Daily Reports
The relationship between the United States and Israel continues to face significant challenges amid ongoing geopolitical tensions and internal political uncertainty. The American ambassador to Israel, Jack Lowe, emphasized that humanitarian aid to Gaza must not be used as a 'bargaining chip' and criticized any attempts to compare Israel to Hamas, which continues to hold hostages and operate outside the laws of war. Lowe's comments came against the backdrop of the International Criminal Court's recent decision to issue arrest warrants for Israeli Prime Minister Netanyahu and Defense Minister Gallant for alleged war crimes.
The ambassador's remarks highlighted that the U.S. remains committed to supporting Israel in its fight against Hamas while pressing for better humanitarian conditions in Gaza. Lowe pointed out that despite ongoing conflict, steps have been taken to open crossings and ports to facilitate the delivery of aid, though more efforts are deemed necessary. He stressed that the comparison between Israel’s democratic actions and Hamas's tactics is unfounded.
Meanwhile, Israel's economic outlook has come under scrutiny, following a recent downgrade and a pessimistic review from the credit rating agency S&P. The agency warned that recovery from the ongoing conflict, dubbed 'Operation Iron Swords,' would be slower than past rebounds. The forecast predicts a meager 0.5% growth in 2024, expecting a more robust recovery only in 2025, provided the geopolitical climate stabilizes and investment conditions improve.
The S&P report elaborated on several factors contributing to Israel's shaky economic prospects, including strained relations with key allies like the United States, the ICC's legal actions, and internal political strife, notably Benny Gantz's threat to resign from the government. The review also highlighted the risks of further escalation involving Iran or Hezbollah, which could further deteriorate investor confidence and halt economic recovery.
In light of these events, analysts stress the need for a clear and actionable plan post-conflict, which remains a point of contention within the Israeli government. Despite the strong economic performance earlier in the year, uncertainties continue to loom over the nation’s future, challenging both its security and economic stability.
- Normalization between Saudi Arabia and Israel is seen as a strategic shift that could stabilize the Middle East and ensure Israel's security, according to Ambassador Lowe. Key to this normalization is achieving peace in Gaza and addressing the future of Palestinian governance, which remains a complex issue.
- Lowe remarked on the resilient nature of US–Israel relations, emphasizing American 'iron support' for Israel's victory over Hamas. He acknowledged the pivotal role of international cooperation in facing regional threats, notably mentioning the involvement of European nations and Gulf states like the United Arab Emirates.
- The S&P review also noted the previous misestimation of Israel's growth, with first-quarter data exceeding forecasts. Despite these growth figures, the agency remains cautious due to ongoing geopolitical tensions and internal political instability, warning that these factors could significantly undermine future economic performance.
