Preventing a wider war

World leaders are worried. With no end in sight and potential escalation looming, the conflict between Israel and Gaza could arguably erupt into a wider war in the days and weeks to come. “To prevent a regional conflagration” is how German Foreign Minister Annalena Baerbock described the task this weekend in Cairo, where officials from nations including the US, UK, China, Turkey, Saudi Arabia, and Jordan will meet. Just outside Gaza, thousands of Israeli troops are massed for a ground invasion Tel Aviv has said is aimed at destroying Hamas, the Iran-backed militant group that authorities said killed about 1,400 Israelis on Oct. 7. But tensions are rising elsewhere. Hezbollah, the Lebanese militia also backed by Iran, said it had begun targeting sites in Israel, and US outposts in Syria and Iraq have come under fire. A US destroyer intercepted missiles and drones it said were headed toward Israel, reportedly fired by Yemen’s Houthi rebels, who are also backed by Iran. In cities across the region, major protests are erupting, from Cairo to Tehran (below).

US President Joe Biden’s trip to Israel this week was aimed partly at containing the violence. But the conflict was already inflamed before he arrived by a deadly explosion in a Gaza hospital compound. Still, Biden’s visit may have shifted the course of the expected Gaza invasion, from “coordinated strikes from the air, sea and land,” to a more targeted assault aimed at limiting civilian casualties. The death toll in Gaza is already about 3,700, according to local authorities. Israeli defense minister Yoav Gallant on Friday outlined a three-stage assault, but the main thrust of Israeli troops could be further delayed under pressure from US and European governments seeking to buy time for secret talks to win the release of hundreds of hostages held by Hamas. It’s a perilous moment for the world, one which Biden underscored in his Oval Office address Thursday night. He cast the Mideast conflict and Russia’s war on Ukraine as parallel: US aid to each, Biden said, is “vital for America’s national security.”

Economists raised their US growth projections through early 2024 and trimmed recession odds to a one-year low as consumers continued to spend. And while inflation in the US has receded, it’s still too high, Federal Reserve Chair Jerome Powell said this week. The central bank is “proceeding carefully” on further monetary tightening “given the uncertainties and risks” facing the economy, he said. The comments affirmed market expectations that the Fed will hold interest rates steady for a second straight meeting. With eyes fixed on a return to 2% inflation, Powell said there are signs the red-hot labor market is cooling and financial conditions are tightening, driven by a rise in longer-term bond yields. As for what comes next, “even Powell, the most powerful man in global finance, can’t pretend to know what’s in store,” Jonathan Levine writes in Bloomberg Opinion.

What happens to the US housing markets if mortgage rates, now hovering near 8%, stay elevated for an extended time? One expert says the big variable is on the supply side. For those wanting to buy, you must now earn more than ever to afford a typical home. For real estate agents, the commission system that typically puts US home sellers on the hook for a 5% to 6% cut of the sale is facing two lawsuits and unprecedented anti-trust scrutiny. And in New York City, condo and coop fees have soared almost three times faster than the rate of inflation. Is there a bright side? Maybe not. “For the first time since the Federal Reserve started raising interest rates, every part of the housing market is now poised to worsen,” Conor Sen writes in Bloomberg Opinion.

When President Xi Jinping first assembled world leaders to map out his vision for expanding Chinese soft power via a web of infrastructure investment, he called Belt and Road the “project of the century.” While the project has drawn $1 trillion, according to estimates, China’s overall activity in participating countries is down about 40% from its 2018 peak as the world’s second-biggest economy slows. South Korea’s newly developed fighter made its debut at a defense exhibition where the nation showcased its high-tech military hardware. It’s been very much in demand since Russia’s full-scale invasion of Ukraine.

Jim Jordan is out of contention to become US House Speaker. House Republicans voted to rescind his nomination after the Ohio representative and Trump loyalist lost a third ballot. Congressional paralysis, amid wars in Ukraine and the Mideast, is now entering a third week without leadership in House. Rivals are waiting in the wings.

Solar power is set to dominate global electricity markets within the next few decades, and may have already reached an “irreversible tipping point,” a new study finds. Solar power is playing an important role in countries’ plans to meet emissions-reduction goals set by the Paris Agreement, and as wind-power projects contend with rising costs. Vital research into climate change in the Arctic is in jeopardy, with collaboration between Western and Russian scientists grinding to a halt thanks to the Kremlin’s war.

As Chinese President Xi and Russian leader Vladimir Putin grow ever closer, their mutual distrust of the US may be their strongest bond. In the Bloomberg Originals mini-documentary Why China-Russia Ties Worry the US, we explore how Russia’s reliance on China has expanded at a fast pace, how it has transformed Russian markets and what it means for a fraught geopolitical landscape.

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