Israel-Hamas War Flash Report 03JAN24 17:40 PST - A Round Up

Israel vs Hezbollah

Once again, there is a lot of digital ink being used, suggesting that Israel and Lebanese Hezbollah are on the brink of war. We continue to monitor the situation in Israel and the Gaza Strip (and the West Bank, Lebanon, Egypt, Iran, Yemen, Red Sea, Egypt).

In our assessment, nothing has changed. The external saber-rattling between Israeli and Hezbollah leaders is meant for internal audiences. Fundamentally, Hezbollah isn't interested in a war with Israel, and Israel isn't interested in expanding operations beyond opportunistic attacks on terror leaders and border skirmishes. We have a lot of intel from just under the surface that Lebanese Hezbollah doesn't have much will to escalate and views the almost three months of border skirmishes as exhausting their resources.

Hezbollah is separate from the Lebanese government, and Lebanon has no appetite for renewed warfare on its soil. While Hezbollah will do what Hezbollah wants, there is pressure from Beirut to avoid escalating things into a full-scale conflict. 

Nothing is every zero percent, but in our assessment, the tension along the UN 2000 Blue Line border between Lebanon and Israel is being significantly oversold.

Houthi Rebels and the Red Sea

The United States and aligned nations have again warned the Houthis in Yemen that if they don't stop attacking Red Sea shipping, they will face the consequences. What that means exactly is unclear. The Biden Administration's foreign policy is conflict-adverse. While this is a preferred worldview, at some point, a red line needs to be drawn with teeth to back it up.

There were multiple reports that some nations dropped out of Operation Prosperity Guardian because the United States' rules of engagement were too restrictive.

In the first meeting of the United Nations Security Council of 2024, members demanded the Houthi rebels stop their attacks and called for the immediate release of the Japanese-owned Galaxy Leader and its crew.

The growing list of shippers that are refusing to use the Red Sea and Suez Canal not only impacts Europe, northern Africa, and the Americas, but commerce in the eastern direction to the Indian subcontinent and Asia. One thing we do know is that reduced traffic through the Suez Canal is bad for Egypt, which earns almost 18% of its annual tax revenue from transit fees.

Terror Bombing in Iran

We do not have enough insight to comment on the terror attack at the tomb of Iranian general Qasem Soleimani on the fourth anniversary of his assassination. We had a lengthy discussion on who might be behind the attack and why and concluded we don't have enough expertise on the internal politics and potential actors. We can't add any value beyond the existing coverage.