Global fears of an escalation in the ongoing confrontation in the Middle East between Israel and Iran have come true over the weekend. The Israeli Air Force struck once again on Saturday at Iranian military sites, while taking care not to cross the critical threshold of attacking energy and nuclear assets that the Islamic republic straddling the Persian Gulf has indicated are its red lines.
Tehran can, of course, be counted upon to retaliate even though military analysts seem to believe that Israel's attacks have degraded Iran's ability to strike back. The fact is that the 'nature of the beast' is such that both the Israelites and the Persians can and will not back down in the face of adversity till the bitter end or till a larger power brings them to heel.
This tit-for-tat war has been going on for several months now, and the immediate impact of this war's escalation over the weekend, for the rest of the world will be yet another spike in crude oil prices and a rise in shipping and maritime premiums. Which in turn means the costs of imports and exports will keep mounting, as will inflationary pressures. With India's main markets being in the US, Europe, and in the Gulf, its ability to earn hard currency from its foreign trade will obviously be affected.
As it is, in the financial year gone by, India's merchandise exports to the global market contracted marginally by over 3% to US $431 billion. This trend can be expected to accelerate and not lessen as we pick up the pieces after the two nations inflict more damage on each other and in the region by way of more savage missile or proxy attacks.
However, the big takeaway for India from the Iran-Israel conflict will be the political fall-out of the war in the Gulf. Balancing between the two "friends and allies" for New Delhi will be a tough task quite akin to walking the proverbial tightrope, and possibly a thankless one.
Denne historien er fra October 28, 2024-utgaven av The Free Press Journal.
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Denne historien er fra October 28, 2024-utgaven av The Free Press Journal.
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