Killing of Hamas Leader in Lebanon Increases Conflict Risk
On 2 January, a drone strike in Beirut, Lebanon killed senior Hamas leader Saleh al-Arouri and six other terrorists. Israel has not directly claimed responsibility but has started generally targeting Hamas leaders in Gaza and elsewhere, which is in line with PM Netanyahu’s goal of “ending” Hamas. Arouri led the effort to create a terrorist contingent in the West Bank, and he had a particularly close relationship with Hezbollah’s leader Hassan Nasrallah. The conflict is continuing in a complicated manner because Israel has stated it will remove five brigades from Gaza, indicating that the war will move towards a long-term, low-intensity conflict. This is because of the economic strain of Israel’s massive mobilization and the increasing criticism of its tactics by the international community. Similar operations targeting Hamas senior leaders and strongholds will likely take place as mobilization decreases. In addition, the risk of a broader conflict has increased because of Arouri’s death, the Houthi attacks on shipping, and the terrorist attack in Iran on 3 January. Turkey also reportedly detained 33 people who were suspected of spying for Israel, indicating Israel wants to engage in more targeted killings. President Erdogan has threatened “serious consequences” if a Hamas leader is targeted in Turkey. Hezbollah is likely now to also mount a military response against Israel over the coming weeks. It is unclear if that will only be missile strikes or significant cross-border fighting.
At Least 95 killed in Explosions at Iran memorial for Assassinated Commander
At least 95 people were killed by two explosions in Iran during a ceremony to commemorate the death of Qassem Suleimani, an Iranian general who was assassinated by a U.S. drone strike in 2020. The cause of the blasts, which took place in the southern city of Kerman, is currently unknown. Iran has vowed retribution on the 'terrorist act' with Iranian officials blaming Israel, but even in the current context of the war in Gaza it is very unlikely they backed the operation. Israeli operations against Iran have previously involved targeted assassinations or sabotage and not mass casualty attacks. For example, on 25 December a senior figure in the Revolutionary Guards was killed in an Israeli airstrike on Damascus, Syria. Although there is no claim of responsibility Islamic State (IS) militants have carried out attacks in Iran and a key IS “operative”, reportedly in charge of carrying out “terrorist operations” in Iran, was arrested in Kerman in September.
Major Shipping Issues in Suez and Panama Canals
Major shipping companies Maersk and Hapag-Lloyd announced on 2 January that they would avoid the Red Sea route that gives access to the Suez Canal because of terrorist attacks by Yemen-based Houthi militants. Both companies (and others) will reroute ships towards southern Africa’s Cape of Good Hope, which will drive up the costs of goods. The Suez Canal is used by approximately one third of global container shipping, and redirecting ships to the Cape will cost up to $1 million in extra fuel for every round trip from Asia to northern Europe. This is leading companies like CMA CGM to increase their prices by 100%.
The Houthis are backed by Iran, and they are currently engaging in terrorism in the Red Sea to support Hamas against Israel. In response, the United States and its allies issued a joint statement warning the Houthis there would be consequences for attacking shipping. The statement said "We call for the immediate end of these illegal attacks and release of unlawfully detained vessels and crews. The Houthis will bear the responsibility of the consequences should they continue to threaten lives, the global economy, and free flow of commerce in the region’s critical waterways," and indicates that the countries involved in the mission are prepared to engage the Houthis directly and carry out strikes against the rebel group in response to further attacks.
Additionally, climate issues are reducing the number of vessels traversing the Panama Canal. The combination of these two problems is highly likely to drive up inflation in 2024, which will cause economic problems for western countries. There are unlikely to be short-term resolutions as the conflict between Hamas-Israel will continue and there will be another El Nino this year.
2023 Expected to Be Confirmed as Hottest Year on Record
The last nine years have been the hottest on record and 2023 is likely to be confirmed as the hottest ever due to temperatures well above the average between June and November. Climate change is now being considered a significant threat to business. According to PWC's 26th Annual CEO survey 39 percent of CEOs say they are moderately or extremely exposed to the threat of climate change with some business already relocating operations. The increasingly stark warnings over climate change also increases the risk of radical environmentalism with climate related protests becoming more frequent, elaborate, and disruptive.
Assassination Attempt in South Korea
On 2 January, an assailant attempted to assassinate South Korean opposition leader Lee Jae-myung, and he is currently recuperating in a hospital. The attacker stabbed him in the neck while Lee visited the port city of Busan. Lee became the head of the Democratic Party in 2022, and he is a likely challenger to the current president in the next election. This event highlights the persistent threats to public figures, especially after the high-profile assassinations of former Japanese Prime Minister Shinzo Abe and Ecuadorian presidential candidate Fernando Villavicencio. There are unlikely to be major political risks from the latest event, but it does show the importance of executive protection for high-profile people.
Argentina Faces Major Protests
Although the new president of Argentina is an ardent libertarian, he has appointed several key figures into his cabinet with government experience capable of implementing reforms. By appointing experienced people from center-right parties, Milei is more likely to be successful in several of his policy goals (though far from all as they do not share his ideological libertarianism). In response to the cabinet and proposed policy changes, anti-government protests are planned outside the Congress building in Buenos Aires on 24 January. There are likely to be other protests by left-wing activist groups and unions, especially if any new policies are imposed before the planned protests. Should protests take place, violence is likely between protestors and law enforcement, especially in Buenos Aires and Cordoba.
Ethiopia Signs MOU With Somaliland
Ethiopia has signed a memorandum of understanding with Somaliland, a self-declared republic, to use one of its ports, which is critically important for the landlocked country. Ethiopia’s Prime Minister Abiy Ahmed has argued that access to the sea is an existential issue for his country, and many thought this referred to taking land from Eritrea. However, this is only a memorandum of understanding, and a full treaty has not been signed, and Somaliland remains an unrecognized country by the African Union. This agreement could have a stabilizing effect on the region if it helps Ethiopia’s economic growth, but if other countries oppose Ethiopia for siding with an unrecognized republic, then intervention by those states could have severe consequences.
Major Disruption in Japan from Earthquake and Aircraft Accident
Japan experienced multiple tragedies over the past week as there was a 7.6-magnitude earthquake and an airline collision that killed five Japan Coast Guard members in Tokyo. The earthquake killed at least 55 people, though search and operations are ongoing. Concerning the airline collision, a commercial aircraft landing at Tokyo's Haneda Airport crashed into a Coast Guard plane. All 379 passengers and crew from the Japan Airlines flight survived. The Coast Guard aircraft was set to deliver aid to those impacted by the earthquake. There will likely be major travel disruption over the short term as Japan continues to respond to the crises.
"I hope that in this year to come, you make mistakes. Because if you are making mistakes, then you are making new things, trying new things, learning, living, pushing yourself, changing yourself, changing your world. You're doing things you've never done before, and more importantly, you're doing something."
- Neil Gaiman
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