Israel, Palestine: Suffer the little children.
Also: Syria, Finland, Estonia, the IMF and Ireland.
ISRAEL. PALESTINE. Suffer the little children.
The war swiftly moves beyond mere calculus.
The Israel Defense Forces on Tuesday said decapitated babies were among the victims of a Hamas strike at a kibbutz. The Gazan death toll reached at least 950 on Wednesday morning after a fourth night of assaults, including on hospitals.
INTELLIGENCE. Golda Meir, Israel's prime minister in the Yom Kippur War, said the only way to end war was to love our children more than we hate our enemies. But with dead innocents now in focus on both sides, love and hate have eclipsed strategic aims and enraged millions more beyond. The war’s outcome is increasingly hard to predict, but further bloodshed is guaranteed. Skirmishes with Hezbollah, plus incendiary claims by Iran, make matters worse.
FOR BUSINESS. A mooted deal with Egypt to evacuate Gazan civilians could save lives, but ensuring members of Hamas don't also escape will be difficult. The Gaza blockade, imposed by Israel and Egypt since 2007, has led to deep economic insecurity, poverty, and grievance. Hamas tried to convince Israel it wanted workers to have access to jobs across the border but was simultaneously training fighters. Any trust that once existed has evaporated.
Written by former diplomats and industry specialists, Geopolitical Dispatch gives you the global intelligence for business and investing you won’t find anywhere else.
SYRIA. Not holding court.
Damascus doesn’t bother to defend torture allegations.
Syria boycotted the start of a case against it on Tuesday at the International Court of Justice in The Hague. Canada and The Netherlands brought forward accusations that Damascus breached the UN Convention Against Torture.
INTELLIGENCE. The 15-judge panel opened the court to empty seats where the Syrian legal representatives should have been. Syria is accused of breaching torture conventions during its protracted civil war. While ICJ orders are binding on states, there is no enforcement mechanism, and the reality is that most judgements have little practical effect. Nonetheless, they are symbolic enough for states to usually spend significant amounts defending such cases.
FOR BUSINESS. The war in Syria continues, overshadowed by conflicts in Ukraine and Israel involving many of the same actors. But the toll remains enormous. An estimated half of the population of 23 million has been displaced, including 5 million seeking new homes in Europe and elsewhere. The Syrian pound continues to shed value, losing 80% since May. Expected aid and reconstruction funds from the Gulf have not materialised and aren’t expected soon.
With the brevity of a media digest, but the depth of an intelligence assessment, Daily Assessment goes beyond the news to outline the implications.
FINLAND. ESTONIA. How to blow up a pipeline.
Sabotage is suspected for another undersea asset.
Damage to an undersea cable and pipeline, connecting Finland and Estonia, was likely caused by an external actor, officials said on Wednesday. Finland has been a member of NATO since April this year. Estonia since 2004.
INTELLIGENCE. The 77-kilometre Balticconnector runs across the Gulf of Finland from Inkoo in Finland to Paldiski in Estonia. Since 2020, the €300 million asset has carried gas on demand in both directions, as well as undersea telecommunications. Photos suggest the damage was mechanical and unlikely to have been caused by natural events. Without being mentioned by name, Russia – around 300 kilometres to the east – is the primary suspect.
FOR BUSINESS. European gas supplies for the winter are largely secured, with 97% of the continent’s storage filled. But pipelines such as Balticconnectorare still critical for delivering supply. Protecting critical infrastructure is becoming more expensive and difficult for states. The task is huge, given infrastructure often lies far from population centres. Like last year’s attack on the Nord Stream gas pipeline, there will likely be no answers on culpability.
INTERNATIONAL MONETARY FUND. Soft landing, hard edges.
Global growth takes a hit on the back of geopolitical tension.
The IMF on Tuesday said the world economy had lost momentum through the combined impact of higher interest rates, the Ukraine war, widening geopolitical rifts, and the uncertainty created by the Israel/Hamas conflict.
INTELLIGENCE. In an unintended feat of grim symbolism, the IMF is this year meeting in the earthquake-struck city of Marrakech. The fund expects global growth to slow to 2.9% in 2024, down from 3% this year. A series of shocks, including Covid and the war in Ukraine, had cut world output by around $3.7 trillion over the past three years, compared to the pre-2020 trend. But in a silver lining, rate hikes have impacted employment levels less than expected.
FOR BUSINESS. Top of mind for the IMF is the concern that geopolitical blocs are breaking out, which could further hamper international trade. For example, the IMF said that in 2022 countries imposed nearly 3,000 new restrictions on trade. This compares to around 1,000 in 2019. Indeed, global trade is expected to grow just 0.9% this year, down from the 2000-2019 average of 4.9%. As blocs solidify, opportunities for new markets will decrease.
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IRELAND. Pots of gold.
Dublin is the latest country to impose a banking levy.
Ireland raised its banking levy on Tuesday, becoming the latest EU country to target banks making large profits on the back of rising interest rates. Dublin also presented plans to create a €100 billion sovereign wealth fund.
INTELLIGENCE. The announcements came as part of the Irish budget. The government said it aimed to raise €200 million in 2024 from the levy, aimed at banks that had previously received financial assistance, including AIB, Bank of Ireland and Permanent TSB. Ireland – better known for its low taxes and welcoming approach to multinationals – joins Italy, the Netherlands, Spain, Hungary, Czechia, and Lithuania in installing windfall levies over the past year.
FOR BUSINESS. While rising rates can lead to greater profits for banks, as the margin between interest paid out on depositors and interest received from loans increases, there remain some headwinds. Declining credit demand is one; rising default rates are another. Nonetheless, EU banking sector profitability has hit record highs recently, with the average return on equity reaching 10.4%, compared to around 1.3% for the sector in March 2020.