The conflict in Gaza has been raging for more than two months now – within the context of a long-standing conflict that dates back over more than 75 years. In light of the attack of Hamas on 7 October and the Israeli military response, the Israel-Hamas conflict is at its worst point in years. After a 7-day truce from 24 November to 30 November, the ground operation of the Israel Defence Forces (IDF) entered a new phase, expanding from the north to the south of Gaza. This will likely lead to an even heavier humanitarian toll as southern Gaza is currently overcrowded with Gazans seeking refuge. So far, the conflict has led to a very important number of casualties and to a humanitarian crisis in Gaza.

Without forgetting about all the civil victims of this conflict, this article wants to shed a light on the main risks and implications of the conflict for countries in the region and possibly for your clients doing business with such countries. 

Before the outbreak of the conflict, tensions in the West Bank were already very high. The current situation is further exacerbating tensions and might lead to severe unrest. It is also increasing regional geopolitical and security risks. A key risk is that Hamas’s allies could participate directly in the conflict and escalate it to a regional level. Since the truce ended, skirmishes resumed at the Lebanese-Israeli border, and between US troops and Iran-backed groups in Syria and Iraq. Since November, Yemen’s Iran-backed Houthi militia have also been attacking ships in the Red Sea. As this is an important trade route, these attacks raise security risks for commercial maritime traffic passing there. 

Geopolitically speaking, the conflict complicates the current détente between Israel and some Arab countries under the Abraham Accords. These are a series of accords on Arab-Israeli normalisation signed by Israel and the United Arab Emirates, Bahrain, Morocco and Sudan. Especially the trilateral negotiations between Israel, the USA and Saudi Arabia, on an Israeli-Saudi détente, could be impacted.

The region is already feeling some economic repercussions of the conflict as well. Oil markets experienced significant volatility at the beginning of the conflict and flight bookings to the region have reportedly fallen. 
A possible disruption of tourism is a key risk for neighbouring international destinations Jordan, Egypt and Lebanon. If the conflict lasts for a long time, it could severely impact tourism in these countries that are already in challenging (socio)economic situations.

The worsening humanitarian crisis in Gaza and the massive destruction of buildings and infrastructure are causing outrage and fuelling regional discontent in support of Palestinians. Mixed with domestic discontent, these manifestations could evolve into larger and more destabilising unrest. Especially Jordan, Egypt and Lebanon are vulnerable to such unrest, again because of their difficult socioeconomic situations and other domestic grievances.

For the time being, Israel’s political risk ratings are maintained at their current levels (see image). However, the short-term risk outlook for Israel is negative. The same outlook is maintained for neighbouring Egypt and Jordan. We continue to closely monitor the developments in the region and will revise the ratings as soon as needed.

For more information, please contact your Credendo Account Manager.