World

MIDDLE EAST CRISIS UPDATE: 14 FEBRUARY 2024

Biden pushes for six-week ceasefire; markets ignore Israel’s faceoff with Moody’s

Biden pushes for six-week ceasefire; markets ignore Israel’s faceoff with Moody’s
King Abdullah II of Jordan (left) listens as US President Joe Biden delivers remarks during a press conference following their meeting at the White House in Washington, DC, on 12 February 2024. (Photo: EPA-EFE / Chrix Kleponis)

US President Joe Biden said he was pushing for a six-week pause in fighting between Israel and Hamas to allow for the release of hostages, saying that could lay the groundwork for broader peace.

Israel is in a pique over its first rating downgrade that’s so far left markets unmoved but led to worry the government’s standing with investors could suffer as it embarks on near-record borrowing to fund the war.

The Houthi militants in Yemen are backed by Iran, but on Monday they fired missiles at a cargo ship in the Red Sea that was carrying maize to an Iranian port, according to US Central Command.

Biden pushes for six-week fighting pause in Israel-Hamas hostage deal

US President Joe Biden said he was pushing for a six-week pause in fighting between Israel and Hamas to allow for the release of hostages, saying that could lay the groundwork for a broader peace.

Such a pause “would bring an immediate and sustained period of calm into Gaza for at least six weeks, which we could then take the time to build something more enduring”, Biden said on Monday following a meeting with Jordan’s King Abdullah II at the White House.

Biden’s comments were his most detailed yet about the ongoing negotiations between Israel and Hamas, which the US is helping to facilitate along with Egypt and Qatar. “The key elements of the deals are on the table,” Biden said, adding that the US “will do everything possible to make it happen”.

Israeli Prime Minister Benjamin Netanyahu last week downplayed the chances of a ceasefire. Hamas’s demands — which include a condition that Israeli forces pull out of Gaza within about 90 days — were “delusional,” he said.

Biden and Abdullah met as concerns grow about a potential Israeli ground offensive in the city of Rafah that threatens to further inflame regional tensions and worsen the humanitarian crisis in Gaza. Biden said he and the king — a key US ally in the Middle East — had discussed Rafah and how to bring more aid into Gaza.

Earlier: Israel conducts strikes in Rafah as humanitarian concerns mount

“We cannot afford an Israeli attack on Rafah. It is certain to produce another humanitarian catastrophe,” the king said. “We cannot stand by and let this continue. We need a lasting ceasefire now. This war must end.”

The US, its Arab partners and other nations must step up efforts to reach a ceasefire immediately and “create a political horizon that leads to a just and comprehensive peace on the basis of the two-state solution”, Abdullah added, referring to his hopes for an independent Palestinian state.

The heads of the CIA and Mossad, Israel’s external spy agency, were expected to meet top Egyptian and Qatari officials on Tuesday for talks, the Financial Times reported, citing people familiar with the process. The meeting would probably be held in Cairo, it said.

Israeli forces launched more airstrikes on Rafah on Monday, ahead of possible ground operations in a city where more than a million people have sought refuge. Many refugees fled the north of Gaza after Israel launched its retaliatory campaign against Hamas for the group’s 7 October massacre. Some 1,200 people were killed in that attack.

Almost 28,000 people have been killed by Israel’s retaliatory air and ground assault on Gaza, according to health officials in the Hamas-run Palestinian territory.

On Tuesday, the Israel Defense Forces said there was still heavy fighting in Khan Younis, a city to the north of Rafah.

Israel faces off with Moody’s over rating downgrade 

Israel is in a pique over its first rating downgrade that has so far left markets unmoved, but led to worry the government’s standing with investors could suffer as it embarks on near-record borrowing to fund the war.

The announcement last week by Moody’s Investors Service already prompted an unusually strong rebuke from officials including Netanyahu, who called into question the politics behind the decision.

A top technocrat at the Finance Ministry’s office known as the “government’s CFO” has now added a voice to the debate by marshalling figures he argues are at odds with the rating company’s rationale for its one-notch cut to A2.

“We have a lot of appreciation for Moody’s, but their decision is not consistent with macroeconomic and fiscal data,” said Yali Rothenberg, the Finance Ministry’s accountant-general who’s in charge of managing Israel’s $300-billion debt stock.

The outcry contrasts with what’s so far been a muted reaction in markets, with Israel’s currency among the world’s best performers against the dollar in the two trading sessions after the downgrade.

Israel’s bond prices were little changed and the cost of insuring the government’s debt against default — a key gauge of country risk — fell the most since November on Monday.

Rothenberg said the Finance Ministry’s bond auctions on Monday drew record demand from local investors and the rate of interest returned to pre-war levels, which he described as a sign of market confidence after the downgrade.

“Even if Moody’s decision is professional, it incorporates geopolitical elements that, in our opinion, had been given way too much weight,” he said on a call with reporters.

While Israel is still well within investment-grade territory, the stakes remain high because it risks further downgrades after the other two major credit assessors also lowered its outlook to negative in the weeks after the war began in October. At the time, a cut to its sovereign rating seemed like an extreme scenario unless the conflict dragged on for an extended period.

Fitch Ratings now ranks the country one notch above the level it has at Moody’s. S&P Global Ratings puts Israel a step above Fitch’s assessment.

Read more on Israel’s war budget:

Israel’s disagreement with Moody’s centres on what officials believe is a misreading of an economy that’s proven to be resilient to wars and still boasts large foreign exchange buffers with access to capital markets at home and abroad. Rothenberg said authorities made a case to Moody’s objecting against its decision, but to no avail.

Houthis fire missiles at cargo ship bound for Iran

While Houthis in Yemen are backed by Iran, on Monday they fired missiles at a cargo ship in the Red Sea that was carrying corn to an Iranian port, according to US Central Command.

Two missiles were fired at the MV Star Iris, registered in the Marshall Islands, Centcom said in a post on X, the social media platform formerly known as Twitter. “The ship reports being seaworthy with minor damage and no injuries to the crew.”

“Of note,” Centcom added, “the MV Star Iris’s destination is Bandar Imam Khomeini, Iran.”

The Houthis started their assaults on commercial shipping in mid-November and say they’re targeting ships linked to Israel and its allies to pressure them over the war in Gaza. Many shipping companies have been rerouting vessels around the southern tip of Africa, a lengthier and costlier journey.

The attacks have continued despite several airstrikes by the US and the UK. The US has said that while it doesn’t expect to deter the Houthis, the strikes — on targets including airports, radar stations and weapons caches — are degrading their military capabilities.

The Houthis, along with Hamas in Gaza, Hezbollah in Lebanon and other groups in Iraq and Syria, are part of Tehran’s so-called axis of resistance. DM

Read more in Daily Maverick: Israel-Palestine War

Gallery

Comments - Please in order to comment.

Please peer review 3 community comments before your comment can be posted

We would like our readers to start paying for Daily Maverick...

…but we are not going to force you to. Over 10 million users come to us each month for the news. We have not put it behind a paywall because the truth should not be a luxury.

Instead we ask our readers who can afford to contribute, even a small amount each month, to do so.

If you appreciate it and want to see us keep going then please consider contributing whatever you can.

Support Daily Maverick→
Payment options

Daily Maverick Elections Toolbox

Feeling powerless in politics?

Equip yourself with the tools you need for an informed decision this election. Get the Elections Toolbox with shareable party manifesto guide.