Israel's strategy of chaos
Summary: Arab Digest editor William Law's guest this week is the defence and security analyst and Gulf specialist Andreas Krieg.
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The US/Israel war against Iran is upending security in the Gulf states and creating global anxiety and uncertainty. Donald Trump entered the war with no exit strategy. Now he and his administration are wavering. However, Benjamin Netanyahu has an end game: to create chaos in the neighbourhood believing it will give Israel security at home and dominance in the region.
You can listen to today's podcast by clicking here.
The widening US-Israeli war on Iran is also generating direct economic shocks for Egypt. To keep up with the latest developments there, besides today's podcast we are circulating below an edited version of Hossam el-Hamalawy's latest Egypt Security Sector Report. Hossam is a journalist and scholar-activist, currently based in Germany. He was involved in the Egyptian labour movement and was one of the organisers of the 2011 revolution. Follow his writings on Substack and X.
The most immediate impact on Egypt has come through energy. Israel’s suspension of natural gas exports, invoked under “force majeure” following the strikes on Iran, abruptly removed roughly 1.1 billion cubic feet per day from Egypt’s supply system. With domestic production standing near 4.1 billion cubic feet per day against demand exceeding 6 billion, authorities have moved to reschedule LNG cargoes and sharply increase fuel oil use in electricity generation, with consumption of the low quality heavy fuel oil mazut rising more than threefold in a bid to maintain grid stability and avoid renewed load shedding.
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An Israeli gas platform off the coast of Gaza appeared to be on fire after Israel and the United States attacked Iran on SaturdayEgypt, meanwhile, suspended the export of roughly 100 million cubic feet of natural gas per day to Syria and Lebanon via the Arab Gas Pipeline following the halt of supplies from Israel’s Tamar and Leviathan offshore fields, a government official told Asharq Business.
The escalation is also reshaping Egypt’s border environment. Israel’s closure of the Rafah Crossing after the strikes on Iran has halted humanitarian and medical transit between Gaza and Egypt, constraining Cairo’s role as the enclave’s main relief corridor and increasing pressure along its northeastern frontier.
At the same time, war risk is spilling into global shipping lanes. Major container operators such as Maersk and CMA CGM have suspended transit through the Suez Canal and rerouted vessels around the Cape of Good Hope, an early indicator of how insurers and shipping companies price regional instability. Any sustained diversion threatens canal revenues, one of Egypt’s primary sources of hard currency, compounding pressure on an already fragile balance of payments.
The risks were publicly acknowledged during an iftar with senior military, police, GIS, and government officials 1 March where Sisi warned that escalation could disrupt oil flows and further erode Suez Canal revenues if the Strait of Hormuz were affected while at the same time attempting to calm domestic audiences by insisting: “Rest assured about Egypt… no one can come close to this country.”
In addition to the stock market slump, the tourism industry is expected to take a strong hit as rising regional instability typically triggers immediate travel advisories and booking cancellations across Red Sea destinations. Tour operators and insurers tend to treat the wider Middle East as a single risk environment meaning escalation far beyond Egypt’s borders can rapidly translate into falling arrivals and reduced foreign currency inflows.
As external shocks mount across energy supply and Suez Canal revenues, Cairo’s room for manoeuvre narrows further reflecting Egypt’s diminished position as a regional power in decline. President Sisi has already moved to contact Gulf sponsors whose financial backing underwrites Egypt’s fragile economy, underscoring how regional escalation rapidly translates into renewed dependence on its principal creditors.
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