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Israel’s challenges in 2023:
Energy, China, and of course Iran

   28.01.2023 | Yishai Gelb
Image by Cole Keister

Israel’s celebrating its 75th birthday this coming April, with a plate full of challenges in a world with growing dangers.


Domestically, Israel has two major challenges, the first is the upcoming death of the Palestinian Authority leader, and the changing energy market. 


Mahmoud Abbas, the Palestinian leader for nearly 25 years is 87 and is nearing the afterlife. As in most dictatorships without a working system for a power transition, the Palestinian Authority could cease to exist and a power struggle will bust among the Palestinians. Hamas, the Islamic Jihad, and other groups will clash for power possibly creating a very unstable situation in which the IDF will need to keep the internal fighting from leaking onto Israeli citizens. Managing the shift in power and eliminating Israeli casualties will be a major challenge to the Israeli Defence forces.


The second domestic challenge is the changing energy market. Green energy is no longer a leftist utopian policy, but the direction in which most countries in the world as well as capital management first are pivoting towards. Besides the quest to decrease fossil fuel-based energy sources, the war in Ukraine taught many countries in the world that they must become energy sufficient without relying on other countries for their energy supplies. China is looking to heavily invest in nuclear power, and Europe is speeding up its investments in renewables as well as a nuclear power. The USA is on the highway toward greener energies, and much of south America is leaning in that direction as well.


For the past 10 years, Israel considered gas as a green source of energy investing heavily in the transition from coal to gas. This might be a good policy in the short run thanks to the gas reserves on the shores of Israel, however, Israel is lagging behind most of the developed world in investments and research in actual green energy leaving it behind in an industry that is growing and gaining influence.

On the regional level, Iran steals the show as Israel's major and most significant challenge in 2023. In December 2022, Iran officially reach nuclear capabilities for the development of a nuclear weapon. It is estimated that by the Middle of 2023, Iran will demonstrate a working nuclear weapon. These developments affect Israel’s relationship with the US and other countries in the region.


In 2018, Israel signed the Abraham accords with Middle Eastern states also threatened by the Iranina regime. Over the past few years, Israel deepened its relationship with the gulf states, particularly by investing in military collaboration. The challenge however will be to include Saudi Arabia in the new coalition of Middle Eastern states in opposition to Iran, This remains a major challenge due to Saudi Arabia's position as a leader in the Muslim world. Israel’s unresolved Palestinian conflict and the situation surrounding Jerusalem make it difficult for Saudi Arabia to normalize relations with Israel.


In mid-January, the US and Israel held the largest joint military exercise signaling that a military solution for the Iranian threat is on the table. The ramifications of Iran's nuclear capabilities becoming a reality means that in the future it will be a lot more difficult to take military action against Iran. Either the Israeli-led coalition takes action before Iran builds a working bomb sometime in the middle of 2023, or Middle Eastern states will face a new reality in the Middle East where Iran-sponsored terror will flourish like never before due to the support of nuclear power.


On the global level, the escalating Cold War between China and the US will be a challenge for Israel as well. Up until recently, Israel had the privilege of enjoying US military support, while doing business with China. Now that the US is attempting to isolate China, the demand for Israel to choose sides is nearing. Israel will have to decide whether it is a part of the US coalition or the Chinees. The answer to that question is clear, however, the challenge will be for Israel to live with the consequences.

China is deepening its grip in the Middle East, mostly economically. Saudi Arabia is pivoting towards the Chinees coalition which could put into question Israel’s attempt to add Saudi Arabia to the Abraham Accords. As China has a growing influence in the Middle East, Israel will face the challenge of navigating international situations with two superpowers pressuring it from either side. 


The war in Europe isn’t a major challenge to Israel at this point in time as Russia seems to be in a stalemate with Ukraine. The challenge that remains is maintaining satisfactory relations with Russia to provide Israel the freedom to continue attacking Iranian infrastructure in Syria, which is controlled by the Kremlin.


In conclusion, Israel has plenty of challenges this coming year. The new government in Jerusalem has the privilege of a strong military complex, a working economy, high enough public support, and what seems to be a stable coalition. The major decision will be Iran and the question of whether to act preemptively or to remain mostly defensive until there is no other choice.

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