Middle East conflict: is an all-out war inevitable?
Events have taken an ominous turn in the Middle East after Iran’s attacks on Israel. Will Israel and its allies retaliate, and how bad can it get?
Following days of rocket and missile exchanges between Israel and the Iranian-backed terrorist group Hezbollah, the confrontation took a “more ominous turn” when Iran launched another round of direct missile attacks on Israel at about the same time as Israel began a limited ground invasion of Lebanon, says The Economist. Iran’s actions suggest the “full-blown regional war that many have feared”, ever since the terrorist attacks of 7 October 2023, “now looks closer than ever”.
Will the Middle East crisis escalate?
The latest round of Iranian missile strikes, most of which were shot down, underlines the weakness of the Iranian regime, says Marc Champion on Bloomberg. The clerics in Tehran have seen Hezbollah, their “most powerful asset”, “decapitated and degraded” by the death of “one Hezbollah commander after another”, including the group’s leader Hassan Nasrallah, as well as the assassination of Hamas’s leader in Tehran. Israel is “clearly having a lot of military success right now”, and Hezbollah has been pushed further back into Lebanon. The resulting loss of credibility is dangerous for an “unpopular, repressive regime”.
Israel’s defences were so effective that the damage to the military and civilian sites that Iran targeted is “minor to non-existent”, says Jonathan Spyer in The Spectator. But, in response, Israel is unlikely to repeat the “small and largely symbolic” strikes it launched last April, as it is aware this would probably be interpreted as “hesitation – and hence weakness”. It would encourage the mullahs in Tehran to see massive missile attacks on Israel as “part of the rules of the game”, which could lead to a similar response “every time Israel takes major action against an Iranian proxy”. This time, Israel is likely to “hit back hard”.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Will the US intervene?
Iran’s attack on Israel also presents a dilemma for the US, says Gideon Rachman in the Financial Times. On the one hand, the US has said it will “work with Israel” to ensure there will be “severe consequences” for Iran, implying some form of support – perhaps even joint military action. However, it is also worried this may spark a wider war in the Middle East, one that “might draw in the US or wreak havoc on the world economy”. So, behind its “tough talk”, the White House may still be urging Israel to “calibrate its response and to not hit back so hard that Iran feels compelled to up the ante again”.
US president Joe Biden may have been putting “heavy pressure” on Israel to rein in its responses to a “symbolic minimum”, but it would be a “mistake” to give the same advice now, says Bret Stephens in The New York Times. Even a weakened Iran presents an “utterly intolerable” threat, not just to Israel, but to the United States, and “whatever remains of the liberal international order”, via Iran’s use of proxies around the Middle East, from Lebanon and Gaza to Yemen.
This requires a “direct and unmistakable” US response that targets the production of missiles and uranium and sends a signal that Iran’s “vast and vulnerable network of pipelines, refineries and oil terminals” will be next, unless it orders its minions to “stand down”.
This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.
Sign up to Money Morning
Our team, led by award winning editors, is dedicated to delivering you the top news, analysis, and guides to help you manage your money, grow your investments and build wealth.
Matthew graduated from the University of Durham in 2004; he then gained an MSc, followed by a PhD at the London School of Economics.
He has previously written for a wide range of publications, including the Guardian and the Economist, and also helped to run a newsletter on terrorism. He has spent time at Lehman Brothers, Citigroup and the consultancy Lombard Street Research.
Matthew is the author of Superinvestors: Lessons from the greatest investors in history, published by Harriman House, which has been translated into several languages. His second book, Investing Explained: The Accessible Guide to Building an Investment Portfolio, is published by Kogan Page.
As senior writer, he writes the shares and politics & economics pages, as well as weekly Blowing It and Great Frauds in History columns He also writes a fortnightly reviews page and trading tips, as well as regular cover stories and multi-page investment focus features.
Follow Matthew on Twitter: @DrMatthewPartri
-
House prices rise 2.9% – will the recovery continue?
House prices grew by 2.9% on an annual basis in September. Will Budget policies and ‘higher-for-longer’ rates dent the recovery?
By Katie Williams Published
-
Nvidia earnings: what to expect
Nvidia announces earnings after market close on 20 November. What should investors expect from the semiconductor giant?
By Dan McEvoy Published
-
Are Chinese consumer brands challenging global chains?
A new wave of Chinese consumer brands is starting to push out into global markets. Complacent Western giants are not nearly ready for the threat that they pose
By Matthew Lynn Published
-
Will turmoil in the Middle East trigger inflation?
The risk of an escalating Middle East crisis continues to rise. Markets appear to be dismissing the prospect. Here's how investors can protect themselves.
By Philip Pilkington Published
-
The Gulf states: a new competitor for the City's financial crown?
Bahrain and other Gulf states could eventually threaten London's financial dominance.
By Matthew Lynn Published
-
Working from home: is it working?
While Labour plans to make working from home the legal default, some employers are calling workers back into the office. What does the future hold?
By Simon Wilson Published
-
Israel conflict: the concerns of a wider war
Israel's raids into Lebanon have raised fears of a wider war
By Dr Matthew Partridge Published
-
Why did Britain give the Chagos Islands back?
What is the deal with the Chagos Islands and what role do the Tories play?
By Emily Hohler Published
-
Can Lebanon's struggling economy survive another war?
Lebanon's economy has been in dire straits for decades, and now it is yet again on the brink of war. Are better times on the horizon?
By Simon Wilson Published
-
Modi’s reforms set Indian stocks on fire
Indian stocks pass a new milestone, but global fund managers are holding back. Are there signs of overheating?
By Alex Rankine Published