Israel War
The morning of 7th October,
2023 wasn’t very good for the Israeli’s especially on Simchat Torah, a Jewish
Festival and the only time of the year when Torah Scrolls are taken out from an
Ornamental Chambers of the Orthodox to read and then the festival is celebrated
by singing and dancing. The Israel on this day were attacked by Hamas, a Militant
Group and a terrorist organization declared by countries worldwide. The
objective according to Hamas is to save the Palestinians and their lands from
being occupied by Israel. But, beheading innocent children, raping and
slaughtering women is not an act of kindness. It’s an act of evil carried by
the militants on Israelis as well on Palestinians and such act can bring no good
to others. Before this war, Hamas attempted many terror attacks injuring and
killing many Israelis.
The Israel-Palestine conflict has its roots dated back in 1948 and is one of the World’s longest continuing conflicts and is a fight between the Jews and the Arabs towards attaining dominance and land for their people in the Middle East. The Palestinians have always blamed Israel for capturing their lands and separating them from Israel. While Israel has claimed the attacks were to stop the militant groups brainwashing the Palestinians. The presence of the Palestinians are now in The Gaza Strip (bordering Egypt and controlled by Hamas) and the West Bank (bordering Jordan). The anger of the Palestine was triggered when the Israeli forces entered Al Aqsa mosque to remove Palestinians who had barricaded themselves for overnight pray.
Mohammed Deif, the leader of Hamas Militant
Group named this attack as Al Aqsa Storm and the early morning of the Jewish
festival started by these militant firing 5000 rockets into the Israeli
territory with targets away from Tel Aviv, the capital city and Jerusalem, the
Holy land of Jewish, Arabs and Christians. The Hamas militants later crossed
the borders and entering Israel by land, sea and air started killing more than
1000 peoples and taking other Israeli civilians and soldiers as hostages.
On the same day, The Prime Minister of
Israel, Benjamin Netanyahu declared War against Hamas by sending its military
forces to Gaza and reinforcing the West Bank. Following this, US President- Joe
Biden, Prime Minister of India, Narendra Modi and other world leaders have
condemned Hamas and have extended their support to Israel. In further assistance,
US has deployed its Navy Ships and Airplanes to Israel.
Can
this war have an Impact around the World?
Yes, The Russia-Ukraine war saw a
yearlong volatile markets and now this Israel-Hamas war may also have an impact
around the world. Israel is among the highest weapon sellers in the world. As
per the SIPRI TIV data, the sales of core sets of weapons such as missiles, ships,
engines, artillery, anti-submarine warfare weapons, aircraft, armored vehicles,
air defense systems, sensors, satellites, and others increased by 53% in the
year 2022 (from 543 million in 2021 to 831 million in 2022). Other than arms
supply, the country mainly exports precious stones and metals, machinery,
electrical equipment and chemical products. Its main export partners are USA,
Hong Kong, UK, Belgium, India and China.
The crude oil prices on 9th
October jumped to 4% and Brent Crude crossed US$ 87. Even though, Israel does
not produce Oil, it is a part of Middle East which produces 31% of Oil in the
World. The major US oil company, Chevron, was ordered by Israeli authorities to
shut down its production of oil at the Mediterranean Sea near the Gaza Strip.
Since, Israel also exports precious metals and stones, the prices of Gold
soared by 1.50% in a day globally. As war has been declared, its economy will
stop its production and the country is located near the Mediterranean Sea which
is major trade route to enter Europe and Russia, there shall be major
disruption in the supply chain. If the war drags for a longer period similar to
Russia-Ukraine, then there may be chances of inflation shoot up increasing the
Oil prices, fall in stock markets and Bond yields on hike.
India-Israel
Relationship
India has always been a growing trade
partner of Israel and has also condemned Hamas for its attack. More than 15000
Indians work in Israel and many large Indian Companies such as Sun Pharma,
Wipro, Tech Mahindra and Infosys has its subsidiaries in Israel. Ashdod & Haifa
Port are one of the major seaports of Israel controlling 99% of Maritime goods.
Haifa Port was purchased by Adani in January, 2023 for US$ 1.03 Billion. The
shipping traffic at both these ports have been slowed down since the
declaration of the War as these ports are closer to the Gaza Strip in the Mediterranean
Sea which has now become a War Zone. Other important port in Israel is Eilat,
located on Red Sea and most of India-Israel trade happens through it. So far,
the Eilat port has not been disrupted.
The Indian stock markets on Monday 9th
October, were resilient as investors fear pressure on the share prices of the major
Indian companies having operations in Israel and other companies dependent on
Israel for trade. Though the Indian markets were supportive to the investors on
the next day, Pharma companies such as Sun Pharma (having its subsidiary in
Israel), Torrent Pharma, Lupin, and Dr Reddy’s having exposure to exports may
have a disruption in supply chain. Adani Ports and SEZ Ltd having its control
on Haifa Port are closely monitoring and prepared for its business plans if the
war continues. The shares of the company dropped to 4% on Monday and then
raised up the next day. Tata Consulting Services (TCS) has several government
projects with more than 1000 employees working in Israel and are also
monitoring the safety of them.
India is dependent on Oil from the
Middle East and the war can have disruption in the supply of Oil. Crude oil
dependent companies in India such as Bharat Petroleum Corporation Limited, Hindustan
Petroleum Corporation, ONGC, Mahanagar Gas, Reliance Industries etc. shall come
under spotlight as the price of crude oil varies. Paint sector also gets hit
when the prices of crude oil surges as the derivatives of crude oil are the key
ingredients used in manufacturing paints. Market performance of precious metal
companies will also be impacted when the gold prices increase.
India imports Arms and Weapons from
Israel and the total imports of the same were US$ 41 million in the year 2022. Below is the trade data of
India-Israel:
(Value
in US$ Billion)
|
Trade Data: India-Israel |
||||
|
Particulars |
FY 2021-2022 |
FY 2022-2023 |
YoY Growth % |
FY 2023-2024
(April-August) |
|
Exports to Israel |
4.796 |
8.451 |
76.22% |
1.947 |
|
Imports from Israel |
3.074 |
2.323 |
-24.43% |
1.012 |
|
Trade Balance |
1.722 |
6.128 |
|
0.935 |
The above figures shows that the trade
between India and Israel accelerated from the FY 20-21 and the exports reached
at the all-time high to US$ 8.45 billion in FY 22-23. India’s major 80% export
products to Israel includes such as Diesel, Unpolished & cut diamonds, and
telecom and electronics components like photovoltaic cells, ICs, etc. India’s
Imports from Israel dropped by 24.43% in the FY 22-23 and the major import
products include Fertilizers, Herbicides, and Rough diamonds. The trade balance
with Israel has always positive throughout the years.
Israel’s war declaration on Hamas may
shadow the aspiring plans build by India, Middle East, and Europe announced in
the G20 summit in New Delhi. The India-Middle East-Europe Economic Corridor
(IMEEC) aims to adopt connectivity and economic corporation between South Asia,
the Gulf, and the Europe.
The tentative route, as shown above in
the picture show that the route connects UAE to India through Arabian Sea link.
Further, the plan involves building a Rail route passing through Saudi Arabia,
Jordan and Israel. In the end, the corridor will be connected with Europe
through Mediterranean Sea link via Israeli ports mainly Ashdod, Ashkelon,
Jaffa, Tel Aviv or Haifa Port increase trade relations. The war could complicate
and delay this plan. Investments in this project would be difficult and unsafe.
The relationship between Saudi Arabia & Israel also plays an important role
where, Saudi Arabia were in support of the Palestine earlier but now has also
condemned the terror act carried on by the Militant Group Hamas.
Conclusion:
A War again may have a heavy impact
around the world if it is dragged for more longer. Though inflation rate in the
most of economies were brought down post Russia-Ukraine War by raising interest
rates, But, another war will severely affect the income and bring instability
to the daily household, corporate, financial sector & government. Israel
has always been strong in terms of War and has retaliated very quickly having
support from the West and other powerful nations. In the end, it’s all about
War, a dangerous armed conflict that can cost everything or nothing and the
impact may spread as fast as a virus.
Many countries still have War like
situation and the conditions there are very terrifying. India has always been
against Terrorism and have never supported Wars because these wars have always
cost the lives of innocent people and well said by the YouTuber, Abhi and Niyu
on their YouTube channel “Kya innocent logo ki jaan lene ke liye ek Map
justified hai?”
References:
https://www.bbc.com/news/live/world-middle-east-67037895
https://www.nbcnews.com/news/world/live-blog/israel-hamas-conflict-live-updates-rcna119362
https://en.wikipedia.org/wiki/October_2023_Gaza%E2%88%92Israel_conflict
https://en.wikipedia.org/wiki/Hamas
https://en.wikipedia.org/wiki/Timeline_of_the_Israeli%E2%80%93Palestinian_conflict_in_2023
https://tradestat.commerce.gov.in/eidb/iecnt.asp
https://tradestat.commerce.gov.in/meidb/cnt.asp?ie=e
https://tradestat.commerce.gov.in/meidb/cnt.asp?ie=i
https://dashboard.commerce.gov.in/commercedashboard.aspx
https://youtu.be/NzlYRGyDSt0?si=C9Muq-brp289_knX