Geopolitical radar: Middle East’s eleventh moment, Ukraine’s incursion into russian territory
- The risk of a regional war in Middle East is as high as it has been after the assassinations of top Hamas and Hezbollah leaders in Beirut and Teheran. The US is leading diplomatic efforts to avert an escalation. Simultaneously, it keeps sending new weaponry to the region in the anticipation of Iran’s attack.
- Ukraine has reportedly advanced deeper into Russian territory in Kursk region. The operation is likely primarily driven by political rather than military goals, and for now, it does not change our assessment that the conflict will drag on.
- Trump sows doubt about willingness to defend Taiwan if he becomes President. US continues to strengthen military alliances in Asia. More China-Philippine skirmishes in the South China Sea.
Middle East: on the brink of a regional war
Over the summer, the risk of a regional war in Middle East has again raised its head. In late July, a Hezbollah rocket killed 12 children on a football field in the Israel-controlled Golan Heights. A few days later, Israel responded by killing a high-ranking Hezbollah official in Beirut. Only some hours later, another alleged Israeli attack killed a top Hamas official, Ismail Haniyeh, in Tehran, Iran. Haniyeh was visiting Tehran to attend the inauguration ceremony of the new Iranian president and was staying on a compound protected by Iran’s Revolutionary Guard Corps (IRGC). While tensions between Israel and Hezbollah have been on the rise throughout summer, the killing of Haniyeh in Tehran marked an unexpected twist in the tensions between Israel and Iran. In April, the two exchanged rockets in first-ever attacks on each other’s territory, but the attacks were well telegraphed to have minimum impact, and the whole thing was more of a show than a real escalation. Apparently, the brief détente after April attacks was only calm before the storm.
The killing of Haniyeh was a huge humiliation for the IRGC, and the country’s Supreme leader Ali Khamenei, has vowed a severe response. There are probably two reasons why we have not seen the response yet. Firstly, it seems Iranian leaders have not yet reached a consensus on how to respond. The new president Mazoud Pezeshkian is a moderate (in Iranian context) and at least before the killing of Haniyeh, he was seeking to alleviate tensions with the West. Apparently, he has been concerned that Iran’s attack on Israel would destroy the start of his presidency and has appealed to Khamenei not to escalate (even if an IRCG-affiliated news source later denied the whole thing).
Secondly, a huge amount of diplomatic effort has been put into avoiding a full-blown regional war in Middle East. Even if Iran’s retaliation seems inevitable, one should not underestimate the power of diplomacy when it comes to calibrating the scale and timing of the attack. Indeed, senior Iranian officials are saying that a Gaza ceasefire deal would allow them to delay and recalibrate their attack. Chances for such may be slim, particularly now that Hamas’ main negotiator, Haniyeh, has been assassinated. Nevertheless, talks are due to resume on Aug 15th and apparently Iran wants a role in the talks.
Author
Danske Research Team
Danske Bank A/S
Research is part of Danske Bank Markets and operate as Danske Bank's research department. The department monitors financial markets and economic trends of relevance to Danske Bank Markets and its clients.
