In a random check I made of international news outlets’ coverage of the tragic incident at the Rafah tent encampment, it appears that most of them had already made up their minds. Impatient, unwilling or unable to wait for an impartial investigation, they have denounced Israel.
“Our
munitions alone could not have caused the fire. our investigation seeks to
determine what could possibly have ignited the fire at the Rafah tent encampment,”
IDF spokesman Rear Admiral Daniel Hagari said in a televised briefing.
Hagari
added that the IDF had not targeted the Rafah tent encampment.
He
said the IDF is “exploring all possible causes of the fire that broke out
subsequent to the IDF attack on the Hamas commanders, including the possibility
that Hamas had a weapons and explosives cache in a place nearby that was ignited
by ‘shrapnel fallout’.”
Hagari
showed aerial footage of a strike on a building, in which, senior Hamas
commanders were meeting. He added that the air strike used two munitions with
small warheads -- "the smallest munitions that our jets could use."
“We
are working to verify the cause of the fire, it is still too early to be
determined,” ..... “Even when we do find the cause of the blaze that broke out,
it won’t mitigate the suffering of the survivors and the families of the people
that died in the fire."
At
least 45 people were killed and 200 others were injured in the fire.
Margin
note: - For the sake of clarity, I have paraphrased some of the comments
Daniel Hagari made at the briefing.
So
far, there has been no progress in concluding a deal for the release of the
hostages held in Gaza. Additional IDF units in Rafah have been ferreting out
Hamas forces in the area and advancing cautiously along the Philadephi
corridor, planning to seal off Hamas’ weapons supply line.
Drawing
on his vast experience in a number of conflict zones, veteran war correspondent
Ron Ben-Yishai, suggested an alternative modus operandi.
“The
battles in the Jabaliya refugee camp over the past two weeks serve as a
condensed model of the entire war with Hamas, encapsulating all its
complexities. Lessons from these battles can guide Israel in releasing hostages
and dismantling Hamas' rule. They also indicate that Hamas can be
destroyed, but it must be done gradually.
The
decision to attack and take control of the recently formed eastern Jabaliya Hamas
battalion, was made for two important reasons. First, the western Negev and its
residents won’t be safe as long as around 1,000 terrorists are hiding in the
refugee camp and its tunnels, armed with weapons and rocket launchers.
Second,
the IDF possessed qualitative intelligence on the tunnel network under the
refugee camp and where the Hamas hideouts were. This intelligence information indicated
that the hostages' bodies were underground.
After
five days of intense fighting, the IDF managed to control the area and
penetrate the depths of the tunnels. However, it took two weeks for the combat
teams and the Engineering Corps to dismantle Hamas' eastern Jabaliya Battalion.
According to Intelligence Directorate estimates, this battalion included about
1,000 local operatives and others who had gathered in the camp after fleeing
other locations.
Roughly
500 operatives were killed or captured, while the rest fled into the tunnels.
Meanwhile, the IDF recovered the bodies of Israeli hostages and continues to
destroy tunnels under the camp.
Destroying
Hamas' underground capabilities is crucial to weakening it militarily and undermining
its credibility among the civilian population. To achieve this, the IDF must
address several issues: First, they need to free hostages held in the tunnels
who may be harmed during operations. Second, high-quality and precise
intelligence is essential. Third, IDF soldiers must apply the lessons learned
in Khan Younis, including identifying Improvised Explosive Devices (IEDs),
approaching booby traps with caution, and navigating narrow alleys without
being harmed by IEDs or RPG ambushes.
The
IDF can learn from its war experiences and remain dynamic throughout this
conflict by engaging in large, recurring operations as needed. Future
operations will look different from those conducted so far.
The
IDF's main military goal is to destroy at least 65%-70% of Hamas' strategic
tunnels, including those leading to Egypt for supplies and escape routes. This
will make Hamas more dependent on international aid for food, medicine and
other supplies for the Gazan population.
According
to a Wall Street Journal report, American intelligence estimates that
the IDF has only destroyed 35% of Hamas' combat force and even less of its
tunnel capabilities. However, IDF intelligence disputes these figures. Of the
30,000 Hamas known operatives before October 7, the IDF has eliminated or
captured more than 14,000. While Hamas is recruiting new fighters, these new recruits
won’t significantly change the balance of forces. Many of them are untrained and
often lack motivation.
Estimates
suggest there are still about 50 escape tunnels under the Gaza-Egypt border,
which the IDF's progress in Rafah is addressing. Nonetheless, the IDF must
approach this issue cautiously and in coordination with Egypt.
All
of the above should lead Prime Minister Benjamin Netanyahu to conclude that
weakening Hamas in Gaza is imperative, as its ability to recover and regroup
still poses an immediate danger to the residents of the western Negev and
Israel as a whole. However, it is equally crucial not to abandon the ultimate
military goal of releasing the hostages. The IDF's achievements in dismantling
Hamas's military power furthers this goal, and the Israeli government must
prioritise the release of the hostages.
Achieving
both objectives simultaneously is feasible, but it requires a change in the war
strategy. Instead of aiming to accomplish everything in one fell swoop, the IDF
should adopt a phased plan. Similar to its approach during the Second Intifada,
the IDF should deploy forces for pinpoint operations of varying scopes whenever
a need is identified or if Hamas provokes action.
Priority
should be given to negotiating a hostage deal, and if necessary, committing to
a cease-fire for a relatively long period to facilitate this. The negotiation
team must maintain maximum flexibility to reach a deal, even through a
cease-fire. This should be achieved through intense diplomatic and intelligence
efforts, which will also provide an opportunity to formulate a post-conflict
plan with the Americans.
The
diplomatic effort should focus on exerting international pressure on Hamas. The
goal is to ensure that all relevant countries, starting with the U.S., followed
by Western Europe, and including Qatar, make it clear to Hamas that no
financial aid for the reconstruction of Gaza will be provided unless all the
hostages, both soldiers and civilians, are released. If Qatar agrees to this,
and with American involvement through the United Nations, a different reality
could be created.
The
intelligence effort at this time is essential not only for releasing the hostages
but also to ensure that Hamas does not rebuild its military power and regain
control of the Strip. This is also the goal of the international monitoring
force that the U.S. is likely to establish with the Gulf states to manage Gazan
affairs.
A
cease-fire would allow for a concerted effort to end the northern conflict
against Hezbollah, either through a focused military operation in southern
Lebanon or as a result of a successful diplomatic effort led by the U.S.,
France, Saudi Arabia and Egypt.
It
is important to remember that the fighting must not stop and may even need to
be intensified in the coming days until Hamas agrees to the hostage deal.
Strengthening and expanding the war to additional areas in Gaza will apply
significant pressure on Hamas, as long as it is done without causing setbacks
to Israel's international efforts.
It's
not easy, but it's possible. A phased plan for the release of hostages and the
weakening of Hamas in Gaza is likely the next step, provided there is a
government in Jerusalem capable of making the right decisions and avoiding
careless actions and statements.
With
an eye to concluding on a positive note I’m including something
published by Globes, Israel business news last week.
Margin
note – For the of brevity
I’ve ‘cherry picked’ some of the report.
“Despite
frequent announcements of large contracts, Elbit Systems' share price is down
6% this year.
Defence
budgets around the world are rising, and defence companies are benefitting from
increasing demand for their products. Elbit Systems (TASE: ESLT; Nasdaq: ESLT)
too keeps reporting large contracts. Its orders backlog reached a record $17.8
billion at the end of last year, and just this week the company announced
contracts worth $760 million for the Israeli Ministry of Defence, the latest of
many such announcements in the past few months, with large orders coming from
the US, Europe, and Australia.
Nevertheless,
while defence sector stocks have risen by some 8% so far this year and by 18.5%
over the past twelve months, Elbit’s share is in the doldrums. The share price
is down 6.2% for the year to date, at just under $200, which is similar to the
price just before the outbreak of the Gaza War in October last year, giving the
company a market cap of $8.9 billion.
What
is the explanation for the stock’s lacklustre performance? Two analysts we
spoke to mention negative sentiment towards Israeli stocks. "Elbit is an
Israeli stock," says Liran Lublin, head of Research at IBI Investment
House, "and there are many good Israeli stocks that are underperforming -
Bezeq, the banks, Bazan with record results and a declining share price.
Foreign investors are not keen on the Israeli market, and Israelis themselves
are deciding to look overseas. We are seeing many foreigners exiting the stock,
and not enough Israelis buying to halt the slide."
Analyst
Omri Efroni adds: "There’s a trend of anti-Israeli sentiment, which can
exert a great deal of pressure on foreign investors to sell the stock." He
cites the Bank of Nova Scotia, whose asset management company Scotiabank
recently sold 40% of its holding in Elbit. According to a filing with the SEC
(the US Securities and Exchange Commission), the bank had a 2.5% holding in
Elbit at the end of the first quarter, which compares with 4.2% at the end of
the previous quarter. This is after it sold shares in the fourth quarter as
well. This implies sales of shares to the tune of some $150 million during the
first quarter. If the bank still has the same stake today, it is worth $225
million. In Efroni’s view, the bank did not want to be associated with the stock.
Bloomberg has reported in the past that the bank has been a target of protests
and petitions because of its holding in Elbit.
Efroni
says that, besides the pressure on foreign investors, the problem is also low
liquidity in the stock on Nasdaq, which depresses it. He believes that at the
same time there are institutions that want to invest in defence stocks, because
of the high spending on defence in the US and Europe, so that new buyers could
come along, but it’s hard to know when that might happen. Oppenheimer holdings gives
Elbit an "Outperform" rating with a price target of $256, 28% above
market.
According
to IBI’s Lublin, another factor negatively impacting Elbit Systems, though to a
lesser extent than the general negative sentiment, is its cash flow. "In
the end, when you look at the numbers for the past year and going forward, you
see impressive growth in the orders backlog and in revenue, and a supportive
macro environment, since defence budgets around the world are rising," he
says. "Elbit entered this period with a somewhat higher p/e(price to
earnings) ratio, reflecting market expectations for growth. All that has still
not percolated through to the company’s cash flow.
Lublin
adds that "what interests the market in periods of uncertainty is not just
growth, but how much cash flow a company can generate, and here Elbit has
further work to do." IBI’s recommendation for Elbit is "Market
perform", with a price target of $220, 10.2% above the current share
price.
While
Elbit Systems has underperformed, there are small defense companies on the Tel
Aviv Stock Exchange that have risen sharply. Aryt Industries (TASE: ARYT), for
example, which makes fuses, and which announced a NIS 150 million order from
the Ministry of Defence this week, has shot up 152% in the past year.
Specialized camera company Next Vision (TASE: NXSN), and electro-optics
companies Imco Industries (TASE: IMCO) and ThirdEye Systems (TASE: THES) have
also risen sharply.
No
comment was forthcoming from Elbit Systems.
Paging
up I realise that I haven’t concluded on a completely positive.
Never
mind. Have good weekend.
Beni,
30th
of May, 2024.