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<h1 class="gmail-reader-title">How Israel is trying to beat the ‘Axis of Resistance’ by dominating the regional supply chain</h1>
<span class="gmail-post-author"><span class="gmail-by">By</span> <a href="https://mondoweiss.net/author/ahmed-alqarout/" title="Posts by Ahmed Alqarout" class="gmail-author gmail-url gmail-fn" rel="author">Ahmed Alqarout</a></span>
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<span class="gmail-date-link">October 29, 2024</span>
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<p>In a recent public address on October 4, Iran’s Supreme Leader
Ayatollah Ali Khamenei highlighted for the first time what he described
as U.S. and Israeli plans to control the region’s natural resources. He
stated that Israel’s current war campaign aims to position Israel as a
hub for exporting energy to Europe and importing technology to ensure
its survival. Khamenei called for resistance against the so-called
India-Middle East-Europe Economic Corridor (IMEC), a proposed land
bridge connecting India, Saudi, the UAE, Jordan, Israel, and Europe. </p>
<p>Days after his call, the Iranian parliament discussed introducing a
bill for a defensive alliance with the countries belonging to the “Axis
of Resistance.” Khamenei further elaborated on this vision on October
27, calling for the establishment of “a global political and economic
alliance, and if necessary a military one” to confront Israel and stop
its ongoing crimes against the peoples of the region. This signals a
clash of markets might be the next phase of the war. At the heart of
this clash is the conflict over dominance in regional and global supply
chains. </p>
<p>Supply chain disruptions have become a recurring global issue since
the outbreak of COVID-19, which caused countries to implement stringent
controls over imports and exports. The concept of supply chain security
swiftly became a central concern. The U.S. government adopted
protectionist measures, particularly regarding vaccine exports, while <a href="https://time.com/5827804/russia-wheat-food-shortage/">Russia</a> and <a href="https://www.theguardian.com/world/2022/may/14/india-bans-all-wheat-exports-food-security-risk">India</a>
imposed restrictions on food imports and exports, and China limited the
export of protective equipment and medicines. This experience
highlighted the importance of supply chain security for many nations.</p>
<p>The emphasis on supply chain security was not solely driven by
pandemic-related concerns but also by the escalating geopolitical
competition between the West and the BRICS nations. The U.S., in
particular, began wielding supply chains as a strategic tool against
China and Russia, especially in light of the semiconductor and Ukraine
wars. The U.S. imposed restrictions on Chinese companies’ access to
critical semiconductors produced using American technology, affecting
major firms like Huawei and ZTE. In the aftermath of the Ukraine war,
the U.S. led a Western coalition in imposing broad sanctions on Russia’s
supply chains, attempting to isolate the country from the global
economy. In response, Russia and China retaliated by limiting critical
exports of rare earth minerals and uranium to the West.</p>
<p>The global supply chain conflict extended to the MENA region. In the
context of its war on Gaza in 2023, Israel sought to exploit its
integration within global and regional supply chains to achieve its
military objectives. By weaponizing its position within these supply
networks, Israel aimed to further its strategic goals. </p>
<h2><strong>Embedding Israel in the regional supply chain</strong></h2>
<p>Before Israel could weaponize its regional supply chain, it first
needed to establish it. While Israel had trade links with other MENA
countries for decades, these connections were limited and often
conducted in secrecy. However, the signing of the Abraham Accords in
2020, which included Israel, the UAE, Bahrain, and later Sudan and
Morocco, allowed Israel to more deeply embed itself in the regional
supply chain. Additionally, Israel’s recent gas discoveries over the
past decade became a tool to draw countries into closer economic
relationships, building on earlier agreements like the Camp David
Accords (1978) with Egypt and the Wadi Araba Treaty (1994) with Jordan,
as well as the region’s growing energy needs due to population growth.</p>
<p>Israel aimed to further entrench itself in the regional economy by
signing numerous free trade agreements and strengthening trade ties with
countries that had normalized relations with it. Israel signed its
first free trade agreement in the region post-normalization with the
UAE. In May 2022, both countries agreed on the <a href="https://www.moec.gov.ae/en/-/uae-and-israel-sign-comprehensive-economic-partnership-agreement-to-advance-bilateral-trade-beyond-usd-10-billion-in-5-years">UAE-Israel Comprehensive Economic Partnership Agreement</a>.
This agreement, the UAE’s second bilateral trade deal following its
agreement with India in February 2022, aims to boost trade by reducing
or eliminating tariffs, enhancing market access for exporters,
attracting new investment, and creating opportunities in key industries
such as energy, environment, and digital trade. It is expected to
increase bilateral trade beyond $10 billion. </p>
<p>This agreement has facilitated Israeli companies exporting cyber
security services to the UAE, contributing to Israel’s economy, even
amid global calls for boycotts following allegations of genocide. The
UAE became a vital economic lever for Israel to maintain strained global
trade relations and establish links with the Indian economy. For
instance, <a href="https://www.ondas.com/post/ondas-holdings-airobotics-receives-2-6-million-order-for-optimus-drone-systems-in-dubai-uae">Airobotics</a>, an Israeli company, has offices in Dubai, from which it exports Israeli services and drones worldwide. Shipping and <a href="https://www.reuters.com/article/world/middle-east/israeli-pipeline-company-signs-deal-to-bring-uae-oil-to-europe-idUSKBN275151/">energy projects</a> between the two countries are also being discussed and implemented.</p>
<p>Following the normalization of relations with <a href="https://www.reuters.com/world/middle-east/israel-bahrain-hope-seal-free-trade-deal-by-end-year-2022-10-31/">Bahrain</a>
in September 2020, Israel sought a free trade agreement with the
country. The agreement is expected to allow Israel to leverage Bahrain’s
strategic position in the global shipping, finance, and energy sectors.
Already, Cox Logistics, which manages the land bridge linking India,
the Gulf, and Israel via Bahrain, has signed an MoU with Israeli firm
Trucknet to use a cloud-based platform to facilitate exports to Israel
via the U.S. military supply chain in the MENA region. <a href="https://www.defsecme.com/business/bahrain-based-cox-logistics-signs-agreement-with-israels-trucknet">Cox Logistics</a>
provides logistics services to U.S. military vehicles across the Middle
East. With Saudi Arabia, the UAE, and the U.S. as Bahrain’s key trading
partners, this highlights Israel’s integration into regional trade
links under the U.S. security umbrella. While the volume of trade
through this route is not large, it has bolstered Israel’s resilience in
the face of war, especially after Yemen imposed a blockade on the Red
Sea, significantly reducing maritime imports and causing inflation.</p>
<p>Similarly, after joining the Abraham Accords, Israel accelerated its
integration into the Moroccan market, using Morocco as a stepping stone
to gain greater access to Africa. <a href="https://www.afdb.org/fileadmin/uploads/afdb/Documents/Publications/Analyse_de_la_politique_commerciale_du_Maroc_Volume_2_Anglais.pdf">Morocco’s free trade agreements</a> with African nations, such as Tunisia, helped make Morocco a <a href="https://www.hespress.com/%D8%AA%D8%B7%D8%A8%D9%8A%D8%B9-%D9%8A%D9%82%D9%88%D8%AF-%D8%A7%D9%84%D8%AA%D8%AC%D8%A7%D8%B1%D8%A9-%D8%A8%D9%8A%D9%86-%D8%A7%D9%84%D9%85%D8%BA%D8%B1%D8%A8-%D9%88%D8%A5%D8%B3%D8%B1%D8%A7%D8%A6%D9%8A-1212148.html">hub for Israeli exports</a> to the continent. In February 2022, <a href="https://research.hktdc.com/en/article/OTk4MDU1NzA5">Morocco and Israel signed a trade</a>
and investment cooperation agreement that created a framework for
bilateral economic and trade relations. The deal targeted high-potential
sectors, such as automotive, agribusiness, Industry 4.0, aerospace,
renewable energy, and water technologies. It also established qualified
industrial zones in Morocco that would allow direct access to the U.S.
market, thanks to a tripartite agreement between Morocco, Israel, and
the United States. </p>
<p>As a result, <a href="https://www.reuters.com/markets/deals/israels-newmed-signs-deal-morocco-natgas-exploration-2022-12-06/">Israel signed an offshore natural gas</a> exploration and production deal with Morocco in December 2022. In May 2023, Israel and Morocco signed <a href="https://worldisraelnews.com/israel-signs-transportation-deals-with-morocco-as-ties-deepen/">three additional agreements</a>,
including a maritime agreement to encourage direct trade links and an
agreement to develop drones and self-driving cars. Military and security
cooperation has also expanded. After being the first country to sign
the <a href="https://www.nasa.gov/humans-in-space/israel-signs-artemis-accords/">U.S.-led Artemis Accords</a> in 2022, <a href="https://en.globes.co.il/en/article-israel-aerospace-industries-signs-1b-deal-1001483830">Israel Aerospace Industries</a> signed a $1 billion military equipment deal with Morocco in July 2023, supplying satellites used for <a href="https://www.ynetnews.com/article/byvwkjowa">communication, radar, and espionage purposes</a>.
Beyond offering an economic lever, Morocco enabled the sale of
technologies used in the Gaza genocide following their testing in the
field such as drones.</p>
<p>Israel also aimed to <a href="https://www.reuters.com/business/energy/eu-israel-egypt-sign-deal-boost-east-med-gas-exports-europe-2022-06-15/">strengthen its energy ties with Egypt</a>,
building on a 2018 agreement to buy $15 billion worth of Israeli
natural gas over ten years. In June 2022, Israel and Egypt signed an MoU
to increase natural gas exports to Europe. Under this agreement, the EU
would encourage European companies to participate in Israeli and
Egyptian exploration tenders, facilitating Israeli gas exports to Egypt
via existing pipelines and Egypt’s LNG exports to Europe. This agreement
followed Israel’s <a href="https://www.ft.com/content/78ff60ca-184c-11e7-a53d-df09f373be87">unsuccessful attempts</a>
to create its own pipeline directly to Europe. Effectively, Egypt
became dependent on Israeli energy for local consumption and to gain
foreign currency to fund its budget from the sales of liquified Israeli
gas. </p>
<p>In Jordan, Israel sought to deepen the country’s reliance on its
energy and water resources. After signing a $15 billion gas deal in 2014
to meet 40% of Jordan’s electricity needs with Israeli gas, Israel,
Jordan, and the UAE signed an MoU in November 2022 to <a href="https://www.timesofisrael.com/israel-jordan-uae-sign-new-mou-on-deal-to-swap-solar-energy-for-desalinated-water/">swap Jordanian solar energy</a> for Israeli desalinated water. In 2021, Israel had already agreed to <a href="https://www.timesofisrael.com/liveblog_entry/israel-signs-deal-to-double-water-supply-to-jordan/">double its water exports</a> to Jordan increasing Jordan’s dependence on Israel. </p>
<p>Israel even worked to integrate itself into hostile environments. In October 2022, Israel and <a href="https://edition.cnn.com/2022/10/27/middleeast/israel-lebanon-sign-gas-deal-intl/index.html">Lebanon finalized an agreement</a>
defining their maritime borders in the Mediterranean. The agreement
allowed for Kraish and Qana fields to be exploited under a
revenue-sharing understanding. </p>
<p>Shortly thereafter, in June 2023, Israel quietly approved the development of <a href="https://besacenter.org/why-israel-approved-development-of-the-gaza-marine-gas-field/">Gaza Marine</a>,
a small offshore gas field near Gaza. This project was intended to
benefit both the Palestinian Authority and Hamas through increased
revenue and energy independence. Both agreements were designed to secure
Israel’s energy supplies and deter Hezbollah and Hamas from targeting
Israeli energy infrastructure during any military escalation creating a
strong dependency relationship. </p>
<p>In its war against Gaza, Israel sought to leverage its new regional
economic ties to discourage countries from opposing it and to
incentivize those who remained complacent to continue their support.</p>
<h2><strong>Israel’s weaponized interdependence</strong></h2>
<p>At the outset of the Gaza war, <a href="https://www.reuters.com/business/energy/israel-awards-gas-exploration-licences-eni-bp-four-others-2023-10-29/">Israel granted 12 licenses</a>
to six companies to explore natural gas off its Mediterranean coast,
with one beneficiary being Azerbaijan’s national oil company, Socar.
Azerbaijan has played a crucial role in supplying Israel with energy via
Turkey. Despite Turkey suspending trade links with Israel in the
aftermath of the Gaza conflict, Israel continued receiving Azeri gas
through Turkish ports. This agreement with Socar ensured that Azeri fuel
continued to support Israel’s blockaded economy via Turkish transport
routes.</p>
<p>Israel also utilized its water agreements with Jordan to mute growing
criticism of its economic ties and the land bridge connecting it with
Gulf countries. In exchange for Jordan’s silence on the war and
continued support for Israel’s regional integration efforts through the
India-Middle East-Europe Economic Corridor (IMEC), Israel extended its
existing water export agreement. Jordan further benefited from increased
Israeli imports via the land bridge with the Gulf, which served as an
incentive for its continued support of the war.</p>
<p>Israel increased its gas <a href="https://www.timesofisrael.com/chevron-partners-greenlight-24m-investment-to-boost-gas-production-at-offshore-site/">exports to Egypt</a> during the war to incentivize Egypt’s neutral stance despite some disruptions. Egypt also benefited from <a href="https://www.middleeasteye.net/news/egypt-ports-become-key-supply-points-israel-gaza-war">new trade maritime routes</a> linking Turkey, Greece, and Cyprus with Israel. Israel also used its influence in the global financial system to <a href="https://www.amnesty.org/en/latest/news/2024/01/israel-opt-states-must-reverse-cruel-decision-to-withdraw-unrwa-funding/">restrict funding to the UNRWA</a>,
an organization on which both Jordan and Lebanon heavily rely to
support millions of Palestinian refugees. By designating UNRWA as a
terrorist organization, Israel aimed to sever its access to
international funding, thereby exerting additional pressure on Jordan
and Lebanon to shift their positions on the war.</p>
<p>Moreover, Israel capitalized on its close ties with <a href="https://www.middleeasteye.net/news/germany-rewards-saudi-arabia-its-constructive-israel-stance-lifting-arms-export-ban">Germany to secure Saudi Arabia</a> access to advanced military technology. Saudi Arabia contributed to <a href="https://www.reuters.com/world/us-saudi-arabia-close-finalizing-draft-security-treaty-wsj-reports-2024-06-09/">intercepting aerial attacks</a>
on Israel via its airspace, and as a result, Germany approved the sale
of Eurofighter Typhoon fighter jets to Saudi Arabia, relaxing its
previous restrictions on arms sales to the kingdom. This further
incentivized Saudi Arabia to remain silent on the Gaza conflict and it
made it remain interested in normalization with Israel. </p>
<p>A month before October 7, the U.S. launched the IMEC to link Asia
with Europe via the Gulf and Israel, with the aim of enhancing energy,
data, and trade links. The project effectively positions Israel as a
central hub for regional trade, embedding it irreversibly in the
regional supply chain. By integrating Israel into this economic
framework, the Arab-Israeli conflict is expected to conclude, regardless
of whether a resolution to the Palestinian question is achieved. While
Hamas’s attacks have disrupted Israel’s plans in the short term, Israeli
Prime Minister Benjamin Netanyahu in recent speeches to Congress and
the <a href="https://www.timesofisrael.com/liveblog_entry/netanyahu-says-israel-saudi-deal-was-close-on-eve-of-oct-7-declares-we-are-winning/">UN</a>
framed the conflict as a zero-sum game. Israel’s view is that the war
is about securing the Abraham Market Alliance, underpinned by IMEC’s
vision of Israel as the commercial hub of the region. Consequently, both
Israel and the U.S. are attempting to link an end to the Gaza war with a
<a href="https://www.reuters.com/world/us-saudi-arabia-close-finalizing-draft-security-treaty-wsj-reports-2024-06-09/">normalization agreement with Saudi Arabia</a>.
Israel envisions Gaza becoming part of IMEC, defining victory through
its transformation into a regional trade hub — while decimating Gaza in
the process.</p>
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