There is a peculiar irony in watching a former president who fancies himself a dealmaker scold a prime minister for failing to press the button. Donald Trump, never one for nuance, has criticised Benjamin Netanyahu's renewed bombing campaign against Hezbollah targets in Lebanon. Yet the Israeli jets are still screaming over Beirut.
The markets, as ever, are the first to vote with their feet. The shekel wobbled, Tel Aviv’s TA-35 index shed 1.2 per cent by late afternoon, and the cost of insuring Israeli debt against default crept higher.
Capital does not have a conscience; it has a compass, and right now it points away from instability. Meanwhile, Britain’s Foreign Office, ever the eager conciliator, has called for an emergency UN Security Council session. The language from Whitehall is predictable: “restraint”, “de-escalation”, “dialogue”.
But in the City, we know that resolutions are cheap and bombs are expensive. The real question is whether the Bank of Israel can keep the shekel from a tailspin should this spiral into a wider conflagration. The Treasury in London, for its part, will be watching the gilt yield curve for any sign that investors are pricing in a regional contagion.
So far, the 10-year Gilt is steady at 4.2 per cent, but that calm is as fragile as a ceasefire in Gaza. Israel has a right to defend itself, but it does not have a right to ignore the economic consequences.
And neither does anyone else.
