India and Israel-Hezbollah Conflict

Syllabus: GS2/International Relations

Context

• Recent escalation between Israel and Hezbollah marking one of the most intense periods of violence since the 2006 Lebanon War. It is impacting longer trade routes and higher shipping rates and increased risk for the India-Middle East-Europe Economic Corridor.

Historical Background

• The Israel-Hezbollah conflict is a complex and long-standing issue with deep historical roots and significant geopolitical implications.  The establishment of the state of Israel in 1948 was accompanied by the violent displacement of more than 750,000 Palestinian Arabs in the event known as the Nakba (catastrophe). Many of those who were displaced settled in south Lebanon.
• The conflict between Israel and Hezbollah (a Shia Islamist militant group based in Lebanon) dates back to the early 1980s.
  • Hezbollah was formed in response to the Israeli invasion of Lebanon in 1982. Over the years, the group has received substantial support from Iran and Syria, both in terms of funding and military aid.
• Lebanon is a small country that borders Syria to the north and east, Israel to the south, and the Mediterranean Sea to the west.

• Key events include:
  • 1982: Israel invades Lebanon to expel the Palestine Liberation Organization (PLO).
  • 2000: Israel withdraws from southern Lebanon after 18 years of occupation. Even after Israel withdrew from Lebanon in 2000, disputes over border areas, such as the Shebaa Farms, have persisted. Hezbollah claims these areas as Lebanese territory, while Israel disputes this.
  • 2006: A major conflict, known as the Second Lebanon War, erupts between Israel and Hezbollah, lasting 34 days and resulting in significant casualties and destruction on both sides.

Present

• The conflict has seen a resurgence in recent years, particularly since October 2023, when Hezbollah began firing rockets into Israel in solidarity with Palestinians following a major Hamas attack on Israel. 
• It led to a significant escalation, with Israel conducting extensive airstrikes on Hezbollah positions in Lebanon and even killing Hezbollah’s leader, Hassan Nasrallah.
• Key events include:
  • 2023-2024: Ongoing cross-border hostilities, with Israel targeting Hezbollah’s infrastructure and Hezbollah retaliating with rocket attacks.
  • 2024: Israel has been preparing for a potential ground invasion of southern Lebanon to create a buffer zone and ensure the safety of its border areas.

Global Impact of Israel-Hezbollah Conflict

• Regional Stability: The conflict has the potential to destabilize the Middle East further. Hezbollah’s actions and Israel’s responses could draw in neighboring countries, escalating tensions across the region.
• Global Security: Hezbollah’s operations have been linked to criminal activities worldwide, including drug trafficking and terrorism financing. The elimination of key Hezbollah leaders by Israel is seen as a victory for global security.
• Economic Impact: Prolonged conflict can disrupt global oil markets, as the Middle East is a major oil-producing region. Any instability can lead to fluctuations in oil prices, affecting economies worldwide.
• Humanitarian Concerns: The conflict has led to significant displacement of civilians on both sides. This humanitarian crisis can strain international aid resources and impact global refugee policies.
• International Relations: The conflict influences the diplomatic relations between major powers, including the US, Russia, and European countries, as they navigate their alliances and interests in the region.

Implications on India

• Disruption in Trade Routes: A full-blown conflict could disrupt the crucial Red Sea shipping route, impacting global trade.
  • In August 2024, Indian exports fell by 9%, largely due to the Red Sea crisis, with petroleum exports dropping by 38%.
  • Indian exporters, especially in petroleum products, are facing increased shipping costs and reduced profitability, particularly in Europe, which accounts for 21% of India’s petroleum exports.
• Energy Security Risks: India relies heavily on Middle Eastern oil and gas imports, despite increased purchases from Russia. A war could disrupt key shipping routes like the Strait of Hormuz and the Red Sea.
  • The Strait of Hormuz is a critical choke point for LNG from Qatar and oil from Iraq and Saudi Arabia. Any disruption here could severely affect India’s energy flows.
• Impact on Oil Prices: A full-scale conflict would likely drive up global crude oil prices, increasing inflation in India.
  • A $10 increase in oil prices could push up India’s current account deficit by 0.3% of GDP, adding pressure on the economy.
• Longer Trade Routes: Disruptions in the Suez Canal and the Red Sea have forced ships to detour around the Cape of Good Hope, increasing shipping costs by 15-20%.
  • It has particularly impacted labor-intensive industries such as textiles and engineering products in India, which rely on high-volume, low-margin exports.
• Effect on India-Middle East-Europe Economic Corridor (IMEC): The conflict could hinder the development of IMEC, a critical project aimed at enhancing connectivity and trade between India and Europe.

Silver Linings

• Neutrality of GCC Countries: Despite the conflict, major Gulf Cooperation Council (GCC) countries like Saudi Arabia, UAE, Kuwait, and Qatar remain uninvolved, helping to keep trade with India relatively stable.
  • India’s trade with GCC countries increased by 17.8% between January and July 2024. Exports to Iran also grew by 15.2% during this period.

Peace Efforts

• Efforts to de-escalate the ongoing conflict between Israel and Hezbollah have been gaining momentum. Recently, the United States, France, and several allies called for an immediate 21-day ceasefire. 
  • It aims to create a window for negotiations and humanitarian aid, hoping to prevent further escalation and address the needs of affected civilians.
• India has been actively advocating for peace and stability in the ongoing Israel-Hezbollah conflict, and emphasized that ‘terrorism has no place in our world’ and highlighted India’s commitment to supporting efforts for an early restoration of peace and stability in the region. It includes three main priorities:
  • Preventing regional escalation: Ensuring that the conflict does not spread further.
  • Safe release of all hostages: Advocating for the humane treatment and release of individuals held captive.
  • Early restoration of peace and stability: Working towards a swift and sustainable resolution to the conflict.
• India’s balanced stance aims to navigate its historical ties with both Israel and the Arab world, reflecting its broader diplomatic strategy in West Asia.
• These efforts reflect a broader international push to stabilize the region and avoid a wider conflict.

Way Forward

• The future of the Israel-Hezbollah conflict is uncertain and highly dependent on regional dynamics and international interventions. If hostilities continue, there could be a full-scale war, drawing in other regional players like Iran and Syria.
• International pressure and mediation could lead to a ceasefire and negotiations (Diplomatic Resolution), though it seems challenging given the current tensions.
• The conflict could persist at a low intensity, with periodic flare-ups but no major changes in the status quo.

Source: IE