The “economic coronavirus”: The first wave of the coronavirus pandemic exacted a heavy economic price from Middle Eastern countries: reduced oil and gas revenues; a tourism freeze; a decline in remittances from workers earning money abroad; and lower export volumes due to the global recession. This has been calamitous for a region that even before the pandemic had been economically stagnant:
- In Syria, the pandemic struck a country whose basic infrastructures had collapsed during the civil war, and which was already sinking under the heavy burdens of American sanctions and hyperinflation. Eighty percent of Syrians live under the poverty line, 40 percent are unemployed, and many face the threat of starvation.
- The horrific explosion in the Port of Beirut (August 4, 2020) and the government’s resignation in its wake, is expected to exacerbate Lebanon’s twin economic and social crises. Forced to declare insolvency, Lebanon’s national debt stands at over 170 percent of GDP. Citizens bereft of income and hope are demonstrating in the streets and do not shy away from blaming Hezbollah for their suffering.
- This past February, Egypt marked the birth of its 100 millionth citizen. Half the country’s population subsists on incomes of less than two dollars a day. As of this writing, no agreement has been reached in negotiations over the operation of the Grand Ethiopian Renaissance Dam, which Egypt fears will divert water from the Nile and wreak havoc on Egyptian agriculture.
- Jordan’s economy is mired in an ongoing crisis. The pandemic threatens to halt the modest growth the country had recently seen, and a 3.5 percent economic contraction is forecasted (low oil prices somewhat counterbalance the damage caused by the coronavirus).
- Yemen is in a state of humanitarian disaster. The five years of civil war put 80 percent of the population under the poverty line. Per UN data (October 2019), children under the age of five are dying in Yemen at a rate of one every 12 minutes (due to preventable causes).
- Falling oil prices and a projected 7 percent contraction of the Saudi economy, along with a decline in American willingness to help confront the regional challenges, are pushing the Saudi crown prince to explore solutions to the fighting in Yemen, the crisis with Qatar, as well as to relations with Iran.
- Iran has been hit hard by COVID-19 and faces a severe economic crisis, exacerbated by declining oil revenues and the punishing US-led sanctions imposed on it.
- The Turkish economy, whose impressive achievements were a feather in President Recep Tayyip Erdoğan’s cap, is now mired in crisis – currency devaluation, a large budget deficit, high external debt, inflation, and surging unemployment rates.
The pandemic’s negative economic impact may accelerate social and political trends that threaten stability in a Middle East already rife with war, terrorism, refugee waves, humanitarian crises, stagnant economies, corruption, unemployment, and failed governance systems. The required economic reform efforts foment social unrest, as they entail reduced subsidies and hurt lower-income populations. Israel needs to be prepared for the possibility that economic pressures will tempt some rulers in the region to deflect the agitation in Israel’s direction.
In addition to the Iranian threat, Israel faces a potential slide into violence on one or more fronts – vis-à-vis Hamas, Hezbollah, Syria, and in Judea and Samaria.
IDF Chief of General Staff Aviv Kochavy has publicly stated (December 25, 2019) that Israel will not allow Iran to entrench itself in the northern arena in general, or in Iraq specifically: “Iran continues […] to produce missiles that reach our territory, and has doubled the amount of enriched uranium in its possession […] We understand that the possibility that we will reach a limited or more-than-limited confrontation with Iran is not inconceivable.” And in fact, Israel is working to thwart the entrenchment of Iran and its proxies in Syria, and to halt the delivery of strategic arms to Hezbollah. Israel does not hesitate to strike Iranian targets. A notable instance of this was the July 2, 2020 attack, attributed to Israel (and the US), on the Natanz facility where advanced enrichment centrifuges were being developed. The confrontation has also spilled over into cyberspace: on April 23, 2020 there were reports of an attempt by Iran to damage Israel’s water infrastructure; on May 9, 2020 Israel retaliated by seriously disrupting operations at the Iranian seaport at Bandar Abbas. This chain of events suggests a high likelihood of escalation, and highlights the need for Israel to be prepared for Iranian retaliation.
The American sanctions and the negative impact of COVID-19 have not, as yet, caused Iran to drop its military nuclear development efforts, or to abandon its subversive activity in the region. Trump’s belligerent style has made it difficult for the US to garner support within the UN Security Council, which rejected the US proposal to extend the arms embargo on Iran (August 14, 2020). In response, Trump has threatened to invoke the JCPOA’s “snapback” clause to restore all sanctions against Iran, but the chances of this succeeding are not particularly high in light of the fact that the US withdrew from the Iran nuclear agreement in 2018.
Iran currently possesses a stockpile of enriched uranium that could be used to produce a nuclear bomb within a few months (though intelligence sources estimate that the Natanz attack set the Iranian nuclear program back significantly). Teheran limits access to International Atomic Energy Agency (IAEA) inspectors and is developing long-range ballistic missiles; its progress in the latter endeavor was evident recently in the successful launch of a military satellite (April 22, 2020). Iran is signaling, through its military actions, that it will not yield to pressure. This could be seen in its cruise-missile attack on oil facilities in eastern Saudi Arabia (September 2019); in the aggressive actions against oil tankers in the Strait of Hormuz; in its threats against US warships in the Persian Gulf; in its strikes, via Shiite militias, on the US Embassy and American military targets in Iraq; and in the signing of a military cooperation agreement between Teheran and Damascus in July 2020 – an agreement intended to upgrade Syria’s air defense system.
The killing via US airstrike, of General Qassem Soleimani, commander of the Iranian Revolutionary Guard Corp’s Quds Force (January 3, 2020), intensified the Washington-Teheran confrontation. The prevailing view is that Iran will wait for the results of the upcoming US elections to decide what to do next. Israel needs to be prepared for both: the possibility of US-Iran negotiations, which would have weighty implications; and the possibility of intensified Iranian military operations, to the point of full conflagration.
The dominant organization in Lebanese politics has been reluctant to open a battlefront with Israel for more than a decade. Hezbollah’s involvement in suppressing the recent protest movement sparked by Lebanon’s severe economic crisis has eroded its public esteem, and the organization is increasingly perceived as an obstacle to economic recovery. This perception deepened further following the devastating explosion in the Port of Beirut. Along with being prepared for military confrontation with Hezbollah, Israel is also fighting against it in the political arena. Germany’s designation (following in the UK’s footsteps) of Hezbollah and its affiliates as a terrorist organization (April 30, 2020) was a recent achievement for Israel. Hezbollah possesses more than 120 thousand rockets that can reach far into Israeli territory. Iran wants to amplify this threat and is building infrastructure in Syria and subterranean plants in Lebanon for the production of precision guided missiles for Hezbollah. Israel is preparing for the possibility that, in the next confrontation, Hezbollah will try to strike Israel’s offshore gas facilities and vital infrastructure, or even infiltrate Israel and capture territory along its northern border. Despite the accepted view that Hezbollah is not ready now to risk another war with Israel, as it is still licking the wounds of its involvement in the Syrian civil war and is under heavy political and economic pressure in Lebanon, the possibility of an unplanned escalation on the northern front cannot be ruled out. Moreover, intensified Israeli-Iranian enmity could cause Teheran to push for a Hezbollah attack on Israel. (In early April 2020 Israel revealed photographic evidence that Damascus is permitting Hezbollah attempts to establish a presence on the Syrian Golan Heights.)
According to IDF data, 1,295 missiles and rockets were fired at Israel from the Gaza Strip in 2019. In response, the IDF struck 900 targets in Gaza. The Shin Bet has also been thwarting Hamas-initiated terrorist attacks in Judea and Samaria (in 2019, 560 attacks were averted, including ten suicide attacks, four abductions, and over 300 shootings). This preemptive activity has continued in a period of relative calm in Gaza attributed to the coronavirus situation.
Hamas, which controls Gaza, is under pressure from Israel and Egypt, and faces unrest and domestic public criticism for the destruction in Gaza and for the poverty, the ongoing blockade, and the high unemployment rate suffered by Gazans. The Gazan poverty rate, according to the UN, is 38 percent; of 2.1 million residents, 1.3 million rely on food packages supplied by aid agencies. This already-difficult situation is worsening due to the coronavirus pandemic’s economic effects.
Despite international and regional awareness of the situation and its explosive potential, aid to Gaza remains limited. This is due to the aversion to investing in a “war zone,” as well as the rivalry between the Palestinian Authority and Hamas and the fear that aid to Gazans will bolster Hamas’s status. The PA is exerting economic pressure on Gaza, as part of its struggle against Hamas, and as a means of pressuring Israel (which fears that a humanitarian disaster would push Hamas toward confrontation).
We cannot rule out the possibility that the difficult situation in Gaza will cause Hamas to prefer a long-term ceasefire with Israel. When considering these scenarios, attention must also be paid to Islamic Jihad, which is funded by Iran and could, under Iran’s direction, try to thwart attempts to reach an agreement in Gaza.
The defeat suffered by ISIS and the killing of its leader Abu Bakr al-Baghdadi by the US (October 27, 2019), did not eradicate the organization’s ideological, social, and religious infrastructure. From time to time, ISIS demonstrates its ability to carry out terrorist attacks. An organization spokesman has even called for attacks on Jewish targets in order to halt the Trump plan (January 27, 2020).