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Isreal-Palestine

Q. The ongoing Israeli-Palestine conflict is politically and militarily driven. Is a two-state solution realistic to this? What could be the repercussions of the Israel-Palestine conflict on India? 

Answer

As of today, the war is between the two countries. No other country has joined the war. However, the situation will change significantly if Iran, which is a major supporter of Hamas, joins the war. If that happens, it could lead to a spike in crude oil prices which may lead to selling pressure in the market.

However, the good news is that other OPEC countries, like Egypt and Saudi Arabia, do not support the Hamas movement. Therefore, OPEC nations would be careful of the oil prices and may not let it rise beyond 10 to 12%, which will keep the number below the three-digit mark.

Two state solution

The “two-state solution” refers to a proposed resolution to the Israeli-Palestinian conflict that envisions the establishment of two separate and independent states, one for Israelis (Israel) and the other for Palestinians (Palestine), living side by side in peace and security.

Challenges in achieving the solution 

• Security Concerns: Terror attacks, particularly those by Hamas, have caused significant security concerns for Israel. These attacks erode trust and make it difficult for Israelis to support concessions or a two-state solution that they perceive as compromising their security.
• Internal Political Division: The Palestinian territories are divided between the West Bank, governed by the Palestinian Authority (Fatah), and Gaza, controlled by Hamas. This political division has hindered the ability of Palestinians to negotiate and implement a unified peace agreement.
• Settlements: Israel’s continued construction of settlements in the West Bank is a major point of contention. Palestinians view these settlements as a violation of their territorial rights and a threat to the viability of a future Palestinian state.

Prospects for achieving the solution

• International Pressure: The international community, including the United States, the United Nations, and the European Union, continues to advocate for a two-state solution. Diplomatic efforts may intensify to push both parties toward negotiations.
• Public Opinion: Both Israelis and Palestinians overwhelmingly support a two-state solution. Grassroots efforts to advance peace and discussion are crucial because the public can have an impact on political decisions.

Measures that can be taken to achieve the solution 

• Halt settlements expansion: Israel should halt settlement expansion in the West Bank as a confidence-building measure. Addressing this issue is crucial to demonstrating a genuine commitment to peace.
• Engage Regional Powers: Regional powers, such as Egypt, Jordan, and Saudi Arabia, can play a role in supporting peace negotiations and normalizing relations between Israel and Arab states
• Ceasefire and Confidence-Building Measures: Both sides must commit to and enforce a long-term ceasefire to halt violence. Confidence-building measures could include prisoner releases, humanitarian aid, and joint economic initiatives.
• People-to-People Initiatives: Encourage civil society organizations, cultural exchanges, and educational programs that bring Israelis and Palestinians together to foster understanding and build bridges. 

Israel-India trade impact

• Israel imports or buys around $5.5 – $6 billion of refined petroleum products from India. In FY23, Israel’s total imports from India stood at $8.4 billion.
• As per the Global Trade Research Initiative, Indian companies exporting products to Israel may have to pay higher premiums and shipping costs, which will reduce their profitability.
• As of now, there has not been any significant jump in premium costs or shipping charges, but if the war intensifies, the premium charges might increase every week.
• India also imports products like machinery, pearls, diamonds, and other precious and semi-precious stones from Israel. As per available data, in FY23, India’s total imports were $2.3 billion from Israel.
• If the conflict escalates, it could create supply-side problems. If the trade gets impacted in the future, rupee depreciation is a possibility, and the currency may shift to the 83 or 84 mark.

Conclusion

The world stands at a critical juncture following the impacts of COVID-19 and the ongoing conflict in Ukraine-Russia. Preventing another conflict that could disrupt global supply chains is imperative. It is incumbent upon the international community to actively pursue peace between the two states. Any effective peace initiative must address the longstanding obstacles that have hindered the peace process, namely, the issues surrounding West Bank borders and settlements, Israeli security concerns, the Palestinian refugee crisis, and the status of Jerusalem.