Economic forces are at play in Israeli-Palestinian conflict

By Afni Regita Cahyani Muis, Universitas Darussalam Gontor

The January attack by Iranian-backed Yemeni Houthi on commercial ships crossing the Red Sea shows how economic and geopolitical forces intersect in Israeli and Palestinian conflict. The group is part of Iran’s alliance of anti-Israel and anti-Western alliance regional militias. Supposedly aimed at harming Israel’s allies’ economy, the attack has caused disruptions to international maritime transport.

As a result, some major logistics, as well as oil and gas companies, paused their shipping, resulting in rising prices worldwide. The US and UK – often seen as Israel’s allies – responded to the attack with multiple military strikes.

Geoeconomic ambitions in the Israeli-Palestinian conflicts

Israel seeks to cooperate with Egypt and Saudi Arabia as it shares geoeconomic interests in developing an integrated economic zone in the Suez Canal and optimising the economic potential of the Red Sea region.

Suez Canal is an artificial sea-level waterway in Egypt, connecting the Mediterranean Sea to the Red Sea

The development of the Suez Canal went on for decades through the construction of the integrated Sinai project area that began from 1982 to 2014.

An agreement consented by Cairo and Riyadh in 2016 reassigned ownership of two Red Sea islands to Saudi Arabia. This agreement opens up long-term investment opportunities for the Gulf countries for its potential to become an integrated economic zone.

The ambition to develop the Middle East’s economy does not go unnoticed by Israel as the country engages in regional development cooperation despite its long history of conflicts with Arab states.

Israel engaged in a war with the coalition of Arab states – particularly Egypt, Syria and Jordan – in 1967. The six-day war – an escalated tension over territorial disputes in the region – led to over 300,000 Palestinians being displaced from the West Bank.

Despite the conflicts, the countries in the region have been pushing to restore security by constructing a maritime route as a major economic integration area.

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