Gaza ceasefire: is it a defeat for Israel?

Key Markets update for Thursday, 16 January 2025

Yesterday, Israel officially announced that a cease-fire deal was reached with Hamas, which entails a complete withdrawal of IDF troops from the territory of Gaza, in three phases, beginning on Sunday, 19 January. The deal also entails an exchange of hostages and prisoners with 30 Palestinian prisoners exchanged for each Israeli hostage and 50 prisoners for each female member of the IDF. In Gaza, the deal is regarded as a victory for Hamas. It triggered widespread celebrations with Hamas fighters even emerging from their underground tunnels to join the celebration. At the same time, a large convoy of trucks brought much needed aid to the people in Gaza.

These developments are now widely credited to Donald Trump, even by Israeli media like Haaretz. How exactly that was possible, given that Trump is not yet the President, I'm not sure, but apparently that's what happened. Haaretz also alleged very strained relations between Donald Trump and Benjamin Netanyahu. We'll probably find out much more in the coming days.

For Israel, the deal is seen as a defeat. Well, it is indeed a political defeat for Benjamin Netanyahu and his government. They were demanding an unconditional release of Israeli hostages, not an exchange; they also vowed never to withdraw from Gaza and never to allow the Palestinians to return to Northern Gaza, etc. However, the deal is not a strategic defeat for Israel; that already took place a long time ago.

Its wars took a very heavy toll on the Israeli economy. Its indiscriminate bombing of Gaza lost its friends and public support around the world; its inability to defeat Hamas, as planned, quickly and ruthlessly, then its ill-advised adventure in the South of Lebanon against Hezbollah and its inability to stop the missiles now lobbed daily from Yemen, all contributed to that defeat.

Furthermore, Israel's reliance on the United States for security has proven to be its Achilles heel. For all the bluster and tough talk, the U.S. is simply unable to guarantee Israel's security. Meanwhile, the two-state solution has been killed and buried in Gaza rubble, leaving only one viable solution for the future: a one-state solution in which the Jews, Christians and Muslims will live as equals. It is not possible, at this stage, to even begin to predict how the situation will unravel from here, but some analysts have suggested that the ceasefire deal could continue as permanent peace for Gaza.

From the "grand chessboard," strategic point of view, what I believe is relevant, is that the Western empire is now losing an important beachhead in the Eastern Mediterranean. With it, it will likely lose the ability to dominate the region. Dominating the region, in this sense, primarily entails dictating the terms of trade and economic development, which further means that Western corporations and banking institutions might no longer enjoy privileged access to the region's resources. This could then prove another big decolonization domino to fall: very bad news for Western financial institutions.

It remains to be seen for how long Israel will be able to hold onto its newly acquired territories in Syria, or whether it will have better results against Hezbollah in Lebanon than it did against Hamas. That could depend in part on political developments in Lebanon which could deteriorate into a civil war. In Syria, the "coalition of the willing," has already fallen apart and the tensions between Turkey - which apparently dominates the new government in Damascus - and the rest of the Western powers is now undeniable.

Future of Syria summit in Rome, minus Syria and Turkey

Last week, Turkey wasn't even invited to the "Future of Syria" summit in Rome, and neither was Syria's new government. The U.S. has added pressure on Turkey by its decision to upgrade the 50 nuclear bombs that are stored at the Incirlik Air Base in Turkey, where the move is interpreted as a threat: the U.S. making Turkey a potential target of a nuclear attack.

On the whole, I continue to believe that all the day-to-day events are driven by the conflict between the withering Western empire and the emerging multipolar world led by China, Russia and Iran. To pacify the Eurasian continent, the emerging powers have to effect a radical overhaul of the existing insecurity architecture created by the colonial powers over the last two centuries and neutralizing the arch of chaos that surrounds China, Russia and Iran from the Baltics down to the East Mediterranean and across the Southern stretches of Eurasia up to to the Koreas.

Ultimately, I believe that the new powers will be successful and, as Col. Larry Wilkerson put it, we'll see economic power return to the East, where it's been during most of the past 3,000 years of history. The West, if it stays its destructive course, might see a similar fate like the Western Roman Empire. The wiser policy would be, to join them, since we can’t beat them. But betting on wisdom emanating from the West - especially from the EU and UK - at this point, would probably be unwise.

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Trading signals for Key Markets, 16 Jan. 2025

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