explain what I think those are and what I think they aren't, looking at, again, some of the actors in the region but maybe some actors that are a little bit beyond the region.
So let me start with the region. I mean, the biggest actor that I think Israel's deeply and urgently concerned about right now is Hezbollah because there is a very strong concern, perception, sometimes advocating, but oftentimes seeming to pull back from a full-scale war with Hezbollah. And that has to be seen as partly a concern with Iran.
Now, the question of to what extent Iran is controlling or influencing is heavily debated in Israel. But certainly, it's seen as an Iran-derivative problem. I've heard Iran referred to as everything from a proxy to a partner of-- sorry-- Hezbollah referred to as everything from a proxy to a partner of Iran.
So let's say that is the number-one regional pressure from Israel's perception, and certainly in the public discourse. And the fear of a full-scale war is prominent. It seems to rise and recede occasionally over time. And that extends to the other proxies, of course.
I mean, remember that the attacks of the Houthis, with missiles reaching the area of Eilat in Israel has been a feature of this conflict from the beginning. That is an area that does not represent continuity from the past. It was a new thing for Israel in the region. But it does represent escalation. So it makes Israel certainly feel itself to be under more immediate threat of Iranian proxies.
And then I would say the next big regional source of pressure is something that tends to be not, I think, sufficiently on the agenda, or it's on the agenda in other ways, which are Israel's two allies in the region, I mean its long-standing partners with a full peace and normalization agreement, Egypt and Jordan. And those are different kinds of pressures. But they are pressures in a very immediate way.
We have to remember that right now, for the first time-- I would say maybe not for the first time, but the Egypt-Israel peace treaty that was signed in 1979 is under, I would say, its greatest risk. It's not that it has never been challenged before, but nothing even close to the much more significant challenges that we're seeing now given Israel's actions in Gaza and the threat of-- well, frankly the threat of expulsion in some form and the possibilities in particular of an attack, right now, on the Rafah area, where you have nearly 2 million Palestinians who are crowded in with nowhere to go.
And this is putting severe strain on Israel's most important ally in the region. But it's hard to pick favorites because Jordan is an incredibly significant-- when say "ally," of course I simply mean normalized with a full peace agreement. Obviously, these aren't warm relationships. And that's why they are under stress right now.
But we have to remember that the other major threat of escalation, possibly even a greater likelihood of escalation than the northern border, is right in Israel's back door. And that's the West Bank. I think it would be a big mistake to take our eyes off the West Bank. There are stresses.
And the level of violence in the West Bank, I should also remind people, had been escalating. In 2022 and 2023, these were already the most deadly years for both Palestinians and Israelis in the West Bank since the Second Intifada in the early 2000s. So Israel's actions in the West Bank have put further stress on the relationship.
There have been thousands of people arrested. Israel claims about half of them are affiliated with Hamas. There have been hundreds of Palestinians killed. And there are also attacks on Israelis in the region. So this is also another one of those regional pressures because it would involve Jordan-- it would place strain on the relationship with Jordan, again, one of the two parties that are immediate neighbors with which Israel has a full peace agreement.
I think the only other really significant actor that can pressure Israel in the form of actually having leverage is not a regional actor. And that's the US. This is opens up a whole new chapter because there are so many different elements of US policy up until now and exactly how the US could pressure Israel. But let me just give a very quick summary.
In the very beginning, the US implemented, certainly through President Biden himself, what we tend to call the "bear hug." And the bear hug, I think that it would be a mistake to look at it as a purely strategic approach. The bear hug comes from a very, very deep and personal place for Biden. And it gave Israel the sense that it had the backing of the US for pretty much everything it wanted to do for a long time.
And there didn't seem to be any limits on the bear hug for a while. But we do see some reservations within the US government. There have been members of the administration who have expressed reservations, a couple who have resigned. That's, in a way, not actually as unusual sometimes as it may seem.
But primarily, we have the domestic pressures in the US. I don't think I need to go through all of them, also in the interest of time. But for the most part, in an election year, the Biden administration is concerned about alienating progressive Democrats.
Let me just remind people that according to survey research, that's about 2/3 of Democrats. So it's not a marginal portion. It's also an organized community with active think tanks. Disclosure-- I am affiliated with one of those progressive think tanks.
And there is concern about the Arab-American vote in key swing states, even the Black American vote. So all of those things have brought the United States now to a point where it is finally considering ways that it can use its considerable leverage, which it has never really wanted to use before.
And I think what we're seeing is that there has been-- up until now, it's been rhetorical. There's been what we hear about behind-the-scenes pressure on Israel to provide more humanitarian aid to Gaza and maybe draw down the fighting somewhat.
But it is interesting that over the last maybe two weeks what we're seeing is, maybe really for the first time, America implementing a policy, even if it's of very, very limited-- very limited impact of actually announcing the executive order to sanction certain settlers in the West Bank. Very much a signal to Israel that America is willing to put policy behind its leverage-- not only rhetorical statements or behind-the-scenes pressure, but actual policy, again, even if it's limited to just a few people.
There was a statement that America would go much further in establishing a blacklist for visas for those kinds of settlers who are found to have been using violence against Palestinians. And the rest of those policy changes are still, so far, at the level of rumors and speculation or proposals or announcements that the administration is considering, but still significant things-- for example, the possible recognition of a Palestinian state and the possible rollback of the Trump administration's policy of essentially accepting that settlements are not a violation of international law.
That was what happened under the Trump administration. The Biden administration has hinted that it might consider rolling that back. So I mean, America has vastly more pressure levers than it has ever used to try to change Israeli policy, certainly in recent decades. There have been times historically when it used them more. And I think that what we're seeing is just the very beginning of the US just considering even sending signals that it might actually use some of that leverage.
You'll notice that I didn't so far touch on Saudi Arabia, which is an important regional actor. And that's because I think we need to distinguish between the pressures on Israel-- which I don't really think Saudi Arabia has been using its weight as a pressure point. In other words, what Saudi is offering is an incentive.
The idea of normalization is certainly attractive to Israel. It's attractive to Mr. Netanyahu personally because it would be seen as very much consistent with his long-standing policy of expanding Israel's foreign relations unto unusual partners, particularly when he thought that normalization in the Arab world could marginalize the Palestinian issue.
It would be seen as a diplomatic coup. But it's an incentive. In other words, for most Israelis, it's nice to have. So the question is, does Israel actually need it? Is it a pressure lever maybe for the prime minister given his political considerations and the fact that he's under a lot of pressure domestically?
But I don't see that in the same camp as the kind of pressure that Hezbollah wields because it can threaten military action, that we see from the West Bank because there could be an escalation, the pressure of breaking existing peace agreements with Egypt and Jordan. I don't think you can compare that with a nice-to-have normalization as right-wingers are putting it very bluntly on social media. Israel has lived without that normalization for all that time.
And I think that-- I'd rather stop here. I'd like to talk more about some of the other regional dimensions because the Palestinians are part of the regional dimension. But I think in the interest of time, I'll stop and wait until we get into that in the discussion. But let's just say that Israel still, after-- again, on the continuity theme, does not seem to be prepared to accept the pressures or incentives by making gestures towards the Palestinians at a bigger political level.
If the expectation was that Israel, in order to meet some of those pressures from the US, for the issue of incentive from Saudi Arabia, was preparing to move towards something like comprehensive political resolution, frankly, at this moment, we have seen no indication of that from the political level. And naturally, support within the public is going down rather than up.
People are not taking the same conclusion from October 7 and this war that the international community has expected. So I'll be happy to expand on that afterwards. And thank you.
MELANI CAMMETT: Great. Thank you so much, Dahlia. This is fascinating. And we look forward to reading your book. We've shared the link on the webinar chat. So turning now to Adel Hamaizia.
ADEL HAMAIZIA: Thanks, [INAUDIBLE]. I'd like to start by thanking The Weatherhead Center and, of course, Professor Cammett for this kind invitation. I've never spoken on Israel-Palestine in any formal academic setting. So it's a topic above my pay grade. However, if Melani asks, you say yes. And seeing as we're looking at the broader picture, I was happy to participate with this august and esteemed panel.
So in my allotted time, I'll try to touch on a slightly different angle, which is really the economics, so looking at some of the key economic costs and developments thus far as per the geopolitical fallout from October 7 and beyond and some of the focus on Red Sea dynamics, which was alluded to by the previous speaker. And I'll riddle you with numbers. Excuse me for not having slides. Perhaps in a round 2, we can maybe dig a little deeper on GCC perspectives, the Abraham Accords, et cetera.
So for context to remind the audience, it's really a tale of two or three MENAs. We have energy exporters, most of the monarchies doing relatively well. And energy exporters, less Libya and Iraq. We have the strugglers. Think Egypt, Tunisia, Iraq, Jordan, through to those currently in or emerging from conflict.
At the country's success, a country Greg is an expert on, for me, the sine qua non for raising the whole region is Saudi Arabia with its Vision 2030, which aims to push for diversification, digitalization, and decarbonization, while, of course, having to contend with this region of ours, often dealing with devastation, demonization, and dehumanization.
So earlier in 2023, we saw the China-Oman-Iraq-mediated Saudi-Iran deal, which had the goal of bringing down the temperature in the region. We saw a true ceasefire of sorts between Saudi and the Houthis. This temperature drop and, with it, geopolitical risk was, of course, short lived.
Just a couple of weeks before October 7, we saw MBS, Mohammed bin Salman, the Crown Prince, speak with Bret Baier of Fox News, articulating that this deal with Israel is getting closer every day while also emphasizing that the Palestine side of things needed to be resolved. The potential deal would be around security for Saudi via the US. Greg can maybe speak to this more, the region. And among other things, really improving investor sentiment an absolute must for the plans around Vision 2030 and broader economic growth in the region.
So the economies of Egypt, Lebanon, Tunisia, and Jordan have been seeing huge fiscal stress and debt servicing for a while with things only getting worse and worse. Some may have just forgotten that Libya and Morocco had gone through their own catastrophes only in the month before October 7.
So what have been some of the economic costs, implications of the war and its broader geopolitical conflagrations? So forgive me for being a little descriptive. I'm going to pepper you with numbers. But I hope they'll elucidate and cover for my often lack of preparation.
So let's start with the macro picture. So just last week-- I believe it was last week-- the IMF downgraded the forecast for MENA in 2024 from 3.4% to 2.9%. So if you could describe what a region-wide 0.5% drop looks like in terms of everyday lives, unemployment, inflation, under-provision of public services, it truly and really is dire. And Professor Melani has a great book on political economies which can speak to this broader contextual and historical picture.
Now, in terms of FX, or foreign currency, this is much needed, especially by the strugglers and the oil importers. Here, we're talking about remittances, tourism, for Egypt, Suez receipts, which I'll come to shortly. And losses here translate into serious knock-on effects in terms of debt servicing, fiscal allocation. A country like Egypt, [INAUDIBLE], the largest country by population in the region, has to service $29 billion of its $165 billion of debt due this year.
So thinking year on year, what does October 7 mean? So according to Smith Travel, the second week of January, compared to the same time last year, we saw drops in hotel occupancy in almost every country in the region for Saudi Arabia, Tunisia, and Oman. In just early December, Lebanon was down year on year by almost 50%, Jordan 30%, Egypt 20%.
Note that we're talking about countries in the region where tourism is a true lifeline, accounting for up to 20% of GDP, both FX and job creation of course-- labor-intensive industry. So while Dubai tends to benefit from conflict given its role as safe haven-- and I enjoyed my own trips in December and January to the UAE-- it really was super busy, like spectacularly busy. I lived there in an earlier life. And I've never seen it like this, quite frankly.
Despite all of this, we've seen companies like Emaar, who are known for building Burj Khalifa, the tallest building in the world, witnessed a 33% drop in its revenues in the last quarter of 2023. They, of course, operate across the region. We saw capital flight and portfolio outflows mostly out of Israel and nearby countries. And a lot of investors are playing it more patient. And we know capital is coward.
And we're talking about a region, as I said earlier, that's really banking on SDI. Think Neom, think Egypt, think a lot of the broader plans in the region that hope to create growth and create jobs and avoid, of course, those Arabs and Muslims traversing the Mediterranean to Europe.
Now, on remittances, we saw a drop across the region for countries like Lebanon, where remittances are 20% of GDP, or Egypt, where they're 6%. These are, again, salvation lifelines. Egypt saw a drop not only because of what was going on on October 7. But there's been a growing margin or spread between the official rate of 30 Egyptian pounds to the dollar and the black market, which reached 60s in recent weeks, possibly exacerbated by what's been happening in recent months.
Now, on trade, this is the big one in the news. It's the Houthi attacks on vessels around Bab al-Mandab, one of the eight major, what we call, maritime choke points. So here we're talking about 12% of global trade. Yes, it affects you here in Cambridge, Massachusetts, or wherever else you may be. It affects 30% of global container traffic. Almost 9 billion barrels a day of oil and oil products went through Suez in the first half of 2023, and 8% of global LNG shipments.
So the Houthis say these attacks are in solidarity with Gaza, which does make sense given that these started at the level we are seeing post October 7 with only minor incidents in the years prior. And this has, of course, brought popularity and legitimacy for the Houthis.
The attacks are focused on container ships linked to Israel for destination, ownership, or similar. This expanded to Western shipments, too. Though, due to the nature of flags, ownership, those on board, and product destinations in this very globalized world of trade and shipping, it's often very difficult to disaggregate and define who and what could be considered fair game.
So having said that, a Houthi spokesperson said earlier in February, I think just over a week ago, that Russian and Chinese cargoes wouldn't be targeted. And we've seen some ships sending messages via signaling systems to the Houthis as they pass through the Bab al-Mandab claiming, quote, unquote, "all-crew Chinese" or "all-crew Muslim," "armed guards on board," or "no links to Israel."
We've actually seen opportunistic Chinese shipping companies emerge in this period, growing their own voyages around the Red Sea and banking on immunity, even stopping off in Yemen. So a journalist friend I actually spoke to just earlier today before this Zoom-- called Zoom event, I spoke with a journalist who was telling me that-- he's in close contact with senior Houthi leadership.
He told me that they're readying for an escalation should the Rafah invasion go ahead and that they'd run out of targets and had to expand to more US/European vessels, including, interestingly, a US ship transporting Brazilian corn to Iran, exemption adjusted of course.
So Israel has tried to circumvent the Red Sea and the Cape through a land corridor in which firms unload cargoes in Bahrain and Dubai for trucking to Israel via Saudi and Jordan. One of the largest shipping firms, Hapag-Lloyd, confirmed these land-service corridors. And this would, of course, be an Abrahamic dividend made possible by the Accords which we can discuss shortly.
So on the numbers, we've seen a 43% year-on-year drop in shipping volume through Suez in January 2024 with transit around the Cape of Good Hope rising by 60%. For Egypt, again, major for its effects. [INAUDIBLE] are some 2% of GDP. They've lost almost half year on year in January. And just to put this in dollars terms, we went from $804 million to $428 million year on year for January.
So the Houthis, who also seem to have been avoiding GCC states vessels, we've seen rerouting from Qatar on the LNG side of things around the Cape. And to put it into perspective, an extra 6,000 to 7,000 nautical miles is roughly an additional $1 million in fuel costs and additional 20-odd days for LNG carriers, more 8 to 14 for other types of ship vessels.
With some challenges-- for example, Houthis may not want to harm a Qatari cargo. But if it's heading to Europe, of which most countries are steadfast supporters of Israel, this might be part of the calculation for Qatar gas and the like. One of the major trade routes of Shanghai to Rotterdam, we saw 3 and 1/2 times the cost for these 20-foot equivalent unit containers in early February compared to early December.
On insurance, at their peak since the beginning of the conflict, we've seen war rates jump to 0.7%. This is for, say, $120 million cargo. It's around $800k. And prior to October 7, these were around 0.05%, with most underwriters even waiving war-coverage cost altogether for Red Sea voyages. So these insurance rates have come down somewhat since the formation of this naval coalition brought together and led by the US to ensure freedom of navigation and commerce, namely Operation Prosperity Guardian, which has already engaged drones, small combatant vessels, surface to ship missiles, and other arms.
Now, in terms of this asymmetric warfare-- again, I'm speaking above my pay scale here, but I like the numbers-- the orders of magnitude in terms of the costs for Iranian drones used by Houthis, at something like 25 to $50,000, maybe not all in, being neutralized at a cost in the millions of dollars is really something to think about.
Now, with Yemen, 50x the size of Lebanon and stockpiles all over the place and with domestic power consolidation, of course, part of calculus, limited strikes are really unlikely to degrade the Houthis physically, politically, ideologically. So this could go on. Though, we'll see if attacks are halted with the end of the war.
Somebody I was speaking to at US Treasury a couple of weeks ago said to me these attacks are the Houthis OFAC, their own sanctions regime. So on the coalition, we've seen none of the GCC states but for Bahrain join. Saudi and UAE don't want to open up that headache with the Houthis. Bahrain, of course, hosts their Fifth Fleet and has its own reasons.
And then on Saudi Arabia, where there are to be attacks on Saudi crude or transgression into Saudi waters, a lot of analysts have observed that it pushed the Kingdom to align with the US or remain silent. And they'd have to grapple with its own interests and obligations to global maritime shipping and their own energy consumers. They'd have to grapple with efforts to manage Iranian proxies. Think [INAUDIBLE] 2019, as well as public opinion at home.
But Houthis have, for the most part, avoided targeting vessels in the energy trade, which is interesting. But it sort of makes sense, possibly due to wanting to avoid any disastrous oil spill on Yemeni shores. And we've seen the likes of BP, Shell, Trafigura suspend shipments completely.
One big question many non-oil-watchers have been asking is why oil hasn't been reacting, or at least much. And one is really around the laid infrastructure which bypasses some of these choke points like Bab al-Mandab, Saudi's East-West pipeline, for example. And historically, '73 Oil Embargo adjusted-- historically, conflicts with Israel didn't see much of an oil reaction. So it usually requires a major producer to be involved. Think Libya civil war. Think the Soleimani incident. So estimates have it that oil vessels going around the Cape at around $2 per barrel.
On Yemen bombing, I was actually speaking with a friend from DOD just a couple of days ago-- so I believe mutual friends on the call-- who said to me, I'm sure, "they," the Saudis, are experiencing schadenfreude with the bombing of Hodeidah after having pushed back on Saudi for a while.
Now, the other potential black swan-- and I won't go on for too long-- is really thinking about a Houthi threat to cut subsea cables. And this transports data, financial information between Europe and Asia. And to put some numbers on this, this would be around 17% of the world's internet traffic is carried via the Red Sea. So anything like this would require, of course, a more capable state actor to support such actions. So I won't name names, but you can guess who may have those capabilities.
We've also seen boycotts across the Middle East, particularly on US and Western brands, less Israeli. There aren't that many at retail level. I don't think at Iraq levels. We're not there, but significant anyhow. So usual suspects, we're reading about Starbucks, McDonald's, KFC-- perhaps positive, given diabetes and obesity in the region.
But on Starbucks, it was singled out for suing its workers' union over a post on Gaza. On McDonald's, we saw its Israeli franchise apparently give free meals to Israeli military personnel. This was circulated in social media in the region. And in one report I came across for McDonald's franchise in Egypt, year on year we saw a 70% drop.
One of the more amusing boycotts, if I can call it that, was announced by a Moroccan hashish producers, who had announced they will not be selling to Israeli wholesale partners. And I'm not sure how that supply chain works.
Now, in terms of political risk and infrastructure, there were some early worries around potential attacks on energy installations that belong to European or even American IOCs. And a major IOC had reached out to me early on in October, worried about North Africa in particular. But of course, this sort of attack would be self-harm to those economies. And government state security in the region will be on high alert.
I'd like to come maybe later to think about the Palestine and Israeli economies and maybe GCC perspectives on the politics, which is, again, slightly above my pay scale, but I can have a go. But other big questions I think we should be thinking about on the broader geoeconomics is what next for the Belt and Road Initiative and its planned peer competitor, the IMEC, or India Middle East corridor, given Israeli-China, how do I put this, reduction in relations and a, I'd say, Sino-Arab stance.
And again, thinking about the shifting geoeconomics and how Israel's relations with the Arab region, Turkey, China, and others will develop around broader alliance and bloc building. Think BRICS, Shanghai Cooperation Council, and beyond. I'd have loved to go into the politics, but maybe in a round 2. But I thought that would offer maybe a slightly different slant on just the geopolitical ramifications for the region.
And were we to go into a Lebanon situation, the orders of magnitude would be multiplied significantly. And we don't even want to think along those lines. But I'll leave it there. Thanks so much, Melani. Sorry for going on a little bit.
MELANI CAMMETT: Thank you so much for this detailed analysis-- really fascinating and disturbing. As if this region needed more economic troubles. OK, so I'm going to turn it over to Professor Krause. Thank you.
PETER KRAUSE: Thank you so much, Melani, and to The Weatherhead Center for the invitation. It's an honor to be in conversation with Greg, Dahlia, and Adel, whose collective work I've long admired. I want to talk about the geopolitics of the conflict but through the lens of the actors directly involved, from the inside out as opposed to the outside in.
And I think that too often, as scholars or politicians of international relations or particularly US foreign policy, people exclusively use an outside-in perspective, which I think can really skew understanding of the dynamics on the ground. So I'm going to share some slides, as well, that I think will help support some of the things I'm going to talk about. So just give me a thumbs up, or let me know if those look hopefully OK.
But in any case, talking about inside-out versus outside-in, there's a couple of things I want to start with. The first is the argument that was made by some that the Saudi-Israeli-US normalization deal supposedly caused the October 7 attacks by Hamas. So there is no doubt that Hamas strongly opposes such a deal. And it's also true, as Greg noted, that one of the effects of the October 7 attacks is to make that deal less likely, at least in the short term.
But to me, the claim floated by President Biden and some regional observers that normalization negotiations caused October 7th starts with these outsiders and what they were focusing on at the time, which is the Saudi-Israeli negotiations, and then seeing this attack as blowing up that deal, then arguing that that was, therefore, the operation's motivation. The evidence that I've seen does not support this claim.
So first and foremost, planning for the attack itself began two years ago, long before the Saudi-Israeli negotiations ramped up. Secondly, when, three weeks ago. Hamas published a 16-page document on its narratives on the motivations for the October 7 attacks, it did not mention the Saudis or those negotiations once. Now, certainly this is a PR document. And Hamas can and does lie. But it is a curious omission if anti-normalization was the driving force behind the attacks.
Thirdly, in a broad poll of Palestinians in the West Bank and Gaza on the causes of October 7, spoiling normalization was not even one of the 10 choices posed by Palestinian pollsters. And the other category it would encapsulate was selected by less than 1% of Palestinians.
What was the first cause mentioned by Hamas in its narrative document, the one right here I was just showing you, or, not coincidentally, also the most common motivation named by Palestinians in this poll? The violations of the Al-Aqsa mosque in Jerusalem and challenges to the status quo there by Israeli activists and police.
Finally, it helps to look at what caused Hamas attacks in the past to provide some insight into the actions on October 7. When the Abraham Accords, the precursor to the Saudi-Israeli negotiations, were signed in September 2020, Hamas did almost nothing. In fact, 2020 was the least deadly year for Israelis and Palestinians in at least the past decade and a half.
Hamas later launched rockets into Jerusalem on May 8, 2021, not because of the Abraham Accords, but because, the day before, Israeli forces had stormed the Al-Aqsa compound in response to Palestinian stone throwing and protests. To bring it full circle, it was after this crisis in May 2021 that Hamas began planning the October 7 attacks.
Looking at the dynamics from the inside out thus provides us with a more accurate understanding of which geopolitical developments do and do not play a major role in violence on the ground. It is important to note that the Al-Aqsa issue itself has massive international implications and is indeed why Hamas named its October 7 operation "Al-Aqsa Flood" in the first place.
Now, thinking more about the origins of this name and then Hamas's actual strategy, I would say that Hamas wanted October 7 to start an international storm that flooded Israel from multiple fronts. This storm, in which other groups in the, quote, "axis of resistance" would participate, including Hezbollah, the Houthis, and other groups connected to Hamas and Iran, some pictured here on this flag waved in Tehran, would simultaneously coerce Israel while propelling Hamas to the top of the reinvigorated Palestinian national movement.
In the case of October 7, the key strategy of Hamas was not spoiling but rather provocation, mobilization, and outbidding, all of which I will explain in greater detail. Let's first talk briefly about Al-Aqsa and why it is the initial centerpiece for October 7 and why it's likely to play a larger role in the conflict in the near future.
Al-Aqsa is the third holiest site in Islam and the center of Palestinian claims to their desired capital of Jerusalem, giving it massive religious and political implications. Since 1967, Israel has controlled the site, parts of which are the holiest site in the world for Jews, who call it the Temple Mount because it was the location of the second Jewish temple destroyed by the Romans 2,000 years ago.
Israel, for a time, maintained a tenuous status quo in which all can visit Al-Aqsa/the Temple Mount. But only Muslims can pray there. In recent years, some national religious Israeli Jews have built a movement to not only visit the site in larger and larger numbers, but also to pray there, all with the intent of increasing Israeli and Jewish control and for a small but growing faction to build the third Jewish temple on the site.
To the left is a picture I took in 2022 of a newly refurbished welcome area leading up to the Temple Mount that describes how Jews can prepare to walk around alongside a graph from a supportive organization counting how many Jews have visited the site over time. And you can see the increase from 2013 up until 2022.
These actions, coupled with pictures and videos of Israeli police storming and arresting Palestinians inside the Al-Aqsa mosque, have generated outrage at the Israelis and sympathy with the Palestinians across the Middle East. In the short term, Hamas aims to prevent changes in the status quo at Al-Aqsa and sees itself as the defender of the site and the Palestinian presence there.
In the long term, it aims to recapture control of the site along with the rest of Jerusalem for the Palestinian and Muslim people. Now, these issues mobilize support in the region for the Palestinians. And they mobilize action alongside that of Hamas by members of the axis of resistance.
Hamas is first and foremost a Palestinian nationalist organization. But their Islamist orientation drives much of their international alliances and strategy. Ismail Haniyeh, head of Hamas's political bureau, explained last month that Hamas sees itself as the spearhead of the entire Islamic nation.
Hamas thus aims to scoop up the vestiges of Arab nationalism and solidarity with the Palestinian cause among the people of the Middle East while also mobilizing Islamist organizations and states whose broader movement eclipsed Arab nationalism decades ago. How does Hamas attempt to do this? By launching an unprecedented attack on Israeli soldiers and civilians, Hamas knew it would provoke a war. And the violent Israeli response to Hamas actions would mobilize support for Hamas and the Palestinian cause, as it has done.
Now, Hamas has not gotten the full flood that it wanted. And the organization is being significantly degraded by the IDF as we speak. Nonetheless, support from Hezbollah, the Houthis, and Iraqi militias have been more than a trickle. And this type of significant, sustained, coordinated violence against the Israelis on multiple international fronts has not occurred since the days of Israel's wars with Egypt, Syria, Jordan, and the Palestinian fedayeen inside them in the 1960s and '70s. Even though this round of conflict will end without anything approaching a Hamas victory on the ground, it's a model of transnational mobilization and conflict that Hamas and its allies will attempt to build on and utilize again in the future.
Now, what is ironic about the surge in international support for the Palestinian cause, not just by the axis of resistance but also by individuals and states in the Middle East, Africa, Europe, and North America, is that this is what Mahmoud Abbas tried but largely failed to achieve over the past 15 years. Abbas made a turn away from violence and towards international engagement the centerpiece of PA and PLO strategy coming out of the Second Intifada and the Hamas takeover of Gaza.
Now, look, Abbas achieved some modest gains, such as the UN recognition of Palestine as an observer state in 2012. But there was not a global surge in support for the Palestinian cause anything like there is today. And you did not see developments like Egypt threatening to suspend its peace treaty with Israel that Dahlia mentioned or countries like Jordan and other Arab states threatening to pull out of economic deals with Israelis.
Interestingly enough, if there's one thing that the current Israeli government, Iran, and the Saudis can all agree on, it's that they dislike Mahmoud Abbas and the PA, albeit for different reasons. Who exactly is the PA's strongest international backer today? Europe or the US, under the Biden administration at least.
But the PA is an umbrella institution, not a single faction. And Hamas has stronger international allies today than do Fatah or other groups in the PLO who have seen their international alliances wither as they transformed into state-like bureaucracies and bureaucratic entities. And recent polls, like this one pictured here, show that Hamas's attempt to outbid Abbas, Fatah, and the PA for Palestinian support has been successful at least in the short term.
Now, ironically, Hamas's actions could provide what we in social science call a radical flank effect that benefits the PA in the push for a two-state solution. And I'm happy to discuss that in the Q&A. I don't necessarily disagree with Dahlia and Greg, that even though the US and others are talking more and more about the two-state solution, that it's in many ways further off than it was 10 or 15 years ago, even though there's renewed international support for it.
But nonetheless, these international connections and the ones particularly to these organizations have significant implications in who will lead the Palestinians in the years to come. So what comes next in terms of geopolitics from the inside out? Even if Al-Aqsa was the central motivation for the October 7 attacks, Hamas's taking of hundreds of Israeli hostages, the subsequent Israeli invasion of Gaza, and the deaths of 28,000 Palestinians have understandably put the focus there for Israelis, Palestinians, and the rest of the world.
But although it has gotten less attention outside of the region, as Dahlia mentioned, the situation is at a boil in Jerusalem and the West Bank. And it may well spill over in the next two months with the arrival of Ramadan and Passover.
Thankfully, for those looking to avoid escalation, the two holidays don't overlap in 2024 as they did last year. But they are still pretty close in the calendar, with Ramadan starting March 10 and ending less than two weeks before Passover. These holidays are certainly times for family gatherings and community bonding. But unfortunately, they are also likely to create escalatory flashpoints amidst the ongoing conflict.
Now, the Palestinian people will undoubtedly be featured in the media and in the minds of many Muslims who focus on those less fortunate than them during Ramadan. And tensions around Al-Aqsa will be particularly fraught as more Palestinian Muslims want to visit and pray there than at any other time.
The eyes of the region will be on Al-Aqsa to see whether Israel loosens its current restrictions on Palestinians from the West Bank visiting Jerusalem or restrictions on those in Jerusalem of various ages and genders visiting the site at all. In terms of Hamas and other Islamist factions, they are likely to launch or attempt to inspire attacks against Israel during this time.
Indeed, the Hamas rockets on Jerusalem in 2021 were fired during Ramadan. Any incidents that occur in and around the holy sites have the potential to spark actions by actors in the region, whether diplomatic ones by neighboring states or violent ones by members of the axis of resistance.
Now, Prime Minister Netanyahu has aimed for Israel to end any operation in Rafah by the start of Ramadan. But it is unlikely that Israel's military operations and certainly its military presence in Gaza will be over by then. The one thing I could see is Netanyahu agreeing to a ceasefire deal that takes place during Ramadan as a way to try to avoid some of these issues.
Now, on the Israeli side, Passover happens to be when national religious groups focus their attempts to promote Jewish visitation and prayer on the Temple Mount. Angry and emboldened by the Hamas attacks on October 7, I would expect these groups to try to outdo their prior efforts, perhaps trying harder to carry out a ritual animal sacrifice on the site, employ greater violence against Palestinians in the West Bank, and take other steps to assert religious and political claims while challenging the existing status quo.
With the backing of the Israeli National Security Minister pictured here, Itamar Ben-Gvir, these groups are likely to be bolder than ever before, perhaps with Ben-Gvir leading the way. These individuals and organizations believe that such acts are the proper response to Hamas violence. And Hamas believes that its violent attacks are the proper response to such actions. Needless to say, these coming holy days have the potential to intensify and spread the conflict even beyond its current scope.
So in sum, there is great value in looking at geopolitics from the outside in, starting with a focus on the interests and policies of Middle East states and the US. But we miss much if we avoid also looking at the international dimension from the inside out, which I tried to do in my opening remarks today. To help supplement the excellent remarks from my co-panelists, I'm also happy to provide insights on Israelis and the United States in the Q&A. But for now, thanks so much. And I look forward to the discussion.
MELANI CAMMETT: Great. Thank you so much, Peter. That was great. So I have been collecting a bunch of questions in the webinar Q&A. And I think what I'm going to do is aggregate them and throw them back at you. And some of them have been particularly posed for specific panelists. But I think all of you are qualified to comment on all of these, if not most of them.
So let me just package together a bunch of questions under some themes. And then we can have responses from the panelists again. First, a number of participants have asked about the role of other actors. And these range from China to the GCC to Turkey, what role that these actors might play going forward, and what are their positions now? We've talked about individual Gulf countries, not so much about the GCC as a bloc, if it is taking a coherent position.
And then a related question has to do with the Saudi-Israeli relationship. How is this playing out now in light of post October 7 and Gaza and so forth? Is this rapprochement that the two countries established sustainable? Is there any impact of this on that relationship? So that's one set of questions I'll pose to the panelists. And don't feel obliged to answer all of these.
There's a second set of questions related to Israeli politics, several of which have been directed specifically at Dahlia. But others, feel free to jump in, as well. So some questions about the possibility of a change of government or a reconfiguration of Netanyahu's coalition in the coming months. What would a new coalition look like? What would a possible successor to Netanyahu look like? And would we see any change in policies vis-á-vis Gaza.
Another question related to oil and natural gas reserves under the Palestinian territories. Is there any angle here that might be motivating the current Israeli government and its allies in its war on Gaza? Are they interested in getting their hands on this? Or is this really about just their standard territorial ambitions? And so forth.
What about the relationship between Israel and the Palestinian Authority in the West Bank? How is this playing out? We see from Peter's presentation that the PA doesn't have as much credibility as other actors. But nonetheless, it still is in control in Ramallah, however factionalized it might be. What's the relationship there?
Can Israel handle an even more full-blown escalation of war on its northern front? I don't know if there's an official proclamation of war between Hezbollah and Israel, Lebanon and Israel. But there certainly is something that looks like a war going on there right now.
And then a question about the role of land in Israeli motivations here. Is this part of the goal here, is to really just finally displace the Palestinians and take over Gaza? Some questions also about economic ramifications, which Adel handled quite comprehensively, but maybe focusing a bit more on Jordan as well as Egypt. How is this playing out on the Jordanian and Egyptian economies?
And Israel's rating has been downgraded, as have the ratings of other countries. The Israeli Central Bank has spent a lot of its reserves on this effort. And we're hearing a lot about labor displacement in Israel as the reservists are called up, and so forth. So what are the outlooks for these economies, Israel's economy in particular, but others, as well? So a variety of questions. Why don't we go through in the order we began. And feel free to take as many of those as you like or ignore as many of them as you like. Greg.
GREGORY GAUSE: I'll focus on that first basket, Melani. I think that the role of China here is fascinating in that the Chinese, more than any other global power, have an interest in the free flow of commerce on the high seas. And I know that the United States asked the Chinese to join Prosperity Guardian, much as the Chinese joined the naval efforts against the Somali pirates some time ago. And the Chinese have refused.
And so it does appear that I think that the Chinese value the potential damage to the American role in the region from this crisis more than they do acting in concert with the United States on what could be seen as a relatively uncontroversial common interest in the free flow of commerce. So I think that that's really interesting.
The GCC is not going to act as a unit here. And even if it did, I'm not sure it would make that much difference than the individual states. The GCC doesn't have a common position on this. Two members are in the Abraham Accords, four are not. The Saudis talk about normalization.
Kuwait, which has a real parliament with some powers, is not going to be involved in a normalization process because it couldn't get through parliament. So I wouldn't look at the GCC as something that's worth thinking about as an actor in this. The individual states themselves, that's a different story.
The Turks are really interesting here because, of course, Erdogan has played the Islamist card and the anti-Israel card at various times. But given the problems in the Turkish economy and the need for decent relations with Europe, the US, Saudi, and Israel, which are also important economic partners to Turkey, the Turks have-- the Erdogan government, I should say, have been playing, I think, a relatively low profile on this crisis. And I think that it's driven very much by their own economic issues and the upcoming Turkish elections later on this year.
Saudi-Iran is a really fascinating thing. I think that we shouldn't call it an alliance by any stretch of the imagination. I think rapprochement, a detente maybe might be the best way, to find a French word for what's going on between Saudi Arabia and Iran. But I know the Saudis are disappointed that there hasn't been more progress here.
And in fact, the Saudis have kind of dragged their feet a bit as a signal on this to the Iranians on things like restoration of civilian airline connections between the two countries. I know the Saudis are disappointed with the Chinese role in following up on trying to, perhaps, get the Iranians and the Saudis on the same page on de-escalation in some other parts of the region.
So I don't think that we should put too much store in the Saudi-Iranian factor in this crisis. It seems to me that the Iranians, more important than their relationship with Saudi, their relationship with the US, they had, in effect, an under-the-table deal with the Biden administration before October 7 to keep things-- keep the temperature down, as Adel would say.
And so the Iranians kind of froze the nuclear side of things. The number of attacks on US forces and installations in Iraq and Syria went down. And it seemed like there was a tacit agreement. We also saw that the prisoner releases from Iran and the US committing to lift the block on Iranian access to some of its assets, in this case in South Korea.
So we saw some willingness of the Iranians to quiet things down with the US. Once October 7 happened, I think that deal went out the window. The Iranians see the opportunity to press for their larger goal of getting the US out of the region. And these other issues, including the bilateral relations with Saudi, are de-emphasized.
Finally, I think why only Bahrain in Operation Prosperity Guardian? I think that from the Saudi perspective, it's all about Yemen. The Saudis-- there's been a real turn in Saudi foreign policy when King Salman came in and MBS took the reins on day-to-day issues.
At the beginning, it was a very, very harsh rhetoric and policy toward Iran, threats toward Iran. We'll take the fight into Iran. This is a time when the Trump administration was implementing the, quote, unquote, "maximum pressure" policy. And the Saudis were big supporters of that.
After the attacks on the Saudi oil facilities in September of 2019, in which there was, for all intents and purposes, no concrete American response, Saudis basically, I think, rethought. And they've been emphasizing much more regional stability as a necessary component of their economic transformation and Vision 2030, as Adel mentioned.
And ending the Yemen conflict, or at least ending their direct participation in the Yemen conflict-- I don't want to say that if Saudi and the Houthis agree on something that the Yemen crisis is over; it's not. As Peter would tell us, very complicated domestic politics in Yemen driving a lot of this stuff, too.
But the Saudis are looking to maintain this truce with the Houthis and encourage the UN political process there. And they just weren't going to join Operation Prosperity Guardian. Now, in Operation Prosperity Guardian, those ships will call at Jeddah and other ports in Saudi Arabia when they need to. And that won't be a problem. But actual Saudi involvement in it is a non-starter because of their hopes for progress on Yemen. Thanks.
MELANI CAMMETT: Great, Dahlia.
DAHLIA SHEINDLIN: Sorry, I realized I wasn't on mute this whole time. I'm going to try to get at all of those queries about Israeli politics and such. In terms of whether the government could change, I mean, really all of us analysts who think we know do not know.
And the main reason is that we have 64 out of a 120-seat majority for the original government augmented by a war cabinet which added another party of 12 seats in addition. And for that reason, the current government is very stable. The war cabinet is not expected to last beyond the war. But nobody knows how the government is defining an end to the war.
And so the war could go on for however they define it, for ages. Once that war cabinet breaks up, there will still be the original coalition majority. So there's no clear path towards calling early elections. But there are many scenarios by which Israel might go into early elections.
There could be defectors within the Likud party, Netanyahu's party. Once the war cabinet breaks up, it would only take five of them to bring down the government. But right now, again, that would take several steps to get there.
So elections, I think there's more speculation than there is hard information. People who are against Netanyahu, which is an increasing number of the population since the war began, expect that there will be elections within the year. There are perfectly good scenarios in which his government might outlast a year.
If there are elections within the year, or let's just say any time soon, we can expect the results to look a lot like current surveys, which means that Netanyahu and the parties of the original coalition would not win. They've lost about a third of their support very consistently. I never cite one poll. I only cite ideally dozens of polls. And that's the average that we're looking at.
But nobody can count on that because if elections are further away, public dynamics may change. Of course, different parties will run, including probably new parties. Old parties might break up. It's very unstable.
Is there a possibility of a coalition reshuffle? Yes, we have that option by Israeli law. There is such a thing as constructive no confidence, by which the people who manage to pass that bill have to have an alternative government in mind. I suppose it is one scenario.
But the problem is that the parties that would go into a new coalition mostly are sworn not to go in with Netanyahu. And so it doesn't leave much room because according to their current coalitions, their current Knesset strength based on the elections of 2022, they don't have a majority if they're in the opposition, otherwise they would be the coalition.
So they either have to break their boycott of Likud, which means probably that Netanyahu would have to step aside, which anybody who knows Mr. Netanyahu the way we Israelis know him, because we've been living with him for 16 years practically, he's not going to do unless there's some circumstance that we haven't thought about.
So I would say all of these scenarios have some traction in reality. But there's no one scenario you can say is the most likely right now with one exception. And that is that I assume there will be elections before the end of 2026 when they are originally scheduled. And that's because very few Israeli elections ever-- sorry, very few Israeli Knesset terms ever last for a full four years.
Governments are reshuffled oftentimes without-- sometimes without elections. And in general, elections are held on an average of about 2.3 years, 2.6 years. So they will happen at some point, but we don't know when.
I think the bigger question is something that whoever asked these questions did raise, which is what would be the difference in policy? Because right now, there's no party that has significant traction in Israeli life, certainly in terms of coalition strength, that really openly supports a full, comprehensive political resolution based on two states with one sort of exception.
I'm putting aside the parties that are too small to matter-- Labor and Meretz. Those are what Israelis consider to be the Zionist left-wing parties. One of them is not going to cross the threshold, just like we saw in 2022. The other one is going to be too small to matter.
But there is the centrist party, Yesh Atid, which is currently the head of the opposition. That's still the party that came in second place in 2022. And I wouldn't exactly call the party leader, Yair Lapid, a great, big, courageous supporter of the two-state solution. But he is the only leader of a significant party in Israel that is willing to say the words.
And the last time he said the words was to a Saudi newspaper. And before that, the last time he said the words were in front of the UN General Assembly. So that's not nothing. But again, right now, he's losing half of his 2022 strength in elections, again, in all the polls, to the party to his right. And that's the party led by former chief of staff and current War Cabinet Member Benny Gantz, who refuses to say the words "two-state solution."
In fact, the last time he mentioned the issue, he said he was against it. But he might be, sort of, for two entities. He's not considered a bold political leader with a vision of that sort. So I think that my conclusion about Gantz, who is currently leading in all the polls, such that if there was a coalition reshuffle, he would definitely play a key role if there's any possibility of a new alternative coalition, if there are elections anytime soon, he is definitely the front-runner.
I think that what we see in him, given his personality, is that he is more open to the pragmatic and pressure and leverage possibilities of external actors. Netanyahu has a long-standing experience, I should say, in managing to get out of that kind of pressure and building his own insurance policies in foreign relations so as not to give in to international pressure, including from an actor that I think none of us have mentioned yet, and with good reason. And that's Europe. Did anybody notice that we hadn't even mentioned Europe? I bet you didn't even notice because Europe hasn't--
ADEL HAMAIZIA: [INAUDIBLE]
DAHLIA SHEINDLIN: --had a tremendous influence right now. But the point is I think Gantz, being, A, less experienced at foreign relations, B, also being somebody who takes more pragmatic considerations more seriously than Netanyahu, who is certainly influenced, as far as we know, by his personal, political, and legal difficulties.
So I think that, also because Gantz would probably build a coalition of parties who are in that more pragmatic realm, even if they are not even remotely ideologically left wing in any way. They're essentially right-wing parties. But I call them the security right, which means they're taking into account the kind of factors that us analysts take into account and not necessarily personal political considerations or ideology such as the far right religious ideology of Netanyahu's coalition partners at present.
So you might expect to see a slight change of policy if there was, in the future, a government led by a party like Benny Gantz's National Unity. But it would take still, I think, a perfect storm of the kinds of pressure from international actors and somebody in the Israeli political system who is willing to take the risk and have the vision to move ahead toward something like a two-state solution.
A word about the point about the PA. I think we should be more cautious than to refer to them as being in control in Ramallah. Israel is in control of the entire West Bank in different ways with different levers, just as Israel was in effective control, according to the International community of Gaza from its perimeters after 2005 and certainly after 2007.
So I think that the reason why the PA is so roundly despised right now has a lot to do with how they've governed and a great deal to do with how much control they don't have and yet continue to govern in ways that many people find self-serving. And essentially, contractor of the occupation, I think, is the most common approach that Palestinians take, whether they say that openly or not.
And then, yeah, the questions about whether the aim-- whether Israel is operating in Gaza based on considerations about gas reserves, I mean, it's not impossible. But frankly, I don't think that's the top consideration. The issue of the gas reserves has been on the Israeli agenda for about at least a decade.
So far it's still a matter of speculation about how to get that gas flowing and how to get the profits. And I think that the work is ongoing. But I doubt if that's the primary consideration.
And then the question about whether the real aim is to take the land, expel the Palestinians and resettle it, my real response is that the true prize for the current ideological members of the Israeli government-- by which I mean religious Zionism as a party, Jewish Power, which they're both basically Jewish supremacist parties, and add a big chunk of the Likud. You have to take that into account, leaving aside Israel's ultra-orthodox parties because they're not as single-mindedly committed to the same goal even if they basically support it.
But those ideological factors within Israeli politics, the big prize for them is what they call Judea and Samaria, the biblical lands of the West Bank. And I think what they really want is an excuse to do something like they're doing in Gaza in the West Bank in ways that justify something that Israel already has a strong basis to do, which is complete takeover.
Israel has already laid not only the physical groundwork in the form of its army presence, closed military zones, areas designated for land use for Israel, settlements, which is only one of those factors, but also the legal groundwork. Israel has-- I can't get into every single change over the years, frankly going back to 1967. But Israel has a perfectly strong legal and administrative basis for annexing the West Bank, having announced those intentions, as well, already from 2020 very openly.
So I think that the real prize for them is to have an excuse to do something like that in the West Bank, finish the job of complete Israeli open, permanent control. And Gaza is like a prize, except that I don't think it's a prize that everybody, even in the original government, is as committed to. I don't think Netanyahu would have made that such a priority, to actually reconquer all of Gaza and rebuild settlements.
The idea is certainly gaining traction. I've been surprised myself that it has as much support as it does in public opinion, somewhere between 25% and 40% support rebuilding settlements in Gaza, which surprised me. Really, as a pollster who's been doing this kind of work for 25 years, I didn't see it coming. But I think that it reflects the influence of these political figures.
So I think that they wouldn't say no to it if the opportunity was there. But I do think that the Israeli leadership, as much as they are very vocal about rejecting and frankly traducing the entire international community and international courts and international law, they are aware. I think they are aware. They are paying attention. And there is certainly some sort of concern, I think, that the Israeli government on some level is taking that into account, that all eyes are on Israel in terms of just how badly Israel's actions can be seen.
Obviously, we're not seeing-- it can be confusing because the ICJ ruling just came two weeks ago-- a couple of weeks ago. And now we see what's happening in [? Rafah, ?] which looks like it could get vastly worse. But I do think it's in the mix.
So I still have doubts that Israel is going to really prioritize complete reconquering annexation of Gaza, resettlement, and full expulsion. I also don't think it's really willing to risk that easily, completely sacrificing the peace agreement with Egypt and probably setting off complete rebellion and chaos in the West Bank. So I will leave it at that.
MELANI CAMMETT: Thank you. Turning over to Adel.
ADEL HAMAIZIA: Thanks, Melani. What I'm going to try and do is rush through Israel-Palestine economy, compliment Greg on GCC, touch on China, and maybe end on the question about plausible transition.
So in terms of Palestine, yes, Gaza, complete halt of economic activity. In terms of West Bank, mobility restrictions. The Israeli government made a decision to hold the PA's monthly clearance revenues. And this, of course, means that it disables paying wages, social transfers, et cetera.
Now, in terms of the Israeli economy, a diversified and relatively strong economy. Of course, tourism dropped off. We saw 100,000 work permits cancelled for Palestinians. Melani had alluded to the opportunity cost in terms of the reservists, hundreds of thousands, many of these in high-tech sectors, which Israel has garnered international prowess for.
We saw the offshore gas fields such as Tamar shot down. And that, of course, reopened later. There are estimates that the war is costing some $220 million a day. So for Q4, that was $19 billion. If we were to go on another few months and go up to, say, $50 billion, that'd be around 10% of Israel's GDP.
And if we're talking about 20% of Israeli workers on reserve duty that are displaced or away for other war-related reasons, this is, of course, a huge drain on the workforce. And this opportunity cost has spooked investors. We've seen some cessations and some outflows notably by leading Japanese companies.
There were some exceptions. We saw a double down by Intel, which made its largest-ever FDI at the end of 2023, during the war. Of course, it was planned before. And of course, I think you mentioned the central bank and, of course, Israel have to sell a record amount of bonds to fund its war.
I won't talk about the US, because we don't know where the costs are and what role that will play. But there are questions that remain around energy cooperation in the Eastern Med. Big-picture questions, I understand, Israelis are having internally are really, if you're going to have to further securitize this highly securitized state, what does that mean for taxes? What does that mean for investors, tech entrepreneurs?
Patriotism, I was just writing before, is extremely high in wartime. But we're unsure how that looks after PTSD, brain drain, brain gain. Israelis are one of the nationalities with the highest number of second passports. So I think thinking about that.
Also, beyond deterrence being pierced on October 7, I think that Israel's brand around the security brand in the corporate sector was also damaged. So what that looks like in terms of defense exports, cyber software, is a big question.
Finally, the ICG was mentioned by the previous speaker, Dahlia. So of course, we heard about Netherlands' stalwart ally of Israel. We saw a Dutch court rule against exports of parts of the F-35 due to likelihoods of risks of international law violations.
We saw Japanese companies cut ties with Elbit Systems, Israel's largest firm. On the GCC, I think Greg really covered it well in terms of the camps. You could further refine it a tad with Bahrain and the UAE as four normalizers, what my colleague at Rice calls pragmatic coexistence camp, Oman, Qatar, and Saudi. And then, of course, no ties at all, Kuwait.
So these positions were very much matched by the statements after October 7. We saw UAE and Bahrain condemning Hamas, while the other four countries emphasized occupation as the main driver. Saudi was really convening very much on the Arab and OIC side of things. And we saw that continue on.
UAE, up until December, was really leading at the UN, given its role at the UN Security Council, led by, of course, Lana Nusseibeh, the UAE envoy to UN of Palestinian origin. And of course, the Qataris have been at the heart of it with mediation through its channels into Hamas and aid.
I wanted to touch on a poll just very briefly-- a couple of numbers. And I won't dwell on these. I know Peter had shared some numbers, as well. But there were 8,000 respondents in an Arab Center poll that just came out, I think, a week or so ago. So they found that 92% of those polled in the region stood with the Palestinians. 69% stood with the people of Gaza and Hamas. 67% viewed October 7 as a legitimate military operation.
US military and political support was considered the most important factor in continuation of the war. And perhaps the most interesting, including for Professor Gregory, is that opposition to Saudi normalization went from 38% in 2022 to 68% opposition at the end of 2023, early 2024, as done December/Jan.
Now, on the GCC positions, Greg touched very much on the Saudi side. There were some splits in terms of within the OIC and Arab League on how far push back could be. Do we go back to an oil embargo? What's the role of sovereign wealth funds here? And so on and so forth. But we did see last week-- or was it-- it was the week before-- a very strong Saudi statement affirming the need for a Palestinian state on 67 borders, East Jerusalem as its capital.
So back to the Arab Peace Initiative. I was actually at a meeting recently where one idea was put forward by a colleague of an API 2.0 in the near-distant future, but including the OIC countries, perhaps less Iran. Of course, there's moral hazard around any investment or reconstruction discourse until we see an actual-- a settlement of sorts.
One thing from my recent trip to Saudi, I was speaking to somebody, a senior at MOFA. And he drummed home to me that where any-- and I emphasize any of the capitals-- Western or US human rights organization visit him to speak about human rights in the Kingdom and the care for life, they will be shown the door with a "thank you very much," which I thought was very interesting and something I've been hearing across the region, which doesn't bode well for some of the poorer developing countries which may bear the brunt of repression in the future.
Anyhow, on UAE, spoke of the drafting of resolutions. UAE condemned Hamas at the beginning, while also calling for restraint. We suspect that the UAE wants to see Hamas defeated, but of course not at the expense of the Palestinians. They prescribe Hamas a terrorist organization.
We had Dr. Gargash, the former foreign minister, now presidential advisor, confirmed that the Abraham Accords would not be rolled back and that any strategic decision is long term. And this was echoed at the [INAUDIBLE] dialogue. And one thing to think about is throughout the UAE's two-year stint at the UN, they faced Houthi missiles in early 2022, Greg spoke about Buqayq, the Russia-Ukraine fallout, and then October 7.
So their tenure was mired with conflict. And it's worth noting that it said that Israeli officials offered and provided intelligence to the UAE in the aftermath of the Houthi attacks on Abu Dhabi, which paled in comparison to the US's delayed non-response, which really annoyed those in Abu Dhabi.
Now, in terms of the Abrahamic dividend, it was meant to bolster relations with the US, bring more [INAUDIBLE]. We saw UAE-Israel trade figures got twentyfold, from some 100 million-odd dollars to 2.3 billion last year. It offered new access to technology.
We saw FDI from Mubadala into VC funds, a billion-dollar stake in the gas offshore, which was mentioned earlier. We've seen uni collaboration in the AI space. And in the first eight months just of last year, we saw almost a quarter million travelers from Israel head to Dubai, which was 70% higher than the previous year.
So for UAE-Morocco, we've seen tangible economic results. Having said that, things have gone quieter recently. One thing from a conversation I had with some UAE decision makers just last month was that they felt they had been-- and this was the term-- "de-Arabized" by the region for their Israeli relationship. They said if it wasn't for these relations, we wouldn't be getting the desal, the field hospitals, the lorries and trucks that are going through easier compared to others. And of course, that still lacks actual political leverage, which remains absent alongside the US, it seems.
We had Dr. Al Nuaimi, who's head of the UAE Foreign Affairs Committee, who spoke of a roadmap post [INAUDIBLE] with an international arrangement and safeguards prior to funding. And generally what we're hearing from the GCC-- and this started with the finance minister of Saudi at Davos last year saying gone are the years of flows, flows, money, money. It has to be investment with returns with, of course, humanitarian aid where necessary.
In terms of individuals-- and maybe, I don't know if we have time later-- but there's talk of Mohammed Dahlan making a comeback, a former advisor to the UAE.
MELANI CAMMETT: Sorry to cut you off. We only have-- sorry, we only have about five minutes left. So if you could wrap up, and then I'll turn it over to Peter. Sorry.
ADEL HAMAIZIA: Oh, should I wrap up?
MELANI CAMMETT: Yes, please. I got to turn it over to Peter.
ADEL HAMAIZIA: Oh, sorry. So I'll skip the China bit. All I'll say is in terms of roadmap ahead and to play on Valentine's Day and marriage, this isn't an endorsement. This isn't my view. But thinking about palatability from voices I've heard in the region, if we think about something old, something new, something borrowed, something blue, something old would be PA auspices, octogenarians in fact, rebranded, reformed, reconfigured.
Something new would be some Palestinian technocrats, including from the diaspora, GCC, USA, Europe. Think the [INAUDIBLE] people. Think Marwan Barghouti, a release perhaps. And then something borrowed, some sort of peacekeeping force, governance force led by Abraham Accords countries-- Egypt, Jordan-- a security pact, of course, for Saudi in the future, broaching Korea treaty level but not quite there. I'm sure Greg can speak in the future about nuclear and additional [INAUDIBLE].
And this force would work, of course, on tunnels, demilitarization, disarmament. Essentially, we're talking about a protectorate, in other words, led by Abraham Accords. Will this be palatable for Palestinians? Open question.
Something blue, this would be UNRRA, a Palestinian fixture that needs to be maintained in most sane people's opinions, even with heightened auditing and monitoring just to satisfy Israel, whether right or wrong. And then finally I'll add something green, which is an EU-US-GCC fund which is cascaded across the various development funds in the region and the role of sovereign wealth fund opportunities for tenders on the Mediterranean Coast.
And this thinking about this fifty shades of state and public relations, Bantustan through Costa Rica, in terms of demilitarized forms of state, have been mooted. And I'm sure this is something we can speak about in the future. I'll skip the China piece. But I had a few things to say about that, but maybe on another occasion.
MELANI CAMMETT: Sorry, we're running out of time. So I'm going to turn it over to Peter and also call your attention to some questions I think you've seen in the webinar Q&A about motivations. There have been a couple questions that suggest that Hamas motivations really boil down to anti-Semitism rather than other issues, so if you could address those. And I know Dahlia has to hop off right at 11:30. So if we lose you, thank you so much for joining us and sharing your insights.
PETER KRAUSE: All right, batting cleanup in an academic panel. All right, here in 90 seconds, let's see what I can do. Number one, Daniel Sobelman, former fellow at Harvard Kennedy School, great on Israel-Hezbollah, rules of the game, and escalation dynamics. So I'd strongly recommend him.
[? Riyadh, ?] to your question on transition for the PA, I'll say that, number one, if there's going to be any real transition, I think there have to be elections. We have Mahmoud Abbas, who's in his late 80s. We have a generational change that needs to happen. And there needs to be greater legitimacy for the PA.
I mean, going to Dahlia's point, if you look at public approval and support for the PA and for Abbas, it's well under water, well under 20% in most polls. So any type of transition for the PA, to me, has to have a new legitimacy mandate for the Palestinian people before we even get to something about operations in Gaza.
To Robert's question that Melani mentioned on Hamas motivations, yes, I would say that Al-Aqsa and the issues there are kind of the proximate cause and maybe motivation for the October 7 attacks. But absolutely, Hamas's aim ultimately to potentially end Israel or recapture all of Palestine is what drives the organization. So certainly, it's not simply Israel enforcing the status quo would make all of this go away or prevent violence. I'm just talking about one of the proximate key causes of the actual attacks we saw on October 7.
Question I had quickly for Greg, though we're not going to have a chance to answer-- maybe we'll talk offline, Greg-- I'm fascinated by how you said that nothing changed after October 7. But I was so surprised because you did seem to say that Saudi foreign policy vis-á-vis normalization changed.
Whereas, actually, I wonder if that's going to change, too, because when you look at the things the Saudis demanded, as you mentioned, it was almost all US concessions, right-- security guarantees, nuclear program, et cetera, and the Palestinians, kind of this fig leaf little thing to the side, a la maybe with the Egyptian deal in the '70s or others. Yes, right now it's tough for the Saudis to make that kind of deal.
But I really wonder if in a year or two, if things "settle down," quote, unquote, if the Saudis won't still look at their own state interests and do something like that and kind of sell out the Palestinians a bit. Maybe not. Maybe things have changed. But that seems to me the one thing you're saying did change, whereas I'm skeptical of whether, from Saudi interests, it will. So maybe we'll talk offline about that. But thank you so much, Melani and The Weatherhead Center, for having me.
MELANI CAMMETT: Wow, you are incredibly disciplined. So we will actually end right on time. And I cannot thank enough our four esteemed panelists who shared really deep insights with us from their deep knowledge of the region and of all these various dimensions of the ongoing Israel-Palestine conflict, if we can call it that.
So thank you so much. I really appreciate your joining us. And thanks to all the participants. Please join us for future episodes in our ongoing webinar series on Israel-Palestine. Thank you.
ADEL HAMAIZIA: Thank you.
DAHLIA SHEINDLIN: Thank you. Thank you for hosting us.
ADEL HAMAIZIA: Thank you.