Israel–Palestine War in Gaza: A Brief Context

How are developments impacting the global economy?

Photo by Aveedibya Dey on Unsplash


Chinonso Ihuoma

Date Published

October 16, 2023



The Gaza Strip is a key stage in the ongoing Israel-Palestine war. It is a small Palestinian territory closest to Egypt and Israel on the Mediterranean Sea and one of the most heavily inhabited strips in the world. The history of the strip is filled with records of foreign occupation by kingdoms like the Ottoman Empire (from the 1500s to the First World War), the United Kingdom (1918-1948), and Egypt (1948-1967). After the 1967 Arab-Israeli war (Six-Day War), Israel became the dominant foreign power in the region as well as in the West Bank, Jordan’s former territory. Israel’s victory over an allied military force from Egypt, Syria, and Jordan led to the beginning of a new chapter in Gaza’s history.

A Historic Peep

Gaza remains one of the most vulnerable strips in the world and the stage for various uprisings, protests, and wars. The 1987 intifada (intifāḍah), a major historical conflict in the region, resulted in heightened tension between the Palestinians and Israelis over the latter’s occupation and activities in the West Bank and Gaza Strip. Although peace was brokered in 1993 and 1995 with the signing of the Oslo Accords between Israel and the Palestine Liberation Organization (PLO), tension returned to the two Palestinian territories. The Oslo Agreement sought to support the Palestinians’ right to independence and the creation of an interim five-year Palestinian Authority, consequently resulting in the Palestinians' political control of Gaza. Also, Israel agreed to a periodic withdrawal of its forces from some parts of the West Bank and Gaza Strip.

However, the Oslo peace process failed due to internal political tensions, but from July 11 to 25, 2000, the President of the United States of America, Bill Clinton, championed the Camp David Summit. Unable to achieve its objectives, the agreement between Ehud Barak (Israeli Prime Minister) and Yasser Arafat (Palestinian leader), the Middle East peace process, was thwarted.

By September 2000, a second Intifada erupted, leading to a four-year war between Israel and Palestine that ended with another treaty at the Sharm el-Sheikh Summit and a reaffirmation of the parties' commitment to the roadmap for peace. Consequently, Israel and Palestine's leaders, Prime Minister Ariel Sharon and President Mahmoud Abbas, agreed to end all forms of military activity against each other’s territories and citizens everywhere. In addition, Israel withdrew from the West Bank that it had occupied.

Hamas Role in Israeli-Palestinian Wars

Hamas was formed in 1987 during the first intifada as a social-political and militant Palestinian Muslim Brotherhood that propagates the creation of an autonomous Islamic Palestine, the use of arms in Palestinian resistance to Israel’s occupation, and the rejection of any form of agreement between the PLO and Israel. Although it has no political authority in the West Bank, it currently governs the Gaza Strip after its victory over Fatah in the 2006 Palestinian legislative election. Since then, Hamas has engaged in some internal conflicts, like the 2007 Battle of Gaza. Its position in Gaza has instigated a series of tensions and clashes between Gaza and Israel, and this has culminated in wars like the Gaza War (2008-2009), the 2014 war, and the ten-day war of 2021, among others.

Impact of the Current War?

On October 7, 2023, Hamas launched the biggest surprise attack, regarded as the heaviest blow since the decades of its conflict with Israel. Although Israel’s Iron Dome intercepts some 90 percent of the rockets that leave Gaza, this massive attack led to the destruction of lives and properties. Hamas killed over 1,400 Israelis and took over 150 civilians, foreigners, and soldiers as hostages, with threats to execute them if a counter-attack from Israel persists. Also, over 2,600 people have lost their lives in Gaza due to counter-attacks from the Israeli forces, while about 500,000 residents in northern Gaza relocated to the south after the evacuation notice from Israel. 

Many persons fleeing northern Gaza pose serious challenges to their host communities and global humanitarian efforts. They contribute to the ever-increasing number of Internally Displaced Persons (IDPs) around the globe, and about 400,000 of the displaced persons currently occupy improvised shelters in United Nations Relief and Works Agency (UNRWA) buildings and schools. These thousands of vulnerable individuals live in conditions that neither promote personal hygiene nor are conducive enough for any individual, thereby exposing more people, including children, to serious health issues and putting more stress on global humanitarian aid from donor individuals, agencies, and countries.

In addition, Israel’s total blockade of the Gaza Strip from accessing food, water, and fuel is predicted to lead to a major food security issue for the 2.3 million residents in the strip. Among other things, the war may cause a continuous rise in energy prices, as within days of the war, oil prices rose by 5 percent, and there is a tendency for further increases, which have significant implications for the global economy. Just like the Russo-Ukrainian war significantly affected oil prices, Hamas's attack on Israel has drawn the attention of political and economic analysts to the impact of such development on the Strait of Hormuz

Hamas had openly acknowledged receiving support from Iran, and Israel’s president had directly blamed Iran for the attack, leading to heightened tension over the possibility of other countries joining the war. Given the fact that over 30 percent of all oil for global consumption goes through the strait, it has been predicted that if oil prices were to rise above 10 percent, then the global GDP would reduce by about 0.15 percent, thereby leading to an inflation increase of 0.4 percent. However, although Brent oil prices stood at $90 a barrel on Monday 9th October, a slight increase from $88 as of Friday (before the attack),  the war still poses a major geo-political threat to oil markets.

The end of the war, as in previous instances, hinges solely on whether the two parties can reach an agreement. However, the timing of this event remains unpredictable.

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Disclaimer: This information in this article is NOT investment advice. It is intended for information and entertainment purposes only.

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