Israel prepares to invade Gaza

This is an audio transcript of the FT News Briefing podcast episode: ‘Israel prepares to invade Gaza’

Sonja Hutson
Good morning from the Financial Times. Today is Monday, October 16th. And this is your FT News Briefing.

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The UK government is proposing to send British prisoners to jails in Europe. ExxonMobil’s purchase of Pioneer could reshape the US shale oil industry, and Israel is stepping up its offensive in Gaza.

John Paul Rathbone
The Israeli defence minister has said this will be a fierce war, a deadly war, a precise war, and it will be war that changes the situation permanently.

Sonja Hutson
I’m Sonja Hudson, in for Marc Filippino, and here’s the news you need to start your day.

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Israel is preparing to launch a major ground invasion of Gaza in response to Hamas’s surprise attack last Saturday. Here to talk to me about the situation is the FT’s defence and security correspondent John Paul Rathbone. Hey, JP.

John Paul Rathbone
Hi.

Sonja Hutson
So walk us through what’s been happening in and around Gaza in the last few days.

John Paul Rathbone
Simply put, the Israeli Air Force has launched a series of heavy and intense bombing strikes. The ground forces have been gathering with them hardware on the borders of Gaza. There’s a siege on Gaza as well. And the Israeli government and army have warned the inhabitants of Gaza in the north to move to the south. So the offensive, when, if it does come, will proceed from north to south.

Sonja Hutson
And what is the Israeli military hoping to accomplish with this invasion? Like, what’s the end goal here?

John Paul Rathbone
The political instructions are to root out Hamas and extirpate it from Gaza. And those are the orders explicitly to the Israeli army. And the Israeli defence minister has said this will be a fierce war, a deadly war, a precise war, and it will be war that changes the situation permanently. The question is how and if it’s possible. And even if the military is able to root out a lot of Hamas and eliminate its leaders, what happens the next day? Hamas is so deeply embedded in Gaza, it also runs the strip. So people are wondering very strongly what happens the day after.

Sonja Hutson
When was the last time the Israeli military entered Gaza in any significant way?

John Paul Rathbone
There have been a number of clashes since Hamas took over Gaza in 2007. In 2008, Israel launched a ground operation called Operation Cast Lead, took 22 days. In 2014, there was another conflict called Protective Edge, that was the last time Israeli ground forces went into Gaza. And one of the reasons why the Israeli forces stood back was because of this 3D aspect to Gaza, that only X and Y axis — backwards and forwards and left and right. There’s also an underground, deep network of tunnels that the Israeli forces have called the Metro. And Gaza has also got quite a lot of tall buildings. It’s got approximately 60 buildings that are six floors or larger. So it’s a very complicated battle environment, indeed.

Sonja Hutson
Yeah, it sounds really risky for the Israeli army. What about risks for Gaza civilians? What are they up against? As it looks like this ground invasion is about to get under way?

John Paul Rathbone
Well, Gaza’s a small place, relatively small, in that there are 2mn, over 2mn people. They are kind of embedded inside Hamas and vice versa. So where civilian hands off and military begins is very fuzzy. So they’ll be exposed to Israeli fire in Gaza. So far, two, almost two and a half thousand have died. So it could get a lot worse, a lot more bloody.

Sonja Hutson
And JP, while this is all happening, is there any place for people in Gaza to go in order to stay safe and get access to basic supplies?

John Paul Rathbone
That’s an open question at the moment. Egypt, which has a border with Gaza in the south, there is a checkpoint, which is sort of open but it’s very clogged, and it’s not clear how much is getting through. And Egypt has said it doesn’t want to permanently receive displaced Palestinians. So it looks as though there’s no obvious place for them to go other than somewhere else inside Gaza at the moment.

Sonja Hutson
That was John Paul Rathbone, the FT’s defence and security correspondent. Thanks, JP.

John Paul Rathbone
Thank you.

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Sonja Hutson
British nationals that are sentenced to jail in England and Wales could be transferred to European prisons. That’s the proposal laid out in controversial legislation that’s expected to be announced today. It’s being spearheaded by justice secretary Alex Chalk in an attempt to tackle the chronic shortage of space in jails. He’s expected to justify the move by pointing to the fact that Belgium and Norway have both housed prisoners in the Netherlands. Government insiders told the FT that preliminary talks were being held with Estonia about housing the prisoners. Labour’s Shabana Mahmood, who’s the shadow justice secretary, slammed the idea. She said it was a quote, symbol of the way in which the Tories have run our criminal justice system into the ground.

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A wave of consolidation could be coming to the US shale oil industry. Last week, ExxonMobil agreed to buy Pioneer Natural Resources for nearly $60bn, which is just a huge amount. Analysts are expecting this to be the first of many major acquisitions by the biggest US oil companies. I’m joined now by the FT’s Houston correspondent Myles McCormick. He covers the energy sector. Hey, Myles.

Myles McCormick
Hey, Sonja. How are you?

Sonja Hutson
Doing well, thanks. So analysts view this as a big step in consolidating the shale oil industry in the US. Why is that?

Myles McCormick
So we’ve been seeing a bit of consolidation in the US oil patch for a while now, and it’s being driven primarily by the fact that the good acreage for drilling, the kind of prime spots, are increasingly running dry because companies are spending less and less on exploration. So that has kind of left companies with very few options when it comes to expanding. And one of the few avenues that’s open to them is just going out and buying up another company that does still have good acreage. But we haven’t seen anything of this scale yet. I mean, it’s the biggest deal we’ve seen in upstream US oil and gas in decades. So in the view of a lot of analysts, this now kind of opens the floodgates potentially to other companies looking to come in and do deals of this kind of size.

Sonja Hutson
What would further consolidation actually look like?

Myles McCormick
Well, when the shale revolution kicked off about 15 years ago, you had a load of these kind of smaller companies buying up drilling rights and starting to drill left, right and centre. So it was a very fragmented industry with hundreds of different operators drilling in basins from North Dakota to Texas. And that has slowly started to consolidate. And as the wave kind of picks up in the wake of this mega-deal, we’re probably going to see US oil production fall into the hands of a smaller number of big operators. So your Exxons and your Chevrons and other super majors or very large independent players. So it’ll be a totally different landscape from what we might have seen 15, 20 years ago.

Sonja Hutson
So, Myles, what are these moves within the US shale oil industry mean for the transition to cleaner energy?

Myles McCormick
Yeah, well, the US supermajors have been more reluctant to go down the renewables route than some of their European rivals. And Exxon, in particular, has long had quite a bullish view about the future of oil demand. It thinks that the death of oil is greatly overstated. And I mean, that contrasts with conventional wisdom in a lot of ways. The International Energy Agency came out recently and said that it reckons fossil fuel demand will peak this decade, and then start to decline. But in going in and paying $60bn, massive amount of money for Pioneer, Exxon is very much putting its eggs in the oil basket and saying that demand for oil is going to be around for a long time, and they’re going to be the ones to supply it.

Sonja Hutson
Myles McCormick is the FT’s Houston correspondent, and he covers the energy sector. Thanks, Myles.

Myles McCormick
Thanks, Sonja.

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Sonja Hutson
Before we go, the FT is having a sale for briefing listeners. You can go to FT.com/briefingsale to get half off a standard digital subscription. Again, that’s FT.com/briefingsale. We’ll have a link to that in the show notes. This has been your daily FT News Briefing. Make sure you check back tomorrow for the latest business news.

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