The Bottom Line: Iran's Retaliation, Lebanon's Unwanted Record, Saudi Pre-Budget Takeaways

????????? Iran is about to launch a ballistic missile strike against Israel, US officials sad on Tuesday, adding that the attack will carry ``severe consequences for Iran.’’ In the meantime, Israeli forces have crossed the border into Lebanon. US officials say this operation will take days, not weeks.

Disclaimer: Any opinions here are mine and do not represent the views of my employer.

The Bottom Line

·????? We will soon find out how far Iran will go to avenge the assassination of Hezbollah leader Hassan Nasrallah in Beirut last week, and Hamas’ chief Ismail Hanieyh, who was killed by Israel in Tehran two months ago.

·????? Iran has been under pressure to respond after a series of Israeli blows to Hezbollah raised questions about the Islamic Republic’s commitment toward its favorite proxy group.

·????? REMEMBER: Iran launched a missile strike against Israel in April after the bombing of the Iranian consulate in Damascus. That was hugely symbolic. Ali Vaez , a prominent Iran expert at the International Crisis Group, says on X he doesn’t count on that being the case this time around.

·????? However, US officials tell CBS the attack could be ``as large as April’’. Well, large doesn’t mean effective. Almost all missiles launched in April were intercepted.

·????? Effective or not, the strike will likely play into the hands of Israeli Prime Minister Benjamin Netanyahu. The West will defend Israel, which means the war in Gaza and Lebanon will go on.

·????? The news finally spooked oil traders, with Brent crude prices surging around 4% to $74.6 a barrel as of 4:28 pm in London.

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What’s the US Saying?

·????? The US will help Israel defend itself against the expected attack

·????? But buried in the news is a seemingly uninteresting readout of a call between US Defense Secretary Lloyd Austin and Israel’s Defense Minister Yoav Gallant about Israel’s ground operations in southern Lebanon.

·????? No talk about urging Israeli restraint, but an agreement that it was important to “dismantle” Hezbollah’s attack infrastructure along the border and THEN pivoting to diplomacy. Cue in more civilian deaths. More suffering.

·????? Needless to say, the US has been hugely ineffective in its effort to restrain Israeli Prime Minister Benjamin Netanyuahu all year as his forces razed the Gaza Strip to the ground in retaliation to the Hamas Oct. 7 attacks, killing tens of thousands of Palestinians.

·????? The Biden administration has been equally ineffective in brokering any diplomatic solution in Lebanon.

• US officials now say the Israeli invasion of southern Lebanon will take days, not weeks. But as many analysts have said, it's easy to enter Lebanon. Getting out could be a lot more complicated, as Israel itself found out in 2006 and in 1982.?

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Lebanon’s Unwanted Record

·????? On Sept 23, Israeli airstrikes on Lebanon killed 569 people and wounded 1,850. That makes it one of the deadliest single-day airstrikes in the 21st century, according to the UN Economic and Social Commission for Western Asia (ESCWA).

·????? Lebanon’s already-strained healthcare sector is on the brink, and the economy will be decimated even more, the report says. The tourism industry is staring at losses that could reach $3 billion.

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Lebanon’s Donation Appeal

·????? If you are reading & can spare something to help the Lebanese people cope with this unmitigated crisis, here are useful links:

·????? The Red Cross emergency appeal: https://shorturl.at/KuxKN

·????? The UNICEF emergency appeal: https://tinyurl.com/5cxajmpx

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Best of the Socials:

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Saudi Arabia’s Pre-Budget Statement Follow Up:

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·????? The figures show how authorities plan to restrain spending in light of lower oil prices, but not enough to shock a thriving non-oil sector.

·????? Monica Malik , the brilliant chief economist at Abu Dhabi Commercial Bank and one of my favorite scholars on the Saudi economy, notes how the government appears willing to accept larger but manageable budget deficits to support its investment plan.

·????? This makes sense given Saudi Arabia’s large investment agenda: the kingdom will host the World Cup finals for football (soccer) in 2034, the EXPO in 2030, the Asian Winter Games a year before.

·????? Sectors such as infrastructure, aviation, sports, entertainment and tourism remain key priorities given what lies ahead.

·????? Low debt levels, as I noted yesterday, means ample room for borrowing to finance projects. Lower, and falling US interest rates will likely prompt further debt sales.

·????? However, we still don’t know the size of quasi sovereign debt, which seems to be rising.

·????? Background: In April, a senior IMF official said Saudi authorities were working to determine the total size of sovereign and quasi sovereign debt. ?

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About Me:

I am a Lebanese journalist, commentator and media executive. I run SRMG Academy, the media training arm of Saudi Research and Media Group, where I am also the managing director of content development. Before SRMG, I was Bloomberg News’ managing editor for European economics and the managing editor for the Middle East and North Africa. I worked for Reuters and the Associated Press in various locations, including Dubai, Cairo, London and Beirut.

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