We lead this morning’s War Watch with a look at how Israel’s assault on Gaza could impact our economy here at home.

#1- IMF chief Kristalina Georgieva thinks Egypt and the region will suffer an economic hit if there is a prolonged conflict in Gaza. “Investors are going to be shy to go to [these countries]. The cost of ins., if you want to move goods, they go up. Risks of even more refugees in countries that are already accepting more,” Ahram Online quotes her as saying at the Future Investment Initiative in Riyadh yesterday.

Another spoke in the wheel: “What is happening in the Middle East is happening at a time when growth is slow, interest rates are high, and the cost of servicing debt has gone up because of covid and the war,” Reuters and Bloomberg quoted her as saying.

#2- Keep an eye on our tourism targets: Flight bookings to Egypt, Jordan and Lebanon have plunged since the start of the conflict, according to analysis by travel research firm ForwardKeys picked up by Reuters. Air tickets to Egypt have fallen by 26% y-o-y, to Jordan by 49%, and to Lebanon by 74%. The number of people visiting Egypt has boomed this year, with the Tourism Ministry reporting a 40% y-o-y rise in arrivals during the first seven months of the year. The government is aiming to attract 15 mn tourists in 2023.

#3- Pundits think the EGP is being squeezed in the parallel market:The conflict is driving up the price of greenbacks on the parallel market, said Fitch’s regional country risk head Ramona Moubarak in response to a question from Ahram Online. Moubarak told the state-owned newspaper that “negative sentiment because of the war has weighed on the parallel market,” saying she thinks the EGP is at about 46. A separate report from Sky News Arabia puts the figure at EGP 47.

Before you take media reports of parallel-market figures seriously: The parallel market is illiquid and opaque, and so more than a little prone to swings and exaggerations.

Remember: The IMF earlier this month downgraded its outlooks for the Egyptian economy and the wider MENA region:

  • Egypt: The Fund downgraded its FY 2023-24 growth outlook for Egypt to 3.6% from 4.1% previously. This was the second time it had downgraded its outlook this year, having cut it from 5.0% in July due to the FX crunch and lower investor confidence.
  • MENA: The IMF lowered its 2023 MENA growth outlook by 0.5 percentage points to 2.0%.

DIPLOMACY-

El Sisi emphasizes the need for caution in how it responds to Israel: President Abdel Fattah El Sisi yesterday said that military force is only for defending the country’s national security, and cautioned that it should be used “wisely.” “It's very important when you have this kind of power that you use it reasonably, wisely, and maturely, and you don't overstep and have illusions about your own strength,” he said at a military exercise in the Sinai (watch, runtime: 1:36). “You have this capability to defend yourself … never let anger or fervor cause you to overstep.”

This came amid calls in some quarters for Egypt to adopt a more aggressive posture towards Israel in response to calls from some of its officials to displace Gazans into the Sinai. Israel’s shelling of a border post earlier this week that injured nine Egyptian soldiers has inflamed public outrage about Israel’s conduct of the war. Both the IDF and Egyptian military said the attack was an accident, and Israel issued an apology.

El Sisi x Macron: El Sisi and his French counterpart Emmanuel Macron said they agreed on the need to avoid escalating the conflict and accelerate the delivery of aid to Gaza at a joint press conference yesterday (watch, runtime: 21:45). El Sisi said that the French president agreed that attempts to displace the Palestinians in the Sinai would be “extremely dangerous,” while Macron called for Israel to allow fuel supplies to reach hospitals. He said France would send a plane carrying medical supplies to Egypt, and a navy ship to provide support to Gazan hospitals. Neither the Egyptian or the French sides released readouts of the conversation.

Deadlock at the Security Council: Competing draft resolutions put forward by Russia and the US were voted down by members of the UN Security Council yesterday.

  • The US resolutioncalled for a humanitarian “pause” rather than a ceasefire, and included a reference to Israel’s right to self-defense. Ten countries on the 15-member council voted in favor, and the UAE, China and Russia all voted against it.
  • The Russian resolutioncalled for a full ceasefire and the cancellation of Israel’s demand for residents of north Gaza to flee south. The UAE, China and Russia voted in favor, and the US and UK voted against it. The rest abstained.

ISRAEL VS. THE UN-

Israel doesn’t have many allies in its war against Guterres: Some of Israel’s European allies offered a defense of UN Secretary-General Antonio Guterres yesterday after senior officials demanded his resignation for criticizing the occupation and accusing the IDF of breaching international law. The German government, and the Portuguese and Spanish prime ministers were among the European countries to support him amid the attacks from Israel, which accused him of committing blood libel and being a terrorist sympathizer. The head of the Arab League, Ahmed Aboul Gheit, also defended Guterres from what he described as “fascist” attacks by the Israelis.

ICYMI- In a statement to the UN Security Council on Tuesday, Guterres condemned Hamas’ “appalling” massacre of Israelis on 7 October but urged world leaders to put it in the context of Israel’s 56-year occupation of Palestinian lands. He also accused Israel of committing “clear violations” of international humanitarian law.

A rebuke: “I am shocked at the misrepresentations by some of my statements,” a visibly angry Guterres told reporters yesterday (watch, runtime: 1:32). “As if I was justifying acts of terror by Hamas. This is false. It was the opposite,” he said, reiterating his condemnation of Hamas

Israel doubles down: Israel’s UN ambassador, Gilad Erdan, yesterday threatened to “teach [the UN] a lesson,” and reiterated his call for Guterres’ resignation. “It is a disgrace to the UN that the secretary-general does not retract his words and is not even able to apologize for what he said yesterday. He must resign,” he said. Israel said it would now block all visas for UN officials, including its humanitarian chief Martin Griffiths.

ON THE GROUND-

Fuel blockade hits aid efforts: The UN’s agency for Palestinian refugees (UNRWA) said it would be forced to begin curtailing its humanitarian relief operations from last night if fuel is not delivered to Gaza. “Fuel is urgently needed to continue the UNRWA life-saving humanitarian operations. If fuel is not received into Gaza, UNRWA will be forced to significantly reduce and in some cases bring its humanitarian operations across the Gaza Strip to a halt,” it said.

No new aid deliveries made it into Gaza yesterday: Since the start of the conflict 17 days ago, just 62 trucks carrying food, water, medicine and humanitarian aid have entered the territory. Israel agreed to slightly ease its total blockade last week but is still preventing fuel from entering, leaving the strip almost entirely without power. The UN said yesterday that a third of hospitals and almost two-thirds of primary healthcare clinics have had to close due to fuel shortages and airstrikes.

Almost 1,500 people, more than 600 children dead in just two days: Yesterday was the deadliest day of the conflict so far, with the ministry reporting that another 756 people had been killed in Israeli airstrikes. This takes the death toll on Tuesday and Wednesday alone to 1,460, including 649 children.

The death toll: More than 6,500 people have now been killed by Israel over the past 18 days, according to the latest figures from the Gaza Health Ministry. Almost 17,500 have been injured.

Biden accuses Palestinians of inflating the death count: “I have no notion that the Palestinians are telling the truth about how many people are killed,” the US president told reporters yesterday. “I’m sure innocents have been killed, and it’s a price of waging war. But I have no confidence in the number that the Palestinians are using.”

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