Israel-Hamas: "They Want Every Jew Dead"
My “weight of the evidence” read of the Israel-Hamas situation is that it is far from a run-of-the-mill “cycle of violence” Middle East conflict. In my opinion Israel-Hamas is a cataclysmic event along the lines of 9/11, the Great Financial Crisis, and COVID - an event where there is a before and after. As discussed in The WOTE Report this weekend, the impact on the economy and financial markets is likely to be profound as a result of higher and stickier oil prices keeping inflation above target and geopolitical uncertainty weighing on consumer confidence and asset market risk premia.
Israel-Hamas is going to evolve very rapidly. The word I keep hearing is “dynamic”. Israel has no choice but to impart complete and total destruction of Hamas, and with #FreePalestine protests already proliferating around the world, Israel does not have the regular course window of sympathy in which to exact its revenge before international backlash forces them to stop. The backlash is here right now before they even step foot into Gaza.
As I discussed last week on Xwitter, I asked a pretty simple question to a presenter at a macro dinner on Wednesday night: “Why would Hamas execute such a well-engineered attack knowing full well how Israel would respond? What gave them that confidence?” The presenter had not heard that question before, and he is as well-connected as they come. I am far from an insightful geopolitical strategist, but I think it speaks to the lack of appreciation by the market consensus of the “dynamism” of Israel-Hamas. Friday’s cross-asset market price action was the first time the market showed any real sign of concern, but already so far in early morning trading today that is beginning to be unwound on reports that Iran has stepped back from its support of Hamas and the Biden administration is over in the Middle East attempting to broker peace.
The United States’ failure to intercept the 9/11 attacks was blamed on its “failure of imagination”. Financial market participants would be best served to not make the same mistake when it comes to Israel-Hamas. This is an extraordinarily serious situation that is going to dominate the market for the foreseeable future.
Three pieces of evidence shape my current thinking on the conflict:
Senior Hamas Official Ali Baraka’s October 8 interview with Russia Today TV
My October 15 secured-line communication with an Army strategist
Jocko Willink’s October 12 conversation with Darryl Cooper
“We made them think that Hamas was busy with governing Gaza and that it wanted to focus on the 2.5 million Palestinians and has abandoned the resistance altogether.”
“The rockets of the resistance cover all of Palestine. Where would Netanyahu take the Israelis who were attacked? To Tel Aviv? We bombed Tel Aviv on the very first day of the attack. Does he want to take them to the Galilee? The northern front with Lebanon has opened today. The Galilee is no longer safe for the Zionist enemy. We can bomb the Galilee from inside occupied Palestine.”
“The Israelis are known to love life. We, on the other hand, sacrifice ourselves. We consider our dead to be martyrs. The thing any Palestinian desires the most is to be martyred for the sake of Allah, defending his land.”
“We have been preparing for this for two years. We have local factories for everything.”
“Our allies are those that support us with weapons and money. First and foremost it is Iran that is giving us money and weapons. There is Hizbullah, and the Arab and Islamic people who are standing by us. There are other countries that support us politically. Even Russia sympathizes with us. Russia is happy that America is getting embroiled in Palestine. It alleviates the pressure on the Russians in Ukraine.”
Baraka’s very clear message was confirmed by my secured-line conversation with an Army strategist and Jocko Willink’s conversation with Darryl Cooper.
Question: “Does Hamas view what they’ve done so far as missions accomplished and there isn’t another leg to this conflict?”
“Not mission accomplished. They want every Jew dead. Phase 1 is complete, but they definitely expected the incursion into Gaza - hence all the videos about going underground and stopping civilians from leaving.”
“The dynamism is more at play here than in Ukraine, and that one surprised the world. No resolution in the short-term.”
There are too many nuggets to summarize on a busy Monday morning, but one of the key notes from Cooper is his commentary about Palestinians in Gaza lionizing martyrs and how children are trained to lionize martyrs.
The bottom line is this: This is existential for Israel. With #FreePalestine protests on-going around the globe just days after Hamas raped, pillaged, and burned Israel citizens in a terror attack that dwarfed the scope and relative scale of 9/11, and with a pro-Iran administration in the White House, Israel has no choice but to escalate well beyond what a complacent consensus expects.