In 1973, during Yom Kippur, Israel found itself under siege from countries including Syria, Egypt, Morocco, Iraq, Algeria, Kuwait, and Saudi Arabia. This conflict led to the first oil crisis, causing oil prices to triple in a short span, marking a significant shift in Western economic growth post-World War II.
The Yom Kippur War largely involved tank warfare. However, recent conflicts in Ukraine reveal that tanks might be considered weapons of a bygone era, easily neutralized by drones. Today’s warfare is laid bare for all to witness through social media, a platform that has also been weaponized by modern terrorist organizations, as evidenced by ISIS and the heart-wrenching attacks by Hamas on Israeli civilians.
The conflict in Ukraine also underscores that the cost of warfare has decreased rapidly. Israel’s technical superiority doesn’t necessarily guarantee stability. The pressing question remains: could recent attacks serve as another turning point for the global economy?
There have been comparisons to the unexpected attacks of 9/11 and Pearl Harbor. Israel’s renowned intelligence services were caught off-guard, and even the Americans, who seemed to have superior intelligence in Ukraine, were taken by surprise.
Complacency
Israel’s defense might have been complacent due to its Iron Dome. It’s likely they didn’t anticipate Hamas› audacity to penetrate their defenses. Underestimating the opponent is perilous, and being caught unaware makes a stern response imperative, much like post-9/11 and after Pearl Harbor. The response is also fueled by the necessity to salvage national pride.
Given the high death toll, Israel’s forceful reaction is not only expected but mandatory. No Israeli government can afford to stand still after such an onslaught. Netanyahu has hinted at a protracted war, targeting the annihilation of Hamas. Unfortunately, a strict approach might be the only deterrent against organizations like Hamas, as negotiations seem futile.
Israel’s retaliation may span several weeks, or even months. During conflicts in Gaza, condemnation from the Arab world is inevitable. Furthermore, Israel will likely withdraw from any concessions made to the Palestinians in previous peace talks with Saudi Arabia.
The fallout of the attacks is not limited to Israel’s borders. There’s increasing polarization worldwide. Israelis have been targeted in Egypt, skirmishes between Jews and Arabs have erupted in American cities, and synagoges and Jewish schools in Europe are heightening their security. Meanwhile, Hamas› attacks are being celebrated by its supporters worldwide.
Iran
Iran’s role in the attacks cannot be overlooked. It’s plausible that Israel might not only confront Hamas and Hezbollah but might also target Iran. An unintended consequence might be a disruption in oil exports from the Persian Gulf. Whether Saudi Arabia will increase its oil production in such a scenario remains uncertain.
Amid these events, there’s speculation on the outcome of the U.S. elections. With the tensions escalating, the Democrats might bear the brunt, as Biden’s approach to Iran is perceived as lenient. In a closely contested election between Trump and Biden, this could be the tipping point.
Han Dieperink is the chief investment strategist at Auréus Vermogensbeheer. Earlier in his career, he served as the chief investment officer of Rabobank and Schretlen & Co.