Can Arab countries absorb a regional conflict’s economic shocks if Israel-Hamas war in Gaza expands?

Palestinian civilians in Gaza have seen their homes devastated, main, since the Israel-Hamas conflict began on Oct. 7, which now threatens to drag troubled Arab states including Syria, bottom left, Lebanon, bottom, and Iraq, right, into a wider regional war. (AFP)
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Updated 24 October 2023
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Can Arab countries absorb a regional conflict’s economic shocks if Israel-Hamas war in Gaza expands?

  • Bulk of impact expected to be felt by economies already grappling with crises, notably Syria, Lebanon and Iraq
  • Geographical distance from the war zone potentially offers room for maneuver for some Arab countries

LONDON: Western media may be warning of “drastic implications” for the global economy should the conflict in Gaza spill over into neighboring countries, but Middle East analysts predict that the economic brunt of a wider conflagration will be borne by crisis-ridden regional countries.

A number of developments are being seen as an omen of things to come. From Lebanon, Hezbollah and allied Palestinian factions have been trading daily cross-border fire with Israel. A US Navy ship has intercepted missiles launched by the Houthi militia in Yemen. Two American bases in Syria have come under fire. And in Iraq, drones and rockets have fired at US forces.

Several countries, including Saudi Arabia, Kuwait, the US, the UK, Germany, France and Canada, have encouraged their nationals to avoid travel to Lebanon or leave while flights remain available.

Forecasting a 60-percent chance of “prolonged conflict” and the potential for the “increasing involvement” of regional actors, including Iran-backed militias, Ali Metwally, a London-based expert, says the economies of Iraq, Lebanon and Syria are most at risk.

“If Hezbollah were to enter into a conflict with Israel, Lebanon would likely suffer significant economic consequences due to its close association with the group and the potential for direct military engagement,” he told Arab News.




 Palestinian girl carries a blankets as she walks past the site of a deadly explosion at al-Ahli hospital, in Gaza City. (AFP)

Lebanon’s tourism and hospitality sectors, major contributors to its service-oriented economy, would suffer the most while its supply chains would face disruption from “any damage to or closure of the port of Beirut,” causing “shortages of essential goods” and “fueling the current hyperinflation.”

Given the financial collapse of 2019 and the resulting paralysis suffered by Lebanese banks, Metwally speculated that any further shocks would only serve to scare off the remaining depositors and investors.

Similarly, Syria, which has been a proxy battleground since the onset of civil war in 2011, has endured high input costs and inflation rates, fuel and medicine shortages, a collapsed currency, devastated infrastructure, and water scarcity for the better part of a decade.

This, according to the UN, has left more than 90 percent of the population below the poverty line and 15 million Syrians in need of humanitarian assistance. Ongoing EU and US sanctions — which also limit the capacity for even those governments that have restored diplomatic ties with Syria to invest in its reconstruction — have only served to exacerbate this.

Were a wider conflict to be introduced into this mix, Metwally said, vital aid flows may be cut off because of a “possibility that the international community would redirect aid efforts from rebuilding and stabilizing Syria to addressing the new conflict, leaving the country with fewer resources for post-war reconstruction.”

Metwally’s concerns are echoed by Ammar Abdulhamid, a US-based political analyst, who said that a wider war “means that the two countries — Syria and Lebanon — will become battlegrounds, and whatever leadership exists in both countries will be decimated. The two states will collapse as such, not just their economies.”




From Lebanon, Hezbollah and allied Palestinian factions have been trading daily cross-border fire with Israel. (AFP)

Noting the likelihood of various Iraqi militias and groups taking sides in any ensuing crisis, Metwally pointed out that the country has no shortage of internal strife, with “sectarian tensions” a continuing concern.

Since “Iraq is heavily reliant on the oil sector in revenue generation and employment, higher security concerns could lead to attacks on oil infrastructure or hinder the movement of oil through critical shipping routes, lowering Iraq’s oil revenue and widening the fiscal deficit of the country after a decent period of surplus.”

Considering all it has been through, Iraq has found a degree of stability unprecedented in the last two decades, and the economy has been gradually recovering since 2021, according to a World Bank report.

INNUMBERS

• $270.36bn Iraq’s GDP (2022).

• $22.4bn Syria’s GDP (2019).

• $20.48bn Lebanon’s GDP (2021).

Source: Statista

In 2022, it earned approximately $115 billion in oil revenues, thanks to a rise in energy prices in the wake of Russia’s war on Ukraine and consequent Western sanctions on Russia. Buoyed by this oil bonanza, the Iraqi government allocated $153 billion for the 2023 budget.

While Abdulhamid thinks Iraq’s geographical distance from Palestine potentially offers it “some room to maneuver,” Metwally remains concerned that “any diversion” of financial resources to address security issues could strain the government’s budget, reducing its supply of essential public services.

Abdulhamid acknowledged the budgetary buffer but said the Islamic Revolutionary Guard Corps, “acting through its proxies and loyalist militias, will siphon most of that and will try to use Iraqi wealth as its war chest. As such, should the war last too long (several months), the potential for intercommunal and inter-regional conflict will increase as Iraq’s economy implodes. Iran will follow suit.”




The economies of Iraq, Lebanon and Syria are most at risk, experts say. (AFP)

Should this happen, both said some effect would be felt by even the most robust regional economies, including the Gulf countries currently benefiting from an oil price windfall. Metwally said while the risk was currently low, were oil shipments in the Arabian Gulf and Red Sea to be disrupted, oil revenues of these countries could take a hit.

Abdulhamid said the fate of other countries in the region, especially the Gulf states, will depend largely on “how much the US is willing to help them secure their borders.” He added: “There are certain parties, especially Iran and its proxies, but also Russia and China, who stand to benefit from a prolonged bloody conflict in Gaza because they can score points against Israel, the US, and Europe.”

While the analysts may all agree on who will bear the brunt of an economic hit, there is less consensus on the prospects of the conflict widening. Abdulhamid is convinced that the fighting will be contained, stressing that “everyone has a lot to lose, but there is a limited possibility of the parties blundering into it.”

Likewise, Syrian-Canadian analyst Camille Alex Otrakji does not believe that war is inevitable despite the uptick in belligerent rhetoric. “It is highly probable that Israel, the US, Iran and Hezbollah are constantly fine-tuning and re-evaluating a broad spectrum of contingency plans, encompassing both defensive and proactive offensive strategies,” he said.

“However, the extent to which each party is prepared to escalate remains a puzzle to international observers.




According to the UN,  more than 90 percent of the population lives below the poverty line and 15 million Syrians are in need of humanitarian assistance. (AFP)

“Expressions of confidence and resolve are substantial on all fronts, coupled with claims of unquestionable monopoly on moral clarity. Yet, all the players are constantly issuing warnings to the other side: ‘If you choose to enter this conflict, be prepared to bear an immeasurable cost,’ a sentiment often stemming from a shared desire to avoid further proliferation of the conflict.”

Nevertheless, Otrakji offered what he described as a sample of “the disturbing scenarios circulating so far,” wherein any attempt by Israel to capture Gaza would result in Hezbollah targeting Israeli cities with tens of thousands of high-precision missiles, which in turn would lead to Israel and the US aiming to destroy Damascus — creating a power vacuum in Syria.

“Should the US enter the conflict, Iran’s allied militias, spanning from Iraq to Yemen, could launch attacks on US bases throughout the Middle East,” he said. Summing up, Otrakji said: “Whenever Israeli Prime Minister Netanyahu or one of Washington’s prominent strategic thinkers heralds the dawn of ‘the new Middle East,’ the old Middle East resurges with a resounding reminder of its enduring complexities.”


WHO urges ‘urgent protection’ of key Gaza hospitals

Updated 5 sec ago
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WHO urges ‘urgent protection’ of key Gaza hospitals

  • The WHO said both hospitals are already operating “above their capacity,” with patients suffering life-threatening injuries arriving amid a “dire shortage of essential medicines and medical supplies”

GENEVA: The World Health Organization on Thursday called for the “urgent protection” of two of the last hospitals remaining in the Gaza Strip, warning that the territory’s health system is “collapsing.”
The WHO said the Nasser Medical Complex and Al-Amal Hospital risk becoming “non-functional” because of restrictions on aid and access routes, further damaging a health system already battered by months of war.
“There are already no hospitals functioning in the north of Gaza. Nasser and Amal are the last two functioning public hospitals in Khan Younis, where currently most of the population is living,” the UN agency said in a statement on X.
“Without them, people will lose access to critical health services,” it said.
The WHO added that closure of the two hospitals would eliminate 490 beds and reduce Gaza’s hospital capacity to less than 1,400 beds — 40 percent below pre-war levels — for a population of two million people.
The WHO said the hospitals have not been told to evacuate but lie within or just outside an Israeli-declared evacuation zone announced on June 2.
Israeli authorities have told Gaza’s health ministry that access routes to the two hospitals will be blocked, the WHO said.
As a result, it will be “difficult, if not impossible” for medical staff and new patients to reach them, it said.
“If the situation further deteriorates, both hospitals are at high risk of becoming non-functional, due to movement restrictions, insecurity, and the inability of WHO and partners to resupply or transfer patients,” the organization said.
The WHO said both hospitals are already operating “above their capacity,” with patients suffering life-threatening injuries arriving amid a “dire shortage of essential medicines and medical supplies.”
It warned the closure of Nasser and Al-Amal would have dire consequences for patients in need of surgical care, intensive care, blood bank and transfusion services, cancer care and dialysis.
After nearly 20 months of war triggered by Hamas’s October 7, 2023 attack on Israel, Gaza is mired in one of the world’s gravest humanitarian crises, with civilians enduring relentless bombardment, mass displacement and severe hunger.
 

 


Gaza aid logistics company funded by Chicago private equity firm 

Palestinian boys carry pots as the queue at a hot meal distribution point in Nuseirat in the central Gaza Strip, June 4, 2025.
Updated 17 min 32 sec ago
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Gaza aid logistics company funded by Chicago private equity firm 

  • Israel blocked almost all aid into Gaza for 11 weeks until May 19, and has since only allowed limited deliveries in, mostly managed by the new GHF operation
  • SRS is run by a former CIA official named Phil Reilly, but its ownership has not previously been disclosed

WASHINGTON: A Chicago-based private equity firm - controlled by a member of the family that founded American publishing company Rand McNally - has an "economic interest" in the logistics company involved in a controversial new aid distribution operation in Gaza.
McNally Capital, founded in 2008 by Ward McNally, helped "support the establishment" of Safe Reach Solutions, a McNally Capital spokesperson told Reuters. SRS is a for-profit company established in Wyoming in November, state incorporation records show. It is in the spotlight for its involvement with the U.S.- and Israeli-backed Gaza Humanitarian Foundation, which last week started distributing aid in the war-torn Palestinian enclave. The foundation paused work on Wednesday after a series of deadly shootings close to its operations and has suffered from the departure of senior personnel.

HIGHLIGHTS

• McNally Capital has economic interest in Safe Reach Solutions

• GHF aid distribution halted after deadly shootings near operations

• U.N. and aid groups refuse to work with GHF, citing lack of neutrality

"McNally Capital has provided administrative advice to SRS and worked in collaboration with multiple parties to enable SRS to carry out its mission," the spokesperson said. "While McNally Capital has an economic interest in SRS, the firm does not actively manage SRS or have a day-to-day operating role."
SRS is run by a former CIA official named Phil Reilly, but its ownership has not previously been disclosed. Reuters has not been able to establish who funds the newly created foundation.
The spokesperson did not provide details of the scale of the investment in SRS by McNally Capital, which says it has $380 million under management.
McNally Capital founder Ward McNally is the great great great grandson of the co-founder of Rand McNally. The McNally family sold the publishing company in 1997.
A spokesperson for SRS confirmed it worked with the foundation, also known as GHF, but did not answer specific questions about ownership.
GHF, which resumed aid distribution on Thursday, did not respond to a request for comment
While Israel and the United States have both said they don't finance the operation, they have pushed the United Nations and international aid groups to work with it, arguing that aid distributed by a long-established U.N. aid network was diverted to Hamas. Hamas has denied that.
Israel blocked almost all aid into Gaza for 11 weeks until May 19, and has since only allowed limited deliveries in, mostly managed by the new GHF operation. This week GHF pressed Israel to boost civilian safety beyond the perimeter of its distribution sites after Gazan health officials said at least 27 Palestinians were killed and dozens wounded by Israeli fire near one of the food distribution sites on Tuesday, the third consecutive day of chaos and bloodshed to blight the aid operation.
The Israeli military said its forces on Tuesday had opened fire on a group of people they viewed as a threat after they left a designated access route near the distribution center in Rafah. It said it was investigating what had happened.
The U.N and most other aid groups have refused to work with GHF because they say it is not neutral and that the distribution model militarizes aid and forces displacement.
The SRS spokesperson said in a statement that under Reilly's leadership, "SRS brings together a multidisciplinary team of experts in security, supply chain management, and humanitarian affairs."
McNally Capital has investments in defense contracting companies. Among the firms it acquired was Orbis Operations, a firm that specializes in hiring former CIA officers. Orbis did not return calls for comment. Reilly used to work for Orbis.

 


Without meat, families in Gaza struggle to celebrate Islam’s Eid Al-Adha holiday

Updated 06 June 2025
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Without meat, families in Gaza struggle to celebrate Islam’s Eid Al-Adha holiday

  • The UN says 96 percent of the livestock and 99 percent of the poultry are dead

MUWASI, Gaza Strip: With the Gaza Strip devastated by war and siege, Palestinians struggled Thursday to celebrate one of the most important Islamic holidays.
To mark Eid Al-Adha – Arabic for the Festival of Sacrifice — Muslims traditionally slaughter a sheep or cow and give away part of the meat to the poor as an act of charity. Then they have a big family meal with sweets. Children get gifts of new clothes.
But no fresh meat has entered Gaza for three months. Israel has blocked shipments of food and other aid to pressure Hamas to release hostages taken in the Oct. 7, 2023, attack that started the war. And nearly all the territory’s homegrown sheep, cattle and goats are dead after 20 months of Israeli bombardment and ground offensives.
Some of the little livestock left was on sale at a makeshift pen set up in the vast tent camp of Muwasi in the southern part of Gaza’s Mediterranean coast.
But no one could afford to buy. A few people came to look at the sheep and goats, along with a cow and a camel. Some kids laughed watching the animals and called out the prayers connected to the holiday.
“I can’t even buy bread. No meat, no vegetables,” said Abdel Rahman Madi. “The prices are astronomical.”
The Eid commemorates the test of faith of the Prophet Ibrahim – Abraham in the Bible – and his willingness to sacrifice his son as an act of submission to God. The day is usually one of joy for children – and a day when businesses boom a bit as people buy up food and gifts.
But prices for everything have soared amid the blockade, which was only slightly eased two weeks ago. Meat and most fresh fruits and vegetables disappeared from the markets weeks ago.
At a street market in the nearby city of Khan Younis, some stalls had stuffed sheep toys and other holiday knickknacks and old clothes. But most people left without buying any gifts after seeing the prices.
“Before, there was an Eid atmosphere, the children were happy … Now with the blockade, there’s no flour, no clothes, no joy,” said Hala Abu Nqeira, a woman looking through the market. “We just go to find flour for our children. We go out every day looking for flour at a reasonable price, but we find it at unbelievable prices.”
Israel’s campaign against Hamas has almost entirely destroyed Gaza’s ability to feed itself. The UN says 96 percent of the livestock and 99 percent of the poultry are dead. More than 95 percent of Gaza’s prewar cropland is unusable, either too damaged or inaccessible inside Israeli military zones, according to a land survey published this week by the UN’s Food and Agriculture Organization.
Israel barred all food and other supplies from entering Gaza for more than two months. It eased the blockade two weeks ago to allow a trickle of aid trucks in for the UN to distribute. The trucks have brought in some food items, mainly flour. But the UN says it has struggled to delivery much of the incoming aid because of looting or Israeli military restrictions.
Almost the entire population of more than 2 million people have been driven from their homes, and most have had to move multiple times to escape Israeli offensives.
Rasha Abu Souleyma said she recently slipped back to her home in Rafah — from which her family had fled to take refuge in Khan Younis — to find some possessions she’d left behind.
She came back with some clothes, pink plastic sunglasses and bracelets that she gave to her two daughters as Eid gifts.
“I can’t buy them clothes or anything,” the 38-year-old said. “I used to bring meat in Eid so they would be happy, but now we can’t bring meat, and I can’t even feed the girls with bread.”
Near her, a group of children played on makeshift swings made of knotted and looped ropes.
Karima Nejelli, a displaced woman from Rafah, pointed out that people in Gaza had now marked both Eid Al-Adha and the other main Islamic holiday, Eid Al-Fitr, two times each under the war. “During these four Eids, we as Palestinians did not see any kind of joy, no sacrifice, no cookies, no buying Eid clothes or anything.”
 

 


Media groups urge Israel to allow Gaza access for foreign journalists

Updated 06 June 2025
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Media groups urge Israel to allow Gaza access for foreign journalists

  • An open letter shared by the Committee to Protect Journalists and Reporters Without Borders called the restrictions “a situation that is without precedent in modern warfare.”

NEW YORK: More than 130 news outlets and press freedom groups called Thursday for Israel to immediately lift a near-total ban on international media entering Gaza, while calling for greater protections for Palestinian journalists in the territory.
Israel has blocked most foreign correspondents from independently accessing Gaza since it began its war there following the unprecedented October 7, 2023 attack by militant group Hamas.
An open letter shared by the Committee to Protect Journalists and Reporters Without Borders called the restrictions “a situation that is without precedent in modern warfare.”
Signees included AFP’s global news director Phil Chetwynd, The Associated Press executive editor Julie Pace, and the editor of Israeli newspaper Haaretz Aluf Benn.
The letter added that many Palestinian journalists — whom news outlets have relied on to report from inside Gaza — face a litany of threats.
“Local journalists, those best positioned to tell the truth, face displacement and starvation,” it said.
“To date, nearly 200 journalists have been killed by the Israeli military. Many more have been injured and face constant threats to their lives for doing their jobs: bearing witness.
“This is a direct attack on press freedom and the right to information.”
The letter added that it was a “pivotal moment” in Israel’s war — with renewed military actions and efforts to boost humanitarian aid to Gaza.
This, it said, makes it “vital that Israel open Gaza’s borders for international journalists to be able to report freely and that Israel abides by its international obligations to protect journalists as civilians.”
Jodie Ginsberg, CEO of the Committee to Protect Journalists, said in a separate statement that Israel must grant journalists access and allow them to work in Gaza “without fear for their lives.”
“When journalists are killed in such unprecedented numbers and independent international media is barred from entering, the world loses its ability to see clearly, to understand fully, and to respond effectively to what is happening,” she said.
Reporters Without Borders head Thibaut Bruttin said the media blockade on Gaza “is enabling the total destruction and erasure of the blockaded territory.”
“This is a methodical attempt to silence the facts, suppress the truth, and isolate the Palestinian press and population,” he said in a statement.
Thursday’s letter was issued the same day the Palestinian Journalists Syndicate said three reporters were killed by a strike close to a hospital in Gaza City.
Israel’s military said the strike had targeted “an Islamic Jihad terrorist who was operating in a command and control center” in the yard of the hospital.


Netanyahu says Israel has ‘activated’ some Palestinian clans opposed to Hamas

Updated 06 June 2025
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Netanyahu says Israel has ‘activated’ some Palestinian clans opposed to Hamas

JERUSALEM: Israeli Prime Minister Benjamin Netanyahu said Thursday that Israel has “activated” some clans of Palestinians in Gaza that are opposed to Hamas, though it was not immediately clear what role they would play.
His comments on social media were the first public acknowledgment of Israel’s backing of armed Palestinian groups within Gaza, based around powerful clans or extended families.
Such clans often wield some control in corners of Gaza, and some have had clashes or tensions with Hamas in the past. Palestinians and aid workers have accused clans of carrying out criminal attacks and stealing aid from trucks. Several clans have issued public statements rejecting cooperation with the Israelis or denouncing looting.
An Israeli official said that one group that Netanyahu was referring to was the so-called Popular Forces, led by Yasser Abu Shabab, a local clan leader in Gaza’s southernmost city, Rafah. The official spoke on condition of anonymity because they were not authorized to talk to the media.
In recent weeks, the Abu Shabab group announced online that its fighters were helping protect shipments to the new, Israeli-backed food distribution centers run by the Gaza Humanitarian Foundation in the Rafah area. But some Palestinians say the group has also been involved in attacking and looting aid convoys.
Netanyahu did not specify what support Israel was giving to the clans, or what specifically their role would be. His announcement came hours after a political opponent criticized him for arming unofficial groups of Palestinians in Gaza.
In a video posted to his X account, Netanyahu said the government made the move on the advice of “security officials,” in order to save lives of Israeli soldiers.
Though it was known in southern Gaza throughout the war, the Abu Shabab group emerged publicly the past month, posting pictures of its armed members, with helmets, flak jackets and automatic weapons. It declared itself a “nationalist force” protecting aid.
The Abu Shabab family renounced Yasser over his connections with the Israeli military in a recent statement, saying he and anyone who joined his group “are no longer linked” to the family.
The group’s media office said in response to emailed questions from the Associated Press that it operates in Israeli military-controlled areas for a “purely humanitarian” reason.
It described its ties with the Israel military as “humanitarian communication to facilitate the introduction of aid and ensure that it is not intercepted.”
“We are not proxies for anyone,” it said. “We have not received any military or logistical support from any foreign party.”
It said it has “secured the surroundings” of GHF centers in Rafah but was not involved in distribution of food.
It rejected accusations that the group had looted aid, calling them “exaggerations” and part of a “smear campaign.” But it also said, “our popular forces led by Yasser Abu Shabab only took the minimum amount of food and water necessary to secure their elements in the field,” without elaborating how, and from whom, they took the aid.
Abu Shabab and around 100 fighters have been active in eastern parts of Rafah and Khan Younis, areas under Israeli military control, according to Nahed Sheheiber, head of the private transportation union in Gaza that provides trucks and drivers for aid groups. He said they used to attack aid trucks driving on a military-designated route leading from the Kerem Shalom crossing with Israel, the main entry point for aid.
“Our trucks were attacked many times by the Abu Shabab gang and the occupation forces stood idle. They did nothing,” Sheheiber said, referring to the Israeli military,
“The one who has looted aid is now the one who protects aid,” he said sarcastically.
An aid worker in Gaza said humanitarian groups tried last year to negotiate with Abu Shabab and other influential families to end their looting of convoys. Though they agreed, they soon reverted to hijacking trucks, the aid worker said, speaking on condition of anonymity because he was not authorized to talk the media.
The aid worker said he saw Abu Shabab’s men operating in Israeli-controlled areas near the military-held Morag Corridor in southern Gaza in late May. They were wearing new uniforms and carried what appeared to be new weapons, he said.
Jonathan Whittall, head of the UN humanitarian office OCHA for the occupied Palestinian territory, said Thursday that “criminal gangs operating under the watch of Israeli forces near Kerem Shalom would systematically attack and loot aid convoys. .... These gangs have by far been the biggest cause of aid loss in Gaza.”
The war between Israel and Hamas erupted on Oct. 7, 2023, when Hamas-linked militants stormed into southern Israel, killing some 1,200 people and taking 251 others hostage.
Israel responded with an offensive that has decimated Gaza, displaced nearly all of its 2.3 million people and caused a humanitarian crisis that has left the territory on the brink of famine.
Gaza’s Health Ministry says over 54,000 Palestinians have been killed, more than half of them women and children. The ministry, which is led by medical professionals but reports to the Hamas-run government, does not distinguish between civilians and combatants in its tally.
Hamas is still holding 56 hostages. Around a third are believed to be alive, though many fear they are in grave danger the longer the war goes on.