Private View Blog: Back to reality for the Middle East
François Savary, Prime Partners
Donald Trump claimed he had solved the problems between the Arab nations and Israel. Nothing could be further from the truth, argues François Savary, CIO of Prime Partners
In the final months of the last Republican presidency, Donald Trump and his son in law, Jared Kushner, sought to normalise relations between Arab nations and Israel. The US leader was all over the media, explaining how his “art of dealing” had solved one of the most intractable geopolitical issues of modern times. Events in May 2021 have proved that nothing could be further from the truth.
Political instability
Looking at pictures coming from Israel and Gaza, the feeling we are back in 2014 could not be stronger. But there is a major difference: the political instability affecting both Israel and the Palestinians.
On one side the fragmentation of the political spectrum impedes formation of a “lasting” Israeli government, with prospects of new elections on the rise. While Israeli prime minister Benjamin Netanyahu may be using the crisis to enhance his chance of winning the next elections, 20 per cent of voters are Arab Israelis and approximately the same proportion is inclined to vote for nationalist Jewish parties. It is not an easy task to build a coalition in such a context.
On the Palestinian side, the decision of president Mahmoud Abbas to postpone elections – the last ones took place in 2006 – is the best proof that the ruling Fatah faction is losing ground, as the more radical Hamas extends its influence from Gaza to the West Bank.
This bilateral political instability makes a settlement more difficult, with the absence of strong leaders to negotiate it. Weak leaders tend to “play the situation”, risking loss of control. In this regard, the reaction of both Jews and Arab-Israelis in some mixed cities has brought forward the fear of civil war inside Israel’s borders, a phenomenon not observed in 2014.
Another difference to earlier conflicts has been the number of rockets Hamas has been able to use against Israeli targets, with sources estimating that 3,200 have been launched. More rockets with a wider range of at least 200 kilometres represent a new reality that Israeli intelligence was not necessarily aware of.
This leads to key questions about the Hamas armoury – estimated to number 100,000 weapons by some experts – and how long its current assault on the Israeli border can be maintained. Moreover, the economic and social costs incurred by the population and the risk of a regionalisation of the conflict would increase significantly, should daily reports of casualties become a lasting reality. Not to mention, that the world economy could face a dire situation should the conflict escalate into a regional conflict, through oil supply interruption, for example.
International response
The international community’s lack of influence on the warring parties comes as no surprise, with divisions in the UN Security Council on the Israeli-Palestinian question prevailing for decades. So far, we have seen no signs of any clear and unique vision on the Israeli-Palestinian conflict emerging from the Biden administration in Washington. Iran, with its own presidential election approaching, is more preoccupied with trying to save the 2015 “nuclear deal”.
What is currently under way at the Gaza border is a clear wake-up call for anyone deluded enough to think the last US administration’s initiatives had somehow solved this perennial problem. The resurgence of the Israeli-Palestinian conflict on the news will bring back the need to think about a lasting solution.
In addition, the recent civil unrest within Israel’s borders has shown that any notion of a binational Israeli state, with a growing Arab population, is not only becoming increasingly implausible, but could fatally damage the Israeli democratic system, with a hierarchy of first and second-class citizens.
More than ever, the current escalation is reminding us that while the two state solution is still a valid option, it must embrace a much wider, more inclusive and equitable settlement than the one the Trump administration had in mind.
François Savary is chief investment officer of wealth advisers Prime Partners
