Global geopolitical tensions wield a profound influence, casting a formidable shadow upon public perceptions of the economic landscape. The recent surge of Israeli aggression against Gaza, marking a tragic toll of over 13,000 Palestinian lives, including the heartbreaking loss of more than 5,500 children by the third week of November, unfurls as the latest somber chapter in a protracted cycle of violence tracing its roots back to the establishment of Israel in 1948, emerging as a Zionist colonial settler state.
You can also read: Inside the Day One of the Israel-Hamas Truce
Navigating a rational discourse on the Palestinian predicament has become an increasingly formidable endeavor within the Western sphere. Any expression of solidarity with the Palestinian cause or critique of the Israeli government often finds itself entangled in the web of accusations labeled as “antisemitism.”
Western Predilection for Sidestepping History
The unwavering backing of the colonial settler state by the United States and its European allies, juxtaposed against the persistent resistance of the Palestinian populace, paints a disheartening tableau with no discernible pathway towards resolving the unrelenting violence plaguing occupied Palestine.
The Western liking for sidelining historical context has served as the catalyst for the present conflict.
Even when the UN secretary-general rightly spotlighted the historical underpinnings of the October 7 attack, the Israeli Ambassador to the UN swiftly clamored for his immediate dismissal, laying bare the intricate challenges in nurturing a nuanced comprehension of the situation.
Political Figures in Alliance with Oppressor
The United States and its European allies are not mere bystanders but active architects of the occupation of Palestine. The ongoing Israeli onslaught implicates prominent figures such as US President Biden, Sunak in the UK, Macron in France, Schotz in Germany, Meloni in Italy, and Trudeau in Canada as complicit actors in the orchestrated mass murder by Netanyahu.
President Biden’s steadfast endorsement of Israel, stretching back to his pronouncement in 1986, persists in his current capacity. This upholds an enduring commitment spanning from President Harry Truman to the present, conspicuously underscored in the ongoing phase of Israeli actions against the Palestinians in Gaza. This alliance of political figures with the oppressor perpetuates a distressing chapter in history, demanding scrutiny and a resolute call for justice to bring about a climax of change.
The recent disturbing incidents of racist and Islamophobic rhetoric in public, as exemplified by Stuart Seldowitz, a former deputy director of the US State Department’s Office of Israel and Palestinian Affairs (1999-2003), depict a troubling tableau. These incidents highlight those influencing US government policies toward Arab and Muslim countries.
Inflation Concerns and Escalating Debt
The ongoing Israel-Hamas war carries the potential for immediate and long-term economic repercussions. Drawing parallels with the Russia-Ukraine conflict, it becomes evident that such conflicts can disrupt the intricate interdependence shaping global economic relations, regardless of geopolitical implications. Many economists assert that this war has the capacity to disrupt the global economy.
Numerous central bank chiefs in the West express concern that inflation will be their predominant challenge for the next two years. The prevailing uncertainty surrounding financial markets and the global financial system, coupled with ongoing inflation, rising interest rates, and escalating government debt, suggests that the intensification of the Israel-Hamas war could trigger a significant economic crisis. Such conflicts typically exert a substantial impact on stock markets, exchange rates, and commodity prices.
Potential Trillion-dollar Hit to Global Output
According to Goldman Sachs, the Israel-Hamas war is anticipated to have a significant economic impact. Assessing the longer-term economic consequences is complex, and the potential negative effects on investor behavior will depend on the war’s evolution in the coming weeks or months. This evaluation takes place amid the ongoing Russia-Ukraine conflict, which has already heightened inflationary pressures.
Economists have analyzed the potential impact of the war on the global economy across three alternative scenarios. Regardless of the specific magnitude, all scenarios point in the same direction—expectations of more expensive oil, higher inflation, and slower growth. The estimation suggests that oil prices could surge to $150.00 a barrel, leading to a global growth reduction to 1.7%, resulting in a recession that could subtract approximately $1 trillion from global output.
Given that oil is a crucial and volatile commodity in the global market, characterized by both scarcity and essentiality with inelastic demand, any threat to oil supply due to the Israel-Hamas war could trigger an “oil price shock.” Such a shock would likely exacerbate food price inflation, already elevated in many developing countries, including Bangladesh. If the conflict escalates, rising food and energy prices could extend beyond developing nations, contributing to heightened food insecurity worldwide.
Global Concerns over Consumer Confidence and Economic Stability
Since Operation Al-Aqsa Flood on October 7, oil prices have been on a rollercoaster. The World Bank’s recent update warns that if the Israel-Hamas conflict intensifies, crude oil prices might skyrocket past $150.00 a barrel. This isn’t new; history shows that Middle East conflicts, like the 1973-74 oil embargo and the 1990-91 Gulf War, consistently jack up oil prices. Since this war started, Brent crude oil and European natural gas prices have spiked around 9% and 34%, respectively.
As if that’s not enough, rising interest rates, aimed at taming inflation, are squeezing businesses and households globally. Businesses are mulling over layoffs due to soaring operational costs, while households are grappling with surging grocery and energy bills, denting consumer confidence. Wars hit confidence hard, as seen with the Eurozone post-Russia-Ukraine conflict. The Israel-Hamas war is ratcheting up uncertainty, impacting not just the region but global consumer confidence.
Ceasefire Deal Faces Obstacles
On November 22, news of a ceasefire deal and hostage swap brokered by Qatar brought a brief sigh of relief. Yet, Israeli PM Netanyahu threw a curveball, vowing to persist until Hamas is wiped out. Despite the initial announcement, signs are cropping up that the ceasefire deal is hitting roadblocks and possibly stalling.
The toll of Israel’s aggression on Gaza is staggering—houses, infrastructure, education, health facilities, all obliterated. About 13,000 Palestinians, including 5,500 children, paid the ultimate price. Israel’s relentless assault, triggered by Hamas on October 7, wreaked unprecedented havoc.
On November 13, Israel’s agriculture minister chillingly dubbed it “Gaza Nakba 2023,” hinting at planned genocide and a descent into an abyss. By the ceasefire, 51.4% of Gaza’s housing units were razed—a level of devastation unseen before. The 2014 ground operation cost $6 billion; this prolonged and more destructive war is poised to deepen the economic wound, plunging hundreds of thousands of Palestinians into poverty.
As per report, Israel’s assault on Gaza has inflicted a hefty toll on the Israeli economy, nearing the mark of US$8 billion by mid-November, coupled with an additional daily loss of US$260 million. The ongoing conflict’s daily expense accounts for US$269 million, constituting approximately 10% of Israel’s GDP.
Moody’s, the credit rating agency, is contemplating a potential downgrade of the Israeli government’s A1 credit rating due to the economic fallout from the conflict.
A detailed report published on November 6 delved into the far-reaching consequences of Israel’s aggressive campaign in Gaza. The aftermath has reverberated across businesses, employment, consumer finance, and even the Israeli government.
The Israeli army’s call for an additional 360,000 reservists, equivalent to about 8 percent of the nation’s workforce, combined with mandatory military service for Israelis aged 18 to 40, has led to a significant workforce reallocation toward the front lines.