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The ceasefire and hostage deal between Israel and Hamas, after a two-year conflict, offers India a strategic opportunity to safeguard its economic interests, including energy security, trade routes like IMEC, while navigating the complex geopolitics of West Asia.
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Read all about: ISRAEL- PALESTINE CONFLICT l INDIA VOTES FOR PALESTINIAN STATEHOOD l HUMAN-MADE HUNGER CRISIS IN GAZA l INDIA-PALESTINIAN RELATIONS |
Roots of the Conflict
Origins trace back to the 1948 partition of Palestine and the creation of the State of Israel, which led to the first Arab-Israeli War and the displacement of hundreds of thousands of Palestinians.
Rise of Hamas and the Gaza Blockade
Hamas, an Islamist militant group, was founded in 1987. It took control of the Gaza Strip in 2007 after a brief civil war with the more moderate Fatah party. In response, Israel and Egypt imposed a strict land, air, and sea blockade on Gaza, quoting security concerns.
A Cycle of Violence
The conflict has been marked by a cyclical pattern of violence, with major escalations in 2008, 2012, 2014, and 2021.
Regional Actors
Conflict is fueled and shaped by a complex web of regional and global rivalries, with Iran supporting Hamas, Egypt and Qatar acting as mediators, and the United States serving as Israel's primary security partner.
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The continuation of the conflict is a result of a toxic cocktail of unresolved territorial claims, deep-seated ideological opposition, a suffocating blockade, and the proxy battles of regional powers. |
The recent two-year cycle of violence, which began in October 2023, has had a far greater global impact than previous escalations.
Civilian Toll
Over 67,000 people have been killed in Gaza since the war, widespread destruction of infrastructure in Gaza, creating a massive humanitarian crisis. (Source: abcnews)
Regional Spillover and Maritime Insecurity
Unlike previous rounds, this conflict quickly spilled over into the wider region. In a show of support for Hamas, Yemen's Houthi rebels began attacking commercial ships in the Red Sea, one of the world's most critical maritime chokepoints.
Disruption of Global Trade Arteries
These attacks shut down the Suez Canal route, which handles about 12% of global trade. This highlights that: modern wars no longer stay regional—they disrupt global supply chains instantly.
Global Impact of Israel-Hamas conflict
Energy Market Volatility
Tensions in the Middle East almost always lead to a spike in global oil prices. Fear of a wider conflict that could disrupt supply from the Gulf region pushes Brent crude oil prices higher, affecting energy costs for all nations.
Shipping and Logistics Chaos
Attacks in the Red Sea have forced major shipping companies to reroute vessels around the southern tip of Africa's Cape of Good Hope, a journey that is longer, costlier, and more time-consuming. This has led to:
Global Inflationary Pressure
Higher energy and shipping costs translate directly into higher prices for consumers, fueling inflationary pressure in economies worldwide, from Europe to Asia.
Market Instability
Geopolitical uncertainty causes volatility in global stock markets as investors move away from riskier assets.
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This demonstrates how a "local" conflict can have a global macroeconomic impact. Even a "local" ceasefire in Gaza can immediately reset investor confidence, stabilize energy markets, and ease logistics costs globally. |
Trade Linkages
Israel is a key partner for India in defence, agriculture, and technology. In 2023-24, bilateral trade (excluding defence) stood at over $6.53 billion. India exports goods like machinery and agricultural products while importing crucial items like defence equipment and electronics.
Energy Vulnerability
India imports over 85% of its crude oil, a part of which transits through or near the conflict-prone Gulf region. A rise in global oil prices directly widens India's current account deficit and puts pressure on its domestic fuel prices.
Diaspora and Remittances
Over 18,000 Indian citizens, many of them construction and healthcare workers, are employed in Israel. Their safety and potential evacuation are a major concern, and any disruption affects the flow of remittances to India.
Geoeconomic Projects
The India–Middle East–Europe Economic Corridor (IMEC), announced at the G20 summit in 2023, is designed to create a faster trade route connecting India to Europe via the UAE, Saudi Arabia, Jordan, and Israel. The stability of West Asia is an absolute condition for this project's success.
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The conflict puts India in a difficult position, where its energy security, export competitiveness, and foreign policy balancing act all depends on the outcome. |
Diplomatic Neutrality and Proactive Peace Calls
India maintains its traditional "balancing act"—condemning terrorism, supporting a two-state solution, and providing humanitarian aid to Palestinians.
Strengthening Energy Diversification
India reduces its dependency on Middle Eastern oil by increasing imports from Russia, the U.S., and African nations, while also building up its Strategic Petroleum Reserves.
Pushing for Multilateral Trade Corridors
While IMEC is stalled, India continues to invest in and promote other corridors like the International North–South Transport Corridor (INSTC) to create reliable trade routes.
Investing in Self-Reliance
Under the Atmanirbhar Bharat initiative, India is accelerating its domestic defence manufacturing and technology development to cushion against supply chain shocks from key partners like Israel.
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India’s foreign policy is evolving from reactive balancing to strategic hedging. It is simultaneously engaging with all parties in the Middle East while building domestic capabilities and alternative partnerships to mitigate risks from regional instability. |
Short-Term Relief
A halt in fighting would likely cause oil prices to ease and allow shipping to resume through the Red Sea, lowering logistics costs and easing supply chain bottlenecks. This would provide immediate relief to global markets.
Long-Term Question
The key concern is whether the ceasefire ensures lasting peace or just pauses violence; without a clear two-state roadmap, instability and the risk of renewed conflict will persist.
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A ceasefire acts as a vital "pause button" for economic damage, but it is not a solution in itself. Without genuine diplomatic progress towards resolving the core political issues, economic uncertainty will persist, and long-term investments in the region will remain risky. |
The Israel–Hamas conflict proves local wars trigger global shocks, disrupting trade, energy, and supply chains. For India, West Asian peace is essential—not moral alone, but vital for economic stability and resilience.
Source: INDIAN EXPRESS
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PRACTICE QUESTION Q. Evaluate India's policy of maintaining a diplomatic balance between Israel and Arab states during the Gaza conflict. 150 words |
Historically, India's foreign policy was strongly pro-Palestine, rooted in anti-colonial stance, large Muslim population, and ties to the Non-Aligned Movement. India recognized the Palestine Liberation Organization (PLO) as the sole representative of the Palestinian people in 1974, becoming the first non-Arab country to do so.
The "de-hyphenation" policy treats India's relations with Israel and Palestine as separate and independent issues. Instead of viewing the region solely through the lens of the Israeli-Palestinian conflict, India pursues strategic and economic interests with Israel without abandoning its principled support for Palestine.
The two-state solution is a proposed framework for resolving the Israeli-Palestinian conflict by creating an independent Palestinian state alongside the existing State of Israel. This would give both peoples their own sovereign territory, with the Palestinian state generally comprising the West Bank and Gaza Strip, and East Jerusalem as its capital.
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