Insight Series - Israel-Hamas Conflict Briefing (#7)
Proximities, to better inform its clients and the international community, will be producing a weekly intelligence briefing on the key updates & analysis related to the ongoing Israel-Hamas conflict and how we see it developing. This briefing will be current as of 1400hrs (GMT+1) on the date of publication (21 December). If you require any supplementary information or wish to speak to our analyst team about any recent developments, please email firstname.lastname@example.org.
- The Israel Defence Forces’ (IDF) ground operations through northern and southern Gaza continued during this monitoring period. Critical infrastructure buildings – including schools, hospitals, or refugee camps – that are perceived to be harbouring Hamas militants remained a focal point of the IDF’s strikes. IDF’s ongoing tactic of launching indiscriminate bombing and ground assaults is allegedly partially in response to Hamas’ growing use of guerrilla “hit-and-run” tactics and expanded arsenal. Elsewhere, the IDF accidentally killed three Israeli hostages and sparked mass contempt internationally and mass protests in Israel’s capital –Tel Aviv. With Israel’s unwillingness to change its tactics in Gaza expected to persist, there is a high likelihood that further global incidents of domestic unrest will emerge in response to Israeli operations in Gaza. This activity is most likely to be organised in public areas – e.g. major highways or city centres –and in front of political buildings – e.g. embassies or municipalities. Organisations are advised to reroute their operations around these regions and/or work from home where possible to minimise exposure to these risks.
- Meanwhile, Iran-backed Houthi rebels continued to pose the most serious risk to Western maritime assets in the Red Sea, with several shipping companies now avoiding the area. An international naval coalition is forming to protect international shipping in the Red Sea, potentially increasing the risk of spill-over effects and a widening of the war in the Middle East.
- The Houthi attacks have led to increased shipping time and higher fuel costs. This has yet to result in prices for shipped goods – such as crude or oil products – to increase, but there is a heightened risk of this occurring if the Red Sea situation persists over the coming weeks. Such a scenario could have knock-on effects on secondary industries – such as land transportation or automotive –dependent on these products and raise concerns for a return to the living crisis experienced after COVID-19 and the Ukraine conflict.
- Other Hamas-aligned threat actors launched a series of attacks against Israeli military forces. Hezbollah and the IDF’s ongoing tit-for-tat border strikes continue to be the worst hostilities between the two sides since 2006, with Hezbollah’s missiles able to penetrate Israel’s iron dome missile defence system regularly as of the time of writing. Elsewhere, the risk of Israel and Iran’s tit-for-tat cyber conflict flaring up has also increased in the previous week following an Israel-linked hacking group’s attack on Iran’s gas station operations. Organisations considered a part of Israel’s critical infrastructure – e.g. energy, water, telecommunications – will be the most at-risk sectors for retaliatory activity, with destructive or disruptive cyberattacks such as ransomware or wipers the most likely types of attacks.
What Are The Key Trends?
Key Military and Security Trends:
- The Israeli Defence Forces (IDF) have further expanded their “Operation Swords of Iron” (OSI) throughout Gaza during this monitoring period. Whilst firefights between the IDF and Hamas forces were recorded throughout the Strip during the previous week, the IDF also launched a series of renewed strikes against Hamas as well. Actions in the northern part of the strip are now transitioning from clearing into holding operations. The main effort is now in the southern part of the Strip. Most notably, Tel Aviv launched a missile strike against the Jabalia refugee camps that killed 90 Palestinians. Elsewhere, the IDF also launched a series of more targeted strikes against houses and other buildings the IDF believed to be housing Hamas members, including the Nasser Hospital in Khan Younis. The IDF’s tactic of launching indiscriminate bombing has allegedly partly been in response to Hamas’ growing use of guerrilla “hit-and-run” tactics and expanded arsenal. However, this has led to a high death toll within Gaza, with over 19,000 Palestinians killed since the start of the conflict.
- However, this tactic of indiscriminate targeting of potential targets has also led to the death of three individuals taken hostage by Hamas during the initial 7 October attack. These individuals reportedly stumbled upon IDF soldiers engaged in a firefight whilst waving white flags and calling for help in Hebrew. However, IDF soldiers questioned claimed that the incident occurred because they “feared for their safety” after mistaking the hostages for Hamas combatants and killing the hostages. Israeli Chief of the General Staff Major-General Herzi Halevi stated that the incident violated Israel’s rules of engagement and that the hostages – regardless of whether they were Hamas or not – should have been arrested instead of shot. This incident has sparked mass contempt from the Israeli population and sparked mass protests in the country’s capital – Tel Aviv, as the incident cast doubt on the IDF’s ability to adhere to its rules of engagement. Additional protests are highly likely to emerge in the coming weeks, especially with concerns for the safety of the remaining hostages expected to remain high (see key social trends for further analysis).
- In tandem with these operations, the IDF has continued its assault against Hamas’ estimated 400-500 km tunnel network located underneath the Strip. Most notably, the IDF uncovered the “biggest Hamas tunnel” near the Israel-Gaza border. Whilst previously discovered tunnels were low and small and required single-file movement, this recent tunnel is allegedly designed to carry carloads of fighters from Gaza to the border with Israel and appears to be connected to a wider network. While the IDF has refrained from providing further details of the tunnel, there is a high likelihood that they will start filling the tunnel with seawater to ensure it is unusable to Hamas forces in the future. Indeed, such action would be part of the IDF’s ongoing attempts to flood Hamas’ entire tunnel network with seawater to flush the terrorist group out. However, the tunnel is largely decentralised, which has posed a logistical concern for Israeli engineers looking for solutions to flood the tunnels as quickly as possible. Moreover, the remaining Hamas hostages are believed to be kept in the tunnels, meaning that a miscalculation on the part of Tel Aviv could result in the death of the hostages in the tunnels (see Proximities’ Israel-Hamas Brief #5 for further analysis). These concerns are likely to continue to moderately slow down the IDF’s offensive operations in the Gaza Strip in the coming weeks, especially as unrest over the shooting of the aforementioned hostages persists.
- The Iran-backed Houthi rebels’ attacks against maritime operations in the Red Sea persisted during this monitoring period, further heightening the risk of the Israel-Hamas conflict having spillover effects on the global economy. Several commercial ships were struck by Houthi attacks during the previous week. For example, Houthi spokesperson Yahya Sarea claimed that the group attacked two ships – the Panama-flagged MSCClara and the Norwegian-owned Swan Atlantic – after they declined to respond to Hamas’ calls. These attacks are the latest in a series of attacks against ships perceived to have links to Israel in response to Tel Aviv’s ground assaults in Gaza and caused major maritime firms – such as BP – to temporarily reroute shipping activity away from the Red Sea.
- This trend has significantly raised the cost of shipping goods near Israel via sea with container lines imposing new surcharges. For example, ocean freight rates to Israel from several Chinese ports increased from USD 1,975 to over USD 2,300 for a 40-foot container in recent days. However, ships that are seeking non-Red Sea routes – such as around the Cape of Good Hope – are incurring higher fuel costs. While the increased shipping time and higher fuel costs have yet to result in prices for shipped goods – such as crude or oil products – to increase, there is a heightened risk of this occurring if the Red Sea situation persists over the coming weeks. Such a scenario could have a knock-on effect on secondary industries – such as land transportation or automotive – dependent on these products and raise global concerns about a return to the cost-of-living crisis experienced after COVID-19 and the Ukraine conflict.
- Several nation-states have increased their military presence in and around the Red Sea to minimise these disruptions and preserve global supply chains. The UK, Bahrain, Canada, France, Italy, the Netherlands, Norway, Seychelles, Spain and Greece announced their intention to join the US-led operation to protect shipping in the Red Sea and the Gulf of Aden. In concert, the Italian Navy announced on 19 December that it was sending its frigates to the Red Sea “in the coming hours” as a part of the European Union’s naval operation Atalanta to “counter the terrorist destabilisation activity of the Houthis”. While these nation-states’ naval presence will likely lower the success rate of Houthi attacks against maritime assets in the Red Sea, they are unlikely to notably lower tensions in the region. Indeed, the Houthi group claimed that Western military presence in the Red Sea is a part of the “aggression against the Palestinian people, Gaza, and the Arab and Islamic nations”. This statement coupled with the Houthi’s claim that they will not cease their activities until Israel halts its ground operations in Gaza will ensure that disruptions in the Red Sea will persist for the coming weeks and that there is the potential for violent escalation between the coalition navies and the Houthis Maritime and shipping firms that can redirect their business activities away from the Red Sea are advised to do so to minimise their exposure to these threats.
- Elsewhere, other pro-Palestinian and Iran-linked proxy attacks against Israel also continued during this monitoring period. The Lebanon-located and Iran-backed Hezbollah militants continued to engage in tit-for-tat border attacks with Israeli forces in the worst hostilities between the two sides since 2006. In one notable incident, Hezbollah claimed that it “shelled two Iron Dome air defence platforms” in the Kabri settlement in Northern Israel. The threat posed to commercial operations by these attacks is expected to be limited given that they are likely to remain targeted against Israeli military operations or critical infrastructure operators – such as telecommunications or energy firms - supporting their activities. However, there is a latent risk of firms operating along the Israel-Lebanon border region and/or dependent on Israeli critical infrastructure in this region experiencing business continuity threats, e.g.power disruptions or limited communication network availability.
Key Cyber Trends:
- On 18 December, the Israel-linked hacking group Predatory Sparrow claimed that it hacked gas station operations across Iran and took them offline. Iran’s oil minister Javad Owji confirmed this report after claiming that 70% of the nation’s gas stations were taken offline by “outside interference”. While little is currently known about this cyber threat actor, Predatory Sparrow is believed to be linked to Israel’s military intelligence and historically is known to target Iran’s critical infrastructure operators, such as energy sector firms. As such, this incident appears to be indicative of Israel and Iran’s ongoing tit-for-tat cyber conflict stemming from their long-standing geopolitical tensions. With the ongoing Israel-Hamas conflict likely to further heighten tensions between Tehran and Tel Aviv, there is a heightened risk that this latest cyberattack could inspire retaliatory attacks fromIran-state-linked hackers in the coming weeks. Organisations considered a part of Israel’s critical infrastructure – e.g. energy, water, telecommunications –will be the most at-risk sectors for retaliatory activity, with destructive or disruptive cyberattacks such as ransomware or wipers the most likely types of attacks.
Key Mis-Disinformation Trends:
- No notable mis-disinformation trends were recorded during this monitoring period.
Key Social Trends:
- Instances of domestic unrest prompted by the Israel-Hamas conflict continued during this monitoring period. The most notable protests that occurred were the demonstrations linked to the IDF’s accidental killing of three Israeli hostages in Gaza. This incident prompted thousands in Tel Aviv to take to the streets to express their condolences to the hostages’ families, demand a transparent investigation of the incident by Tel Aviv and, in some cases, a ceasefire to the conflict. Meanwhile, pro-Palestinian protests around the world remain a notable trend during this monitoring period as well. In New York City, hundreds demonstrated in Midtown, Manhattan, with several protesters arrested by the local authorities.
- This NYC protest is indicative of the exponential number of pro-Palestinian protests in the US. According to the Crowd Counting Consortium (CCC) – a public service project that tracks non-violent protests via OSINT reporting – more than 1,869 pro-Palestinian protests have occurred in the US since 7 October. The CCC claimed that the initial activity recorded was “demonstrations, rallies, marches, or protests on public sidewalks and streets”; however, more recent activity has transitioned to “acts of civil disobedience and other deliberately disruptive actions”.While the CCC did not explain this transition, the trend is likely due to the growing violence and number of civilian casualties in Gaza and the IDF’s increasingly aggressive tactics in the Strip. As such, with the IDF’s aggressive ground assault unlikely to desist in the coming weeks, there is a high likelihood that further incidents of unrest will emerge in response to Israeli operations in Gaza. This activity is most likely to be organised in public areas – e.g. major highways or city centres – and in front of political buildings – e.g. embassies or municipalities. Organisations are advised to reroute their operations around these regions and/or work from home where possible to minimise exposure to these risks.
Key Political Trends:
- Following the IDF’s accidental killing of 3 Israeli hostages earlier this week, Israeli Prime Minister Benjamin Netanyahu implied during a news conference that renewed Qatar-mediated negotiations are underway to recover the remaining hostages from Hamas. Israeli intelligence believes there are still some 130 hostages in Hamas’ possession. While the prime minister has refrained from providing further details of the negotiation process, the Qatari Prime Minister SheikhMohammed bin Abdulrahman Al Thani, Israeli Mossad Spy Agency Head David Barnea, and US CIA Director William Burns met on 18 December in Warsaw, Poland to discuss further details of hostage negotiations. While the three parties claimed that talks were “positive” they also stated that an agreement is not expected imminently.
- Despite this, Hamas leader Ismail Haniyeh made an official visit to Egypt on 20 December for diplomatic talks. Ismail and Islamic Jihad – a Palestinian militant group also holding hostages in Gaza – are set to reportedly discuss which hostages could be released under a new truce and what prisoners Israel would be willing to release. Ismail – who typically resides in Qatar –historically only engages in public diplomatic efforts when there is a moderate likelihood of a solution. For example, Ismail travelled to Egypt in early November 2023 right before the Israel-Hamas conflict’s week-long ceasefire and hostage release was announced. While there still is a high level of uncertainty over whether a second truce will be signed, it is unlikely to result in the permanent end of the conflict. Indeed, Tel Aviv’s goal of completely eradicating Hamas from Gaza will likely encourage Hamas to hold on to several hostages for as long as possible to delay the IDF’s ground assaults and to potentially extract greater concessions from Israel. The two sides’ inability to sign a long-term ceasefire deal will likely further heighten tensions and scrutiny within both the West and the Middle East, prolonging the threat of domestic unrest posed by activist groups.
- Meanwhile, international condemnation of the IDF’s ground assault into Gaza continued during this monitoring period. Most notably, The US - Israel’s most important ally - continues to issue increasingly more critical statements against Tel Aviv’s actions in Gaza. Most notably, Washington claims that Tel Aviv is progressively losing support from the international community because of its indiscriminate bombing of civilian areas in Gaza. In line with this, US Defence Secretary Lloyd Austin urged Israel during an 18 December press conference to protect civilian lives and transition away from a major conflict towards lower-intensity warfare in Gaza. Despite the increasingly unfavourable sentiment expressed by Tel Aviv’s allies, there is currently only a low to moderate likelihood that the IDF’s tactics in Gaza will change. Indeed, unnamed IDF officials and advisors speaking to international media outlet Reuters on 19 December implied that the IDF’s aggressive tactics – and subsequent civilian casualties - were necessary to defeat Hamas, demonstrating the limited willingness within the Israeli military and government to halt or change their ongoing operations in Gaza. And even if the IDF will indeed transition to a new phase in the war, it might still ramp up its current operations before doing so.
- Elsewhere, Malaysia announced on 20 December that Israeli-flagged ships are banned from its ports in response because they believe Israel’s actions in Gaza violate international law. Malaysia, which is a 60% Muslim country – does not maintain diplomatic relations with Israel and has historically been a critical voice over Tel Aviv’s action in Palestine. This decision underscores the growing business disruptions that the Israel-Hamas conflict is causing for global economic activities, especially in the maritime sector. Ownership structures in commercial shipping are complex, with the flag sailed on a ship and its parent company’s land of origin not always being the same. As such, there is a heightened risk posed to ships sailing under the Israeli flag for certain logistical benefits no longer being able to port in Malaysia. With tensions over the Hamas conflict expected to increase in the coming weeks, there is a heightened risk of other Muslim-majority countries implementing similar regulatory restraints on Israeli-flagged ships, disrupting their business operations in and around those regions.
- whilst there is growing scrutiny of Israel on a federal level in the US, support for Israel and its operations amongst the general public is expected to remain strong. As such, with the support amongst US citizens expected to remain high and Israel’s position within the US Middle East security plan unlikely to change, there is a low likelihood of Washington revoking its support of Tel Aviv in the foreseeable future over this conflict.
The growing uncertainty looming over the conflicts exacerbates the threat landscape faced by organisations operating both in Israel and the surrounding region. Therefore, Proximities has built out a series of scenarios (organised in decreasing likelihood) based on not only the ongoing developments but also the Israel-Palestine conflict’s historical context to indicate how the conflict could develop. Given the development during this monitoring period, the conflict has continued to sit firmly within Proximities’ scenario 3: a war of attrition (see below for further analysis).
Scenario 3: War of attrition
The war of attrition scenario entails that the current situation between the IDF and Hamas fighters continues indefinitely. While the two sides have historically already been engaged in a long-term conflict, this scenario would take a form like the Russia-Ukraine conflict in that both sides would engage in more regular operations aimed at targeting infrastructure, weapon caches, personnel critical to the opposition and civilian urban targets, such as public gatherings or critical infrastructure entities. Despite this, these operations would unlikely be able to deliver a critical strike that would end the conflict quick manner. This scenario would likely evolve if Israel partially succumbed to pressure from its allies – particularly the US – to not further escalate the conflict and implement its Operation Swordsof Iron to the fullest.
This scenario would likely have one of the higher humanitarian impacts due to the significant imbalance between Hamas and the IDF’s military capabilities. More specifically, Palestine – in the Gaza and West Bank - has already experienced a significantly higher number of civilian causalities compared to Israel, a trend that is likely to intensify further in a long-term conflict.
On top of these social concerns, a prolonged conflict would also likely have significant economic impacts on both Israel and Palestine. Palestine’s economic outlook was already dire before the conflict broke out, with the World Health Organization (WHO) calling it a “humanitarian catastrophe”. In contrast, Israel was ranked as the fourth best-performing economy amongst the Organization for Economic Cooperation and Development in 2022 by the Economist. However, recent policy blunders by Israeli Prime Minister Benjamin Netanyahu – particularly his judicial overhaul – have seen FDI in the country drop by 60% and caused notable swings in the Israeli stock market.
However, TelAviv’s more aggressive approach towards this conflict iteration with Hamas has economic observers concerned about long-term impacts on Israel’s economy. Most notably, many of the reservists who have been called into service for this conflict are technology entrepreneurs, teachers, lawyers, or other sectors that make up an important part of Israel’s entrepreneurial economic activity. As such, rating agencies such as Moody’s or Fitch have downgraded aspects of Israel’s economic rating – such as debt – after warning that the heightened geopolitical tensions surrounding the conflict decrease investors’ confidence due to the risk of “a diversion of resources in the economy” emerging.
Nevertheless, Israel is highly likely to receive some type of financial aid from allies such as the US, with US President Joe Biden already expected to ask Congress for 14 million USD to provide Tel Aviv with security and military aid. While such financial support would likely mitigate the risk of any short-term economic instability, the prolonged nature of the conflict could heighten the risk of Tel Aviv introducing policies such as reducing interest rates to support its wartime economy but subsequently reducing the value of the shekel and hindering Israel’s long-term economic growth. As such, any prolonged IDF mobilisation will likely be weighed against its economic impact, with any significant hindering of Israel’s already slowed economy likely to heighten the likelihood of Tel Aviv calling for a reduction of troops or an extended ceasefire similar to 2014, which would trigger the start of our scenario 1.
Scenario 1: Return to Status Quo
The most sought-after scenario from humanitarian organisations, intergovernmental organisations, and Israel’s Western allies regarding this conflict is either a ceasefire and/or the situation de-escalates enough to where tensions between Gaza and the Israeli forces return to the“status quo”. This return could be triggered by events such as a UN peacekeeping mission or the economic burden of a prolonged conflict forces Tel Aviv to end its military operations (see scenario 3). A return to the status quo would refer to the retreat of the additional Israeli forces, the cessation of all bombing and military operations into the Gaza Strip, and the return of all critical infrastructure operations – such as energy, water, or gas – to Gaza by the Israeli government. However, there will still be a significant amount of investment and construction required to return the strip to what it was pre-conflict. This will likely - alongside historical factors – maintain tensions between Palestinians and the Israeli government for the coming months and heighten the risk of sporadic protests by Palestinian citizens in Gaza and the West Bank. Such activity could be met with a strict Israeli or Palestinian security response, and businesses and their personnel are advised to avoid areas of typical interest for protesters, such as outside political capitals or highways, to minimise their exposure to these threats.
Despite the great appeal of this scenario to not only Israel’s allies but also the international community, several mitigation factors ensure this is a lower likelihood scenario. Most prominently, the communication lines between Hamas and the Israeli government are limited to non-existent and neither side has shown an inclination to open such lines. This lack of communication highlights the two sides’ all-time-low relations and Israel’s focus on eliminating Hamas as a threat and unwillingness to keep an option of diplomatic de-escalation readily available. Moreover, regional states with clout in the region have had limited success convincing either side to come to the negotiation table like the Egyptian government did during the 2014 Gaza War. While nation-states such as Egypt have had some success during hostage negotiations, other nation-states such as the US have largely toed the line of publicly supporting Israel and its actions whilst also calling for“diplomatic efforts” to improve the situation.
Scenario 2: Partial land acquisition & proxy war
In this scenario, Israeli ministerial officials follow through with their promise and annex a large swath of the Gaza Strip as compensation for the Hamas attack. Such aggressive activity could trigger the Iranian government and its proxy groups – such as Hezbollah – to follow through with their promises of launching “pre-emptive” strikes against Israel if they engage in a ground offensive against Palestine and prompt a proxy conflict between these actors. Such a conflict would present a significant risk to not just the Palestinian territories but also Israel as well, particularly from these actors’ rocket strikes.
While Israel’s airspace is protected by its so-called “Iron Dome” air defence system, the dome is not 100% effective. Indeed, Rafael – the state-owned Israeli defence firm that developed the system – claims that the technology has a 90% success rate at intercepting enemy rockets. However, The University of Singapore’s Middle East Institute stated this claim is “very contentious” because it is based on“estimates and data” provided by the Israeli government itself. Indeed, data gathered during the early stages of the 2023 Israel-Hamas conflict found that the between 2,200 – 3,000 rockets fired by Hamas towards Israel since 7 October have been successful in overwhelming the Iron Dome.
But Hezbollah has much more sophisticated weapons systems and the financial support of the Iranian government and has hundreds of thousands of rockets at their disposal, with it probable that such an amount can surpass the Israeli rocket defence system. However, Hezbollah is highly unlikely to launch its entire rocket stockpile at Israel at once and instead sporadically launch a series of rockets towards Israel against strategic targets, such as military installations or weapons caches. Nevertheless, there remains a heightened risk that civilian targets could be selected as well, with critical infrastructure entities, such as those in energy, telecoms, or defence, constituting high-value targets for such activity. Entities and organisations based in an unpopulated area of Israel will be particularly vulnerable in this scenario as the Iron Dome is programmed to destroy rockets which are considered threats to civilian urban areas.
However, this threat will likely be notably mitigated by the presence of US military personnel in the region. For example, the USS Carney, a destroyer, located in the northern Red Sea shot down multiple rockets and several drones that reportedly were launched by Houthi Forces in Yemen and headed towards Israel. Pentagon press secretary Brigadier General Pat Ryder stated that the missile interception was “a demonstration of the integrated air and missile defence architecture that we have built in the Middle East […] we are prepared to utilise, whenever necessary to protect our partners and our interests in this important region”. Nevertheless, there will remain a latent risk of Iranian proxy or pro-Palestinian militia groups’ missile attacks penetrating the Israeli-US defence system and striking strategic targets such as critical infrastructure entities, government buildings, or military infrastructure.
Scenario 4: Full annexation of Gaza
While this can be seen as the worst-case and lowest-likelihood scenario, it would also likely have the greatest impact on business operations and regional stability in the region. Most notably, the full annexation of the Gaza Strip by Israel would bring about strong condemnation from the international community, particularly the Arabic-speaking community. Such a scenario would also likely see at the minimum the partial retraction of Washington’s support for Tel Aviv’s actions in Palestine, especially as calls from the international community increase for action to be taken by the UN Security Council and other intergovernmental organisations against Israel. While it is probable that this scrutiny will not be as severe as against the Russian government in response to the Ukraine conflict, there is a high likelihood that sanctions and other regulatory actions will be levied against Israel in response to the full annexation of the Gaza Strip.
In addition, more intense protests will likely be launched across the world in response to this action, which would be comparable if not of greater scale than those seen during the start of this current Israel-Hamas conflict. While these demonstrations are unlikely to be initially targeted against businesses, entities that show public support for Israel and/or are seen to be undermining the Palestinian cause will likely become targets of pro-Palestinian activist rallies. Indeed, these rallies are likely to be centred in areas of political importance, such as government buildings, embassies, or capital centres. However, protests in Palestine and Israel are likely to be met with significant resistance from Israeli security forces which could lead to clashes and violence. Demonstrations in other major cities – such as Washington D.C. or Amsterdam - are likely to remain peaceful and show solidarity with the plight of the Palestinian people, however, such activity could turn more violent if met with counter-protesters or with significant police resistance.