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Washington: Economic crises are rippling through the countries bordering Israel, raising the possibility of a chain reaction from the war with Hamas that further worsens the financial health and political stability of Egypt, Jordan and Lebanon and creates problems well beyond.

Each of the three countries is up against differing economic pressures that led the International Monetary Fund to warn in a September report that they could lose their "sociopolitical stability." That warning came shortly before Hamas attacked Israel on Oct 7, triggering a war that could easily cause economic chaos that President Joe Biden and the European Union would likely need to address.

The possible fallout is now starting to be recognized by world leaders and policy analysts. For a Biden administration committed to stopping the Israel-Hamas war from widening, the conflict could amplify the economic strains and possibly cause governments to collapse. If the chaos went unchecked, it could spread across a region that is vital for global oil supplies—with reverberations around the globe.

“The more unstable things are economically, the easier it is for bad actors in the region to stir the pot," said Christopher Swift, an international lawyer and former Treasury Department official. "The notion that you can divorce politics from economics is a little bit myopic, and naive. Politics, economics and security go together very closely.”

World Bank head Ajay Banga warned at a conference in Saudi Arabia this week that the war puts economic development at a “dangerous juncture.”

The financial situation is serious enough that Charles Michel, president of the European Council, met with the IMF last Thursday and told officials there that they needed to do more to support the Egyptian government, which he said is under pressure due to the possibility of migrants arriving from Hamas-controlled Gaza as well as people fleeing a civil war in Sudan.

“Let’s support Egypt," Michel told reporters afterward. “Egypt needs our support and we need to support Egypt.”

Egyptian President Abdel Fattah el-Sissi refuses to take in Palestinian refugees, fearing that Israel wants to force a permanent expulsion of Palestinians and nullify Palestinian demands for statehood. The Egyptian leader also said a mass exodus would risk bringing militants into the Sinai Peninsula.

Already, over a million people have been displaced within Gaza, and the threat of the war's escalation looms with clashes along the Lebanon-Israel border between the Israeli military and Hezbollah militants.

“To presume that there won’t be a movement of people is naïve and premature,” said Swift. “Any sudden blow to the el-Sissi regime from the outside, whether it’s an economic blow, or whether it’s the sudden migration of a lot of people out of Gaza into the Sinai could have destabilizing effects.”

Swift said that while el-Sissi’s regime is heavily dependent on US economic and military assistance, it's increasingly going to be popular opinion within Egypt that determines his actions, a lesson learned from the Arab Spring protests that brought down the Mubarak regime in 2011.

In April, the IMF concluded that Egypt's financing needs for the year were equal in size to 35 percent of its gross domestic product. On Oct 5, Moody’s downgraded Egyptian debt that was already at junk status. The downgrade came as past efforts have failed to help Egypt’s economy, which was saddled with about $160bn in debt as of the end of last year.

Mirette F. Mabrouk, director of the Middle East Institute’s Egypt Studies program, said, “Egypt is in the worst economic crisis I can remember in at least five decades” and that only complicates the current turmoil from the war.

“If you have this conflagration in Gaza, you need the rest of the region to be stable for everyone to take appropriate and correct action,” Mabrouk said. “You don’t need more instability in a region that is already quite unstable.”

Mabrouk said one of the most immediate signs of increasing distress is that Egypt’s central bank has in the past week imposed foreign currency restrictions on cards linked to local bank accounts.

One major potential setback for Egypt stemming from the latest Israel-Hamas War would be the loss of tourists seeking to explore the country's ancient pyramids and history. Tourism is one of Egypt's leading economic sectors, and along with foreign investment provides needed access to the rest of the global economy.

A representative from the Egyptian government did not respond to an Associated Press request for comment.

Nearby Jordan is struggling due to slower economic growth and less foreign investment, according to the IMF. Its debt outlook is healthier than Egypt's, but its unemployment rate is in the double digits, according to financial data provider FactSet.

The size of the Lebanese economy shrank by more than half from 2019 to 2021, according to the World Bank. Lebanon's currency, which since 1997 had been pegged to the US dollar at 1,500 Lebanese pounds to the dollar, now trades around 90,000 pounds to the dollar.

While many businesses have taken to charging in dollars, public employees who still get their wages in lira have seen their purchasing power crash, with many now relying on remittances from relatives abroad to stay afloat. International donors including the United States and Qatar have been subsidizing the salaries of Lebanese army soldiers.

The country’s leaders reached a tentative agreement with the IMF in April 2022 for a bailout package but they have not implemented most of the reforms required to finalize the deal. The IMF warned in a report earlier this year that without reforms, public debt in the small, crisis-ridden country could reach nearly 550 percent of GDP.

Before the latest Israel-Hamas war, some officials had pointed to Lebanon’s rebounding tourism industry as an economic lifeline. But since the conflict has threatened to envelop Lebanon—with regular small-scale clashes already taking place between militants from Hamas-allied Hezbollah and Israeli forces on the country’s southern border—foreign embassies have warned their citizens to leave and airlines have canceled flights to the country.

Paul Salem, president of the Middle East Institute in Washington, said that “if tensions spread to the Gulf, this conflict will have the potential to severely impact international markets and struggling economies and populations around the globe.”

AP

Washington: In the midst of two active and potentially world-changing conflicts in the Middle East and Europe, the US is hoping to find at least a small measure of common ground with China as China’s top diplomat visits Washington this week.

Over three days of meetings that begin Thursday, top Biden administration officials, including possibly the president himself, will press Chinese Foreign Minister Wang Yi on the importance of China stepping up its role on the world stage if it wants to be considered a responsible major international player.

Secretary of State Antony Blinken and Biden’s national security adviser, Jake Sullivan, are both expected to urge China to play a constructive role in both the Israel-Hamas and Russia-Ukraine wars. Those meetings could set the stage for a summit between President Joe Biden and Chinese President Xi Jinping next month on the sidelines of an Asia-Pacific Economic Cooperation forum leaders gathering in San Francisco.

The US has been disappointed with China over its support for Russia in the war against Ukraine and its relative silence on the Middle East. In addition, the world's two largest economies are at odds on issues such as human rights, climate change, Taiwan, the South China Sea and North Korea.

Still, both sides have expressed a willingness to talk with each other since Blinken canceled a planned visit to China in February after the shootdown of a Chinese spy balloon over the U.S., which marked a low point in recent relations.

In the months that followed that crisis, however, Blinken rescheduled his trip and went to China in June. He was followed in quick succession by Treasury Secretary Janet Yellen, climate envoy John Kerry and Commerce Secretary Gina Raimondo.

In addition, Sullivan met with Wang in Malta in mid-September ahead of Blinken's discussions with Chinese Vice President Han Zheng later that month on the sidelines of the UN General Assembly in New York. And Blinken spoke just last week with Wang about the Israel-Hamas crisis.

The goal, according to U.S. officials, is to set the stage for another Biden-Xi summit at which the two leaders could explore cooperation or at least easing outright hostility on the most pressing matters of the day.

“Wang Yi’s visit will serve as one of the final touchpoints in laying the groundwork” for the Biden-Xi meeting, said Ryan Hass, director of the John L. Thornton China Center at the Brookings Institute, a Washington-based think tank. “Wang’s meetings in Washington will set the contours for the topics the two leaders will discuss when they meet in November.”

“It opens the possibility of the world’s two largest powers pursuing coordinated efforts to limit escalation or expansion of violence in Ukraine and the Middle East,” he said.

Yun Sun, director of the China Program at the Stimson Center, another Washington think tank, said Wang's trip signals that the Xi-Biden summit is almost certain.

“Wang is here to pave the ground for Xi's San Francisco trip. That’s the core focus of the trip. It means issues will be negotiated, solutions will be discussed and details will be deliberated and inked,” Sun said. “The APEC summit is 20 days away, so time is of essence. His trip means that Xi is coming. Xi’s coming means meeting with Biden. The Xi-Biden summit means efforts to stabilize bilateral ties.”

Scott Kennedy, senior adviser and trustee chair in Chinese business and economics at the Center for Strategic and International Studies in Washington, said Wang’s trip could yield results such as additional direct flights between the two countries, visas for more journalists and even agreements on climate change and resumption of high-level military dialogue.

But while it is important for Wang and the Americans to discuss points of contention in the Indo-Pacific region and elsewhere, Kennedy said it is unlikely the two sides will reach much agreement.

The Chinese Foreign Ministry said Wang will “have in-depth exchanges of views” with US officials on a range of issues and “state China’s principled position and legitimate concerns” on relations between the two countries.

The Chinese president last came to the US in 2017, when former President Donald Trump hosted him at his Mar-a-Lago resort in Florida. Biden, who took office in 2021, has yet to host Xi on US soil. The two men last met in Bali, Indonesia, in November 2022, on the sidelines of the Group of 20 meeting of leading rich and developing nations.

Wang's trip is one of a string of meetings and activities to warm up Xi's visit to the US.

California Gov Gavin Newsom, who is visiting China this week, had a surprise meeting with Xi on Wednesday in Beijing. The Chinese president told the governor that “the achievements of China-US relations have not come easily and should be cherished all the more,” according to the official news agency Xinhua.

Earlier this month, Senate Majority Leader Chuck Schumer led a delegation of six senators to China, in the first visit by US lawmakers since 2019. Schumer was also received by Xi, who said the Thucydides Trap is “not inevitable.” The Thucydides Trap is a political term for the tendency of major clashes when an emerging power challenges an existing power.

The US-China relationship began to sour in 2018 when the Trump administration slapped hefty tariffs on $50bn worth of Chinese goods. It deteriorated further over a range of issues, including rights abuses, the South China Sea, Taiwan, technology and the Covid-19 pandemic.

AP

Beijing: Breaking its silence on the ongoing Israel-Hamas war, Chinese Foreign Ministry spokesperson Mao Ning on Tuesday said Beijing hoped that the issue would be resolved in a "just and lasting manner" on the basis of the "two-state solution."

Addressing a press briefing in the Chinese capital, Beijing, on Tuesday, Mao said, "We sincerely hope that the Palestinian question will be resolved in a comprehensive, just and lasting manner on the basis of the two-state solution. On the escalation of the Palestinian-Israeli conflict, our position is highly consistent with that of the Arab states."

Condemning the atrocities on civilians on both sides, she said her country was opposed to any violation of international law.

Stressing the need to protect civilians amid the ongoing conflict, the Chinese Foreign Ministry spokesperson said the supply of humanitarian aid to Gaza was critical to preventing an ever-worsening humanitarian disaster.

"We all hope that the fighting will stop as soon as possible in order to prevent the situation from escalating or even spiraling out of control. We oppose acts that harm civilians and oppose any violation of international law and call for protecting civilians and providing humanitarian aid to prevent an even worse humanitarian disaster," Mao said at the briefing.

Coming out in support of a two-state solution, she said, we support the "realization of Palestinian people's right to statehood and survival and their right of return, which we believe is the only viable way out of the Palestinian question".

She also called for a "more authoritative, influential and broad-based international peace conference to be held as soon as possible, an early resumption of peace talks and formulation of a timetable and roadmap to that end".

The spokesperson added that since the beginning of the "Israel-Palestine conflict", China has maintained close communication with relevant parties, "actively participated in the consultations at the UN Security Council, and has made every effort to promote peace talks and help de-escalate the situation".

"The international community, especially the many Arab countries, commends China's just position and the role it has played as a responsible major country," she added.

She stated that China will firmly support all efforts that are "conducive to dialogue, ceasefire and peace and will do its best on everything conducive to the implementation of the two-state solution and a comprehensive, just and lasting settlement of the Palestinian question".

China was ready to work together with the international community to "make relentless efforts to that end", she added. 

ANI

Israel vowed again to destroy Hamas, rejecting calls for a cease-fire from the UN chief, the Palestinians and many countries at a high-level UN meeting on Tuesday and declaring that the war in Gaza is not only its war but “the war of the free world.”

Israel’s Foreign Minister Eli Cohen also dismissed calls for “proportionality” in the country’s response to Hamas’ surprise attacks on Israel on Oct 7 that killed 1,400 people and has since led to more than 5,700 Palestinian deaths in Gaza according to its Health Ministry.

“Tell me, what is a proportionate response for killing of babies, for rape (of) women and burn them, for beheading a child?” Cohen asked. “How can you agree to a cease-fire with someone who swore to kill and destroy your own existence?”

He told the UN Security Council that the proportionate response to the Oct 7 massacre is “a total destruction to the last one of Hamas,” calling the extremist group “the new Nazis.” He stressed: “It is not only Israel’s right to destroy Hamas. It’s our duty.”

Cohen called the Oct 7 attacks “a wake-up call for the entire free world” against extremism, and he urged “the civilized world to stand united behind Israel to defeat Hamas.”

And he warned that today it is Israel, and tomorrow Hamas and the attackers “will be at everyone’s doorstep,” starting with the West.

Cohen also accused Qatar of financing Hamas and said the fate of the more than 200 hostages taken from Israel, some of whose families came to the UN meeting, was in the hands of its emir.

Palestinian Foreign Minister Riyad al-Maliki demanded an end to the Israeli attacks.

“We are here today to stop the killing, to stop … the ongoing massacres being deliberately and systematically and savagely perpetrated by Israel, the occupying power, against the Palestinian civilian population,” he said. “Over 2m Palestinians are on a survival mission every day, every night.”

Under international law, he said “it is our collective human duty to stop them.”

Al-Maliki warned that more attacks and killings and weapons and alliances won’t make Israel safer: “Only peace will.”

“For those actively engaged to avoid an even greater humanitarian catastrophe and regional spillover, it must be clear that this can only be achieved by putting an immediate end to the Israeli war launched against the Palestinian people in the Gaza Strip,” he said. “Stop the bloodshed.”

UN Secretary-General Antonio Guterres opened the monthly meeting on the decades-old Israeli-Palestinian conflict—which has turned into a major event with ministers from the war’s key parties and a dozen other countries flying to New York—warning that “the situation in the Middle East is growing more dire by the hour.”

As the council met, a barrage of Israeli airstrikes across the Gaza Strip crushed multiple residential buildings and buried families under rubble. Nearly 90 countries were on the speakers list including about 30 foreign ministers and deputy ministers, many echoing calls for a cease-fire and halt to attacks on Palestinian civilians.

The UN chief said the risk of the Gaza war spreading through the region is increasing as societies splinter and tensions threaten to boil over. He called for an immediate humanitarian cease-fire to deliver desperately needed food, water, medicine and fuel. He also appealed “to all to pull back from the brink before the violence claims even more lives and spreads even farther.”

Guterres stressed that the rules of war must be obeyed.

He said the grievances of the Palestinian people cannot justify “the horrifying and unprecedented Oct 7 acts of terror” by Hamas in Israel and demanded the immediate release of all hostages.

But Guterres also stressed that “those appalling attacks cannot justify the collective punishment of the Palestinian people.”

He expressed deep concern at “the clear violations of international humanitarian law,” calling Israel’s constant bombardment of Gaza and the level of destruction and civilian casualties “alarming.”

Protecting civilians “is paramount in any armed conflict,” he said.

Without naming Hamas, the UN chief stressed that “protecting civilians can never mean using them as human shields.”

Guterres also criticized Israel without naming it, saying “protecting civilians does not mean ordering more than one million people to evacuate to the south, where there is no shelter, no food, no water, no medicine and no fuel, and then continuing to bomb the south itself.”

Cohen, in his address to the council, criticized the secretary-general’s remarks. After being told by a reporter at a stakeout later that the secretary-general stood by his statement, the Israeli minister said: “There is no cause for this, and shame on him.”

Israel’s UN Ambassador Gilad Erdan went further, taking issue especially with Guterres’ statement that it’s important to recognize that “the attacks by Hamas did not happen in a vacuum.”

He accused the secretary-general of having lost “all morality and impartiality” and called for his resignation.

By contrast, US Secretary of State Antony Blinken, speaking for Israel's closest ally, thanked the UN chief “for your leadership in this incredibly challenging time, particularly in getting humanitarian aid to civilians in Gaza.”

He stressed Israel's right to defend itself “against terrorism” but also called for protection of Palestinian civilians saying: “We know Hamas does not represent the Palestinian people and Palestinian civilians are not to blame for the carnage committed by Hamas.”

He said “Israel must take all possible precautions to avoid harm to civilians” and “humanitarian pauses” must be considered to get aid flowing into Gaza and enable civilians “to get out of harm’s way.”

Blinken told the council all countries are determined to prevent the conflict from spreading, saying a broader conflict “would be devastating, not only for Palestinians and Israelis but for people across the region and indeed around the world.”

He warned Iran—which supports Hamas, Hezbollah in Lebanon and the Houthis in Yemen—that while the US doesn't seek a conflict, it will respond “swiftly and decisively” to any attack on US personnel by its forces or its proxies anywhere in the world.

Iran’s UN Ambassador Amir Iravani later accused Blinken of “wrongly” attempting to blame Iran for the Hamas attack, rejecting his “groundless allegations” and saying the Islamic Republic is committed to regional peace and security, and supports the call for an immediate cease-fire.

He echoed secretary-general Guterres’ statement that the Oct. 7 attack didn’t happen in a vacuum and claimed the US’ “unwavering support” for Israel and its rapid provision of military and logistical support “made the US complicit in the brutal massacre of innocent Palestinian people in the Gaza Strip.”

Iravani also claimed that Israel, as an occupying power, has no right to self-defense in Gaza under the UN Charter. But he said the Charter does recognize the right to self-determination and self-defense for the Palestinian people, which Iran supports, “including resistance groups like Hamas, in the struggle against Israeli occupation.”

The United States is pushing for adoption of a resolution that would condemn the Hamas attacks in Israel and violence against civilians, and reaffirm Israel’s right to self-defense. There were some expectations that it might be voted on Tuesday, but diplomats said it was still being negotiated.

Russia’s UN Ambassador Vassily Nebenzia told the council Moscow rejects the US draft and is demanding an immediate ceasefire. The US draft does not mention a cease-fire and Nebenzia said Russia is putting forward its own new proposed resolution.

Jordan's Foreign Minister Ayman Safadi, speaking on behalf of the 22-member Arab Group at the United Nations, accused Israel of waging a war that is killing innocent civilians and “razing Gaza to the ground” in violation of international law “without any deterrent.”

“And the Security Council didn't even call for a cease-fire,” he said, urging the UN body charged with maintaining international peace and security to adopt a resolution to stop the war, condemn the killing of civilians on both sides, and prevent the starvation of Palestinians and their collective punishment.

“The Security Council must take a clear stance to reassure 2bn Arabs and Muslims that international law will be applied,” Safadi said.

AP