Israel imposes ‘complete siege’ on Gaza

This is an audio transcript of the FT News Briefing podcast episode: ‘Israel imposes “complete siege” on Gaza’

[MUSIC PLAYING]

Marc Filippino
Good morning from the Financial Times. Today is Tuesday, October 10th, and this is your FT News Briefing.

Israel is retaliating for a violent attack over the weekend. 

John Reed
They’ve destroyed residential homes, several high-rise buildings. It’s been a very heavy toll so far. And this war is just starting. 

Marc Filippino
And Israel’s currency has fallen as a result of the conflict. Plus, European Union regulators plan to take action against US biotech company Illumina. I’m Marc Filippino and here’s the news you need to start your day.

[MUSIC PLAYING]

It’s been several days since Hamas launched a brutal surprise attack against Israel. Yesterday, the Israeli government responded with what it’s calling a complete siege of Gaza. The military is pummelling the territory with air strikes and calling up a record 300,000 reservists. More than 1,500 people have died since Saturday and Hamas has threatened to kill the hostages they took from Israel. The FT’s John Reed is in Jerusalem. He joins me now. Hi, John. 

John Reed
Hi, Marc. 

Marc Filippino
So we’re talking to you on Monday afternoon, your time. What’s the scale of the fighting as we speak? 

John Reed
It’s showing signs of being a very, very large-scale war. We’ve had, as in the past, the militant factions in Gaza firing rockets into Israel, most but not all of which are intercepted by Israel’s Iron Dome missile defence system. I think the IDF said that more than 4,500 rockets have been fired into Israel since Saturday. So, yes, it’s very large-scale. 

Marc Filippino
And what’s happening on the ground in Gaza? What kind of retaliatory attacks has Israel launched so far? 

John Reed
So we’re limited in what we know about what’s happening inside Gaza. Obviously, it’s impossible for journalists, local or foreign, to report inside there right now. But by the account of Palestinians inside Gaza and Israel’s military, Israel has bombed the strip very heavily. They’ve destroyed residential homes, several high-rise buildings, in at least one case, a mosque, where Israel says that one of the militant groups had operations. It’s been a very heavy toll so far and this war is just starting. 

Marc Filippino
Yeah, and like I mentioned earlier, Israel is calling this a complete siege. What exactly does that mean? 

John Reed
Gaza is already under very, very strict restrictions, has been since 2007 when Hamas wrested control of the enclave from Fatah, the other Palestinian faction. So there is very, very strict controls on movement of Palestinians in and out — essentially a blockade via sea, air and water. What they’re now saying they will do and what indeed they already have done is cut off electricity, cut off, you know, basically all other supplies into the territory. The energy ministry, Israel Katz, also said that he’d instructed authorities to cut off water. Gaza gets some of its fresh water from Israel. 

Marc Filippino
Well, so how are people in Gaza going to survive? Do we know? 

John Reed
That’s a very good question. I think we don’t know. I mean, the impression that I have, to the extent I’ve been able to talk to people inside Gaza, they’re responding as they have in past Israeli military operations. And this is now, I think, the fifth one in a decade and a half. They’re basically moving away from the border areas in the north and in the east that border on Israel, moving into, in some cases, UN-run schools, in other cases, homes of family, friends or acquaintances. And I think they’re just preparing themselves for the worst. The Israeli response already has been quite brutal. If it turns into a ground operation, then a lot of people will be in the way. Don’t forget, this is a very, very densely populated territory where people really live cheek by jowl with the very same Hamas Islamic Jihad militants that Israel is targeting. It’s very hard to get out of the way. 

Marc Filippino
John Reed is our South Asia bureau chief. He’s covering Jerusalem for the FT right now. Thanks, John. 

John Reed
Thanks, Marc. 

[MUSIC PLAYING]

Marc Filippino
Israel’s currency has been hurt by the conflict with Hamas. The shekel fell to a seven-year low against the dollar yesterday, and in response, the Bank of Israel said it would sell up to $30bn worth of foreign reserves to support the currency. I’m joined now by the FT’s Mary McDougall. Hi, Mary. 

Mary McDougall
Hi, Marc. 

Marc Filippino
So, Mary, what was the strategy behind the move by Israel’s central bank? 

Mary McDougall
Yeah, well, it was a big move. And the idea is to stabilise the exchange rates and provide the necessary liquidity for the proper functioning of markets. So as you said, they said they would sell up to 30bn of foreign exchange to support the currency. And they also, in addition to that program, said as necessary they would provide up to 15bn through the swaps markets, which is done via futures to banks. 

Marc Filippino
And what kind of impact would this move have? 

Mary McDougall
It could have a big impact. Israel’s got big foreign exchange reserves. It should be able to easily support the currency. That’s what analysts are saying. It also has experience and credibility in stabilising FX, although historically it’s mainly bought foreign currencies to help weaken the shekel when it was strengthening. In 2020, it provided 7.5bn of support through the swaps markets when the shekel weakened. 

Marc Filippino
So yeah, let’s put this move into context in terms of how the shekel was doing before the conflict arose over the weekend. 

Mary McDougall
The currency’s been on a pretty steady grind lower all year. It’s now down 10 per cent against the dollar this year, which has been mainly fuelled by investors’ concerns over the government’s efforts to weaken the power of the judiciary. Investors have also been increasingly worried about the fiscal outlook as the budget deficit has widened. Analysts at Citi said they now see a downside risk to their forecast of a 2.5 per cent budget deficit in 2024 as defence spending is going to rise. 

Marc Filippino
Mary, do we have a sense yet of what kind of ripple effect the conflict between Israel and Hamas is having on the markets? 

Mary McDougall
Yeah, well, it’s very, it’s still early stages, but the oil market is what everyone’s watching closely. So Brent, which is the international oil benchmark, jumps 5 per cent in early-morning trading before steadying to trade up almost 4 per cent higher at $87 a barrel. Israel’s not an oil producer, but there are concerns the conflict could trigger wider uncertainty in the region and tougher enforcement of sanctions on oil from Iran, whose foreign ministry was reported to back Hamas’s actions as an act of self-defence. 

Marc Filippino
Mary McDougall is the FT’s bonds and currencies reporter. Thanks, Mary. 

Mary McDougall
Thanks, Marc. 

[MUSIC PLAYING]

Marc Filippino
EU regulators want the US biotech company Illumina to sell a cancer test developer it bought. That’s according to FT sources. Illumina bought the company called Grail in 2021, but it didn’t get permission from Brussels. Illumina and the EU have been in a legal battle ever since. EU regulators don’t often force companies to sell. This move is designed to dissuade other companies from defying Brussels. Illumina has argued that the EU doesn’t have jurisdiction over the deal because Grail doesn’t have any revenues in Europe. But US regulators have also demanded that Illumina sell Grail.

[MUSIC PLAYING]

Before we go . . . 

Unidentified voice clip
Hello. Am I speaking with Claudia Goldin? 

Claudia Goldin voice clip
Yes. Yes, I was . . .  

Marc Filippino
A quick shout out to Claudia Goldin. She’s a professor at Harvard University, and she just won the Nobel Prize for economics. Here’s an interview that she did after she learned she won. It was posted on the Nobel Prize website. 

Claudia Goldin voice clip
The first thing I did upon hearing it was I told my husband. He smiled. He said, that’s great. Can we just . . . tell me what to do. And I told him to take the dog out and make some tea. 

Marc Filippino
Goldin earned the prize for her extensive research into why there are more men in the workforce than women and what causes that gap to fluctuate. Goldin found that the number of women in the workplace didn’t steadily increase over time. That’s to say it didn’t increase with economic growth. The trajectory has more of a U-shape to it. 

Claudia Goldin voice clip
The Nobel is often given for extraordinarily important findings, and ideas are often theoretical. But there have been prizes awarded for what I call big ideas and long-term change. 

Marc Filippino
Goldin is the third woman to win the economics prize and the first to win it by herself rather than sharing it.

Claudia Goldin voice clip
Bye now. 

Unidentified voice clip
Thank you. Bye bye. 

[MUSIC PLAYING]

Marc Filippino
You can read more on all these stories at FT.com for free when you click the links in our show notes. This has been your daily FT News Briefing. Make sure you check back tomorrow for the latest business news. 

[MUSIC PLAYING]