Insight: Israel-Palestine Conflict - Shock, Impacts & Considerations

The Middle East region is coming to terms with a major ramping up of tensions between Israel and Palestine, with the aftershock being felt in many key industries, as well as political arenas.

As with any major conflict, there is the inevitable tragedy of loss of human life, something witnessed heavily on both sides.

This is followed by political instability and its knock-on effects towards trade.

While speaking about trade can seem unseemly at a time of human suffering, it is a very important dynamic in such scenarios, as trade is often a bind that ties fragmented regions together.

With this in mind, this piece looks into to the impact on the supply chain, how the region is processing the news, and what to expect in the future.

Supply Chain Impacts

News has recently been circulating on how shares of Adani Ports fell by 4.5% on Monday, as investors grew wary over the possible escalation of an ongoing conflict in Israel, where the company owns Haifa Port.

Adani Ports said: "We are closely monitoring the action on ground [sic] which is concentrated in South Israel, whereas Haifa Port is situated in the North, we remain fully alert and prepared with a business continuity plan that will enable us to respond effectively to any eventuality".

While one may think such a situation may deter investors, Hong-Kong-based financial advisory group CLSA has stated that the situation may conversely lead to investment in the region as big players seek to 'buy in the dip'.

Shipping Giants

International shipping firms have also made statements regarding their operations in the region.

Shipping giant Maersk has announced that its port operations across Israel’s major terminals are continuing to function normally.

The Danish company said in a statement: “Bookings will therefore continue to be accepted to and from Israel; if you have cargo already booked to or from Israel, we expect to facilitate it as normal.”

Maersk also reported that inland services – both road and rail – are fully operational in and around the region.

The world's largest liner MSC added that it, "...will continue to monitor the impact of the security situation on trade and follow advice from the government and will review its service network accordingly.”

Regional Response

When exploring such a long and complex history as Israel and Palestine, sections of the global media have a tendency to report on the immediacy of events and overlook the broader historical context.

This is echoed on the global political stage.

An example of this is witnessed in US President Joe Biden's speech to the UN General Assembly in September (2023) when President Biden articulated a “more sustainable, integrated Middle East”.

The subtext of this was that this was a Middle East where Israel embraces “greater normalization and economic connection” in Biden's words.

Yet the present situation displays the simplicity of such an approach.

'System of Apartheid'

This also exemplifies why figures such as Zaha Hassan, a human rights lawyer and fellow at the Carnegie Endowment for International Peace, are critical of such oversimplification: “This isn’t just a blind spot. This is fantasy land, the way the US has been approaching this idea of Arab-Israeli normalization as if the Palestinian issue didn’t exist.”

Hassan is not a lone voice in this regard, with multiple regional experts and leaders warning that the Palestinian issue must not be sidestepped, as this will inflame tensions rather than heal old wounds.

Such a view has been corroborated by globally renowned human rights groups, amongst them Amnesty International, who have accused Israel of imposing a "system of apartheid" on Palestinians.

Future Ramification

As stated prior, the Israel and Palestine issue has always been a proxy for larger tensions, those that reach all around the world.

With this in mind, major powers are making their positions known.

The Western world has taken a strong, and somewhat predictable, position of unanimously backing Israel, while major nations outside of this have largely strained to stay neutral.

Yet big questions remain for the Middle East.

After President Biden expressed an eagerness for Israel to play a greater cohesive role in the Middle East, there had been a thawing of relations between Middle Eastern nations and israel.

However, in retaliation for recent attacks - attacks in which Hamas went to barbaric levels - Israel President Benjamin Netanyahu has stated: "What we will do to our enemies will echo for generations".

This heavily implies a carpet bombing of Palestine - the beginning of which has already taken around 1,000 lives at the time of writing, and will be significantly more - as well as a prolonged ground operation.

Further, it is unclear who Netanyahu is speaking of when he references Israel's 'enemies', it is clearly plural, so evidently stretches beyond Palestine.

All of this equates to a resurgence of distrust, doubt and wariness in the region, one which makes trade, and ultimately, peace all the more challenging to realise.

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