Israel: the beginning of the end

Key Markets report for Friday, 13 Jun 2025

Early this morning, Israel launched a large-scale attack against Iran, code-named Operation Rising Lion, targeting its nuclear facilities, ballistic missile sites and also Iran’s top level military and scientific personnel. By all accounts, the attacks were very successful, damaging or destroying Iran’s nuclear enrichment facility at Natanz and killing Islamic Revolutionary Guard Corps (IRGC) leader Major General Hossein Salami, and the head of Iranian Atomic Energy Organization, Fereydoun Abbasi. Large explosions were also reported in Tehran and Shiraz.

This will escalate

The attacks were apparently not a one-off ambush: Israeli Prime Minister Benjamin Netanyahu announced that the attacks would go on until the Iranian threat to Israel was eliminated, so what we witnessed this morning was only the beginning of a war that is now certain to escalate. According to the Wall Street Journal, the plan is for the operations to continue for the next 14 days. How badly this could escalate the war, however, is anybody’s guess. Apparently, the Iranians already launched some 300 Shaheed drones toward Israel but so far, there are no reports of any of them actually hitting any targets.

Further attacks on both sides are certain to follow and as the world awaits the full extent of Iran’s retaliation, we should remember that Israel already attacked Iran in April and in October last year. On Monday, April 1, Israel conducted an airstrike on Iran’s embassy in Damascus killing as many as 50 personnel including four high-level Iranian military generals. October attacks allegedly destroyed Iran’s air defences (four Soviet era S-300 systems), for which Iran never retaliated, but vowed that in case of further attacks, their retaliation will be devastating to Israel and that US bases in the region will also be targeted. In all, the region is now braced for a hailstorm of consequences about to erupt.

The broader consequences of Israel’s action

Beyond the war between Israel and Iran, the whole region is about to be destabilized in a major way. Saudi Arabia, China and Russia have already issued strong condemnations of Israeli action, but the consequences of this conflict will likely have a profound impact in Turkey, Iraq, Lebanon and Egypt, potentially with very adverse consequences not only for Israel but also for western influence in the region. Meanwhile, the United States through Secretary Marco Rubio has declared non-involvement in Israel’s unilateral action. His official statement reads as follows:

“Tonight, Israel took unilateral action against Iran. We are not involved in strikes against Iran and our top priority is protecting American forces in the region. Israel advised us that they believe this action was necessary for its self-defense. President Trump and the Administration have taken all necessary steps to protect our forces and remain in close contact with our regional partners. Let me be clear: Iran should not target U.S. interest or personnel.”

I doubt however, that this position will come across as credible in Iran. President Trump himself has recklessly issued statements which imply that he’s OK with Israel attacking Iran casting a shadow on his outreach to Iranian leadership. The United States has been engaged in ongoing high-level negotiations with them, but currently there’s much speculation about the administration’s real agenda in these negotiations: was the whole thing was a ruse to catch the Iranians unprepared, or are Israel’s attacks an act of sabotage against Trump’s efforts, aimed at derailing any potential breakthrough.

Well, this wouldn’t be outside of the Israeli playbook either: Israel has had a habit, in the past of attacking and eliminating peace negotiators, including those engaged in active negotiation with Israel itself. Here’s how journalist Max Blumenthal commented on this in an X post this morning:

“‘Israel’ is unilaterally attacking Tehran days ahead of US-Iranian nuclear talks, with the obvious intention of blowing up negotiations Israel knows it cannot eliminate Iran’s nuclear program alone, or even set it back for more than a few months, so it aims to ignite a regional war that draws the US into direct conflict. Why is it doing this? The long answer requires a detailed treatise on the destabilizing and fundamentally unsustainable logic of the Zionist project…”

Unfortunately, war blows much nuance out of the picture and a polarization of opposing forces is almost unstoppable, drawing even reluctant participants into the battle. Some of this may already be happening: according to some reports, US, UK, Jordan and Syria have committed their air defence systems and air force to defend Israel against Iran’s attack which, if true, will mark them as formal belligerents in this conflict and potential targets for retaliation. On the opposite side, Egypt and Turkey might be drawn into the conflict and Jordan could experience a revolution. Qatar, western empire’s cat’s paw No. 2 in the region, could ultimately even cease to exist.

Is Netanyahu the last Prime Minister of Israel?

In fact, the cat could end up losing both paws - the other paw being Israel. For a small country with a damaged economy and an exhausted military, opening the fifth front in its war against substantially all of its neighbors has very little potential upside but a wide open downside. Back in 2012, Henry Kissinger predicted that in 10 years’ time there would be no more Israel. Obviousy, he got the time interval wrong, but his prediction might nevertheless come true in the end. More recently in Israel, Rabbi Schneerson declared that Benjamin Netanyahu would be the nation’s last Prime Minister. We’ll see…

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Today’s trading signals

With yesterday’s closing prices we have the following changes for the Key Markets portfolio: