At a crossroads: the Middle East now has but two choices

The government of Benjamin Netanyahu is pursuing open-ended re-occupation of Gaza, further repression on the West Bank, and escalation with Iran and its proxies. This is not sustainable, nor does it provide a route to rebuild Israeli security.

For the Palestinians, there is little doubt that Israel's war on Gaza is an historic devastation on a par with the Nakba (Catastrophe) of 1948.

The Israeli right-wingers' appetite for doubling down on force and occupation that is also having dire consequences for Palestinians on the West Bank as well.  

Hamas put the Palestinian issue back on the agenda after it was effectively sidelined by the momentum of the Abraham Accords, but there is now less and less of Palestine left to salvage, so less prospect of a two-state solution.    

Iran's rules overruled

For Iran, the war has brought mixed blessings. On the one hand, Hamas dealt the strongest blow to Israel in its modern history, and after ten months of brutal bombardment it is still standing.

To Israel's north, Iran's main ally Hezbollah has maintained and managed a limited war against Israel along its northern front. In that sense, Iran's asymmetric warfare model has proven effective. Israel is in a deep strategic quandary because of Iran's network. 

On the other hand, the pattern of escalation may have put Iran in new strategic territory that it might live to regret, that being the direct exchange of fire between Iran and Israel.

This was first seen in April, after Israel bombed the Iranian consulate in Damascus. The assassination of Ismail Haniyeh in Tehran, and the expected Iranian response, could yet drag Iran itself into the arc of armed conflict. 

Since the end of the Iran-Iraq war in the late 1980s—Iran has built up its 'forward defence' proxy forces.

For the past 35 years, Israel (and the US) have gone along with the rules of the game set by Iran: that responses to Iranian proxies would be on those proxies themselves, not on Iran proper. Today, those rules might no longer apply. Iran could now be the target.

Impact on the Gulf

For Saudi Arabia and the Gulf countries, their 'double deconfliction' with both Iran and Israel seems to have paid off. 

Throughout these past ten months, and through the upcoming weeks of potential escalation as well, the Gulf countries have been able to stay out of the fight, maintain their security, and proceed with their economic development agendas. Likewise Turkey.

For the US, the conflict has been consequential. It halted any pre-election US-Saudi-Israel deal and dragged Washington's credibility and moral standing through the mud, with Netanyahu showing America as powerless to influence proceedings.

Moreover, Israeli adventurism has dragged the US military to the brink, since Washington has felt it needed to defend Tel Aviv. Warships and submarines have been deployed as a warning to Iran, even though the US is desperate to avoid war.

To ice the cake, Netanyahu showed that he—not US President Joe Biden—holds sway with the US Congress, and that he could effectively determine the course of US policy in the Israeli-Palestinian and Israeli-Iranian arenas.

The US remains the most relevant global player in the region, the main military partner of Israel, and the main military deterrent to Iran and its potential escalation in the region. It is also the primary global diplomatic player in trying to bring the Gaza war to an end.

On Palestinian reconciliation, China has tried to bridge the gap between the two feuding groups (Fatah and Hamas), but neither Beijing nor Moscow has the capacity or the interest to play a major role in this most complex of conflicts.

One of two ways

As the region awaits the next moves from Iran and Israel, two scenarios could unfold. In one, the strikes and counter strikes are choreographed and telegraphed, much like they were in April, and major escalation is avoided. 

That would then return focus on Netanyahu to cease firing in Gaza and Lebanon, letting the region to move forward toward the mammoth post-war Gaza governance and reconstruction project. His alternative is to continue along the path of sustained conflict, largely to avoid ending his political career.

In the second scenario, the strikes and counter strikes escalate, ending in war between Israel and Iran, and/or the Israeli invasion of Lebanon. This would probably involve Israel trying to take out as much of Iran's nuclear infrastructure as it can, and Iran trying to inflict maximum damage on Israel. 

If the second scenario unfolds, the conflict could easily impact Gulf states, global energy markets, and the global economy. That is why investors are glued to the news.

Let us hope that diplomats succeed and that key leaders in the region prefer the first scenario.

The Middle East needs to turn the page and open a new chapter, one of opportunity, not only for Palestinians, who have suffered for decades, but for all.