As with most issues in the Middle East, the hardest part is the beginning, and much can be said for understanding history. The current situation, with Israel ramping up attacks in Gaza, while also pledging to open humanitarian corridors for food and relief supplies, fits a similar pattern according to senior analysts.
While there still is an expectation that a ceasefire will be reached, the likelihood of it being comprehensive, or at least dealing with all of the Gaza Strip is fleeting.
What is at odds are the existential crises at play for both sides, and their many levels.
Hamas – Survival at any cost
For Hamas, while making noises regarding its willingness to accept terms for a cease-fire and to hand over the remaining hostages (dead and alive) to its interlocutors in Egypt and Doha, fundamentally what is left of the group wants to continue to govern and/or at least show to Gazans – and the world – that they were able to survive and withstand this full-on assault by Israel.
For Hamas – as well as Hizballah and Iran – regime survival is a win in the current environment. And it is something that will not only empower these movements, and their ability to recruit new members to refill their ranks, but also gain them financial support into the future.
Analysts note that Hamas is realistic – realizing that once it turns over all the hostages it will have little/no leverage left. And while protestors in the U.S., Europe, the Middle East, and elsewhere will continue to march in support of them – or at least Israel’s actions – world leaders will not care to the same level as they have been – with the exception of Saudi Arabia. KSA is and will likely remain committed to the establishment of a Palestinian state due to local political pressures as well as a desire to become the de facto leader of the Islamic and Arab world.
As such, Hamas needs some sort of guarantee it will be able to survive.
While governing would be an added win, analysts believe the group’s leadership will continue to pursue any course that leads to survival – believing it will be able to reconstitute and reestablish itself in short order once a ceasefire and eventual regional peace agreement is reached.
The worst-case scenario for Hamas is the war continues as it has. It knows it will lose members and leaders, that hostages will be found – eventually all of them; but what it is counting on is that Israel will be seen as responsible for the ongoing humanitarian crisis – which is being characterized by the movement and its supporters as genocide.
Such narratives have already mobilized not only popular support for Hamas and mounting criticism of Israel across the globe, but also witnessed the U.S./Trump also criticize Israel/Netanyahu – something that would have been unthinkable before the 07 October attack.
Therefore, Israel continuing, or even ramping up, its attacks on Gaza – and images of an escalating humanitarian crisis – are seen by Hamas as only fueling support for the movement and against Israel for the long term.
Israel – the existential crisis is on two levels
For Israel, this is the last best opportunity for Netanyahu and his supporters to realize their broader goals vis-à-vis the Palestinians. While international pressure – popular and diplomatic – continue to ramp up due to the humanitarian crisis, analysts are quick to point out that essentially no one really cares or is at least willing to do anything to stop it. As such, for Israel, it is able to continue to prosecute the war with its two goals of – freeing/securing all Israel hostages (dead/alive) and destroying Hamas.
The current path toward a ceasefire has been similar to previous attempts by the international community to work with both sides to achieve peace – riddled with false starts and leaders who are not fully committed to the process.
In the current situation, in addition to the two stated goals by Netanyahu – which illustrate the existential nature of the war – he remains personally susceptible to the legal case facing him and his family. This is something that empowers his coalition partners – who have periodically threatened to pull out of/collapse the government, leaving Netanyahu with a myriad personal and governmental challenges to contend with. In each case to date, such threats by partners have led to an escalation of fighting – whether related to Gaza or directed outward at Iran or Hizballah.
And the current situation is not significantly different.
Drawing off a well-structured playbook of options, Netanyahu continues to engage in the following:
- Tightening travel authorizations for Palestinians looking to travel from the West Bank to Israel for work.
- Undertaking high-profile arrests/military incursions that have led to protests.
- Restricting funding to the Palestinian Authority (PA) through tax revenues – which is how the PA receives the lion share of it budget.
- Legitimizing West Bank outposts into settlements.
- Most recently, questioning how France could recognize/legitimize a Palestinian state in light of the current strife and uncertainty.
The latter is among the few levers Palestinian leaders continue to have – something well known to not only Israel, but also the West. As such, while France is a marginal player at the present time, Israel’s concern is that such an action could lead other countries to follow suit. And while the U.S. is not seen as likely to recognize Palestine at the present time, Netanyahu realizes Trump’s goals in the region are bigger than just Gaza and Israel. As such, if the U.S. President believed recognizing Palestine could further his goal of regional peace with Israel and lead to the creation of a large, robust military and trading block aligned with the U.S. to face China – he would likely do it. And Netanyahu is aware of Trump’s pragmatism.
What comes next?
Analysts believe the likely path forward includes the following:
- Israel will allow for an increased flow of aid into southern Gaza, while continuing to ramp up its military operations across the entirety of the Strip.
- High profile military operations targeting Hamas leadership and weapons caches, along with freeing/securing Israel hostages will be used to maintain momentum and keep international pressure at bay.
- Palestinian leaders in the West Bank will continue to work with Europeans to attempt to secure recognition during the upcoming United Nations General Assembly (UNGA) meetings in September.
- Steve Witkoff and the U.S. team will continue efforts to achieve a cease-fire in Gaza. It is likely this will take place in the coming month – as this would undercut efforts by others to recognize Palestine during UNGA.
- However, such an agreement is expected to be limited in scope – likely only including the southern areas of Gaza.
- The West Bank will continue to witness a steady stream of Israeli attacks and military incursions that will exacerbate tensions.
- A key issue of concern is the Israel settlers who have become more aggressive in confronting Palestinians. This is a potential wild card that could cause that region to explode in wide ranging violence, leading to a resumption of targeted attacks against Israelis – not only in the West Bank/settlements, but also in Israel.
- While the wall between the West Bank and Israel has been able to mitigate such attacks, there remain a significant number of Palestinians living in Israel who are being impacted and affected by events in the West Bank.
China is getting back to targeting foreigners: As discussed some months ago in the Update, analysts who closely monitor China and its posturing are concerned Beijing would/could return to targeting foreigners and/or their companies seen as representing a threat.
This most notably took place in the aftermath of the arrest of Meng Wanzou – Deputy Chairman of the Board for Huawei – who was detained in Vancouver on 01 December 2018. The arrest was predicated upon a warrant issued in August 2018 due to Huawei doing business in Iran in violation of U.S. sanctions.
On the heels of this two Canadiens – former diplomat Michael Kovrig and entrepreneur Michael Spavor – were arrested on espionage charges on 10 December 2018. They remained in detention in China for more than 1000 days while Meng’s extradition hearing was underway – eventually reaching an agreement with the U.S. government.
However, the specter of arrests and sanctions against U.S. executives and their firms has not abated. The Mintz Group – a U.S.-based due diligence firm – had its Beijing office raided and five local staff were arrested in March 2023, being held for more than two years with Mintz withdrawing from China. And Mintz is not alone – with others, to include Bain and Associates, and Capvision Pro Corp also being targeted.
While the concerns have not disappeared entirely, things had been quiet for some time despite U.S. firms aware that the current hostile tone between the Trump Administration and China could lead to similar actions again.
Recently, reports emerged of U.S. citizens being barred from leaving China. By way of background, China occasionally imposes exit bans to prevent individuals involved in pending civil or criminal proceedings from leaving the country.
- This took place when Wells Fargo recently suspended all employee travel to China after one of its bankers – a Chinese-born American citizen – was subjected to an exit ban.
- China’s Foreign Ministry stated that the banker is under investigation for her involvement in a criminal case.
- An employee of the U.S. Patent and Trademark Office – also a Chinese-born American citizen – was prevented from leaving China since April.
- The ban is reportedly related to the employee’s failure to disclose his U.S. government employment on his visa application.
Analysts note that China’s perennially secretive handling of exit bans massively undermines efforts to improve foreign business sentiment. While most visitors will never encounter an exit ban, the lack of transparency casts a long shadow – discouraging business travel and raising perceived risk.
As for how this could impact ongoing trade negotiations, analysts believe there will be little/no effect. Given Washington has been aware of at least one of these cases for months, with little to no progress being made, it is assumed that political pressure by the Administration will be focused on other issues.
But it is important to note this is not a partisan issue. The U.S. has been able to do little over the years to help Americans detained – regardless of the reasons or who is in the White House.
There remain a number of U.S. citizens – circa 13 – who have been detained in China for far longer. While the State Department/U.S. Embassy does try to pressure the Chinese government to release them, it has very little/no leverage and efforts to date have proven unsuccessful.
As such, there is little/no expectation that much will be gained in the near or mid-term, even if trade negotiations continue to track in a positive direction and/or a potential October summit between Trump and Xi ends with an agreement.
Therefore, for firms currently present in China, concern remains that if their employees or the firm itself is involved in a controversial issue(s), the government could respond by detaining employees and/or preventing the firms from conducting business. Hostile business negotiations or contracts/business methods that can be viewed as contrary to the national security interests of China could be leveraged to target officials – whether dual nations or not, and irrespective of rank – who are visiting/residing in China.
This is viewed by analysts as a growing threat irrespective of how current negotiations fare. This has proven to be a weapon employed by the Chinese government when it serves its purposes.
Beijing continues efforts to attract foreign investment: China’s central planning agency – the National Development and Reform Commission (NDRC) – and six other agencies released a number of measures to encourage foreign investors and firms to reinvest their profits domestically.
- This comes on the heels of recent concerns related to China’s foreign direct investment (FDI), which recorded a record outflow in 2024 and fell 13.2% y/y in the first five months of 2025.
Analysts note Beijing is now pulling out all the stops to staunch the bleeding – building upon an earlier step to extend significant new tax credits for foreign firms that reinvest their profits.
The new measures go further, promising inter-agency coordination to make life easier for new projects established through reinvestment, including:
- Improving access to foreign investment support measures and long-term land leasing programs.
- Fast-tracking cross-border capital flows and foreign exchange settlements to reinvest profits held in foreign currencies.
- Simplifying approvals for foreign shareholder loans and Panda Bonds linked with reinvestment.
Analysts note these measures will help China hang on to more of the profits generated by foreign-invested firms, and build goodwill with the foreign business and investor community.
In order to determine if these new steps are being successful, analysts are closely watching Q3 FDI data to determine whether tax breaks and streamlined operating conditions can entice undecided foreign investors to double down on China
Threats to undersea cables are growing: The threat posed to undersea communication cables has been an ongoing concern facing nation states – especially those in the West that rely on them to conduct trade and commercial deals. While highly susceptible to attack, they have generally remained devoid of issues until recently. And while Russia and China are among the biggest concerns given the war in Ukraine and tensions in/around Taiwan, respectively, leveraging proxies to target these networks has become a practical reality that analysts are highlighting to policy makers.
In this regard, the Houthis are among the best positioned and most willing to engage in such subterfuge. In fact, despite intensified kinetic actions and geopolitical recalibrations, the attack surface, particularly undersea communications, remains dangerously exposed to the Houthis in/around the Red Sea and Indian Ocean.
In fact, Iranian backing continues to enable Houthi operations – blending traditional insurgency tactics with modern information and infrastructure warfare. The Red Sea, Eastern Mediterranean, and the broader Middle East remain volatile flashpoints where undersea cables represent both strategic vulnerabilities and opportunities for escalation.
Why This Matters
- Hybrid Warfare Evolution: Adversaries are targeting both physical and digital infrastructure, merging state-sponsored proxy warfare with asymmetric tactics that exploit global interdependencies.
- Global Communication Risk: 95% of global data flows through undersea cables, and a disruption in the Middle East could destabilize economic, financial, and military operations – something well known and understood by all players in the region.
- Strategic Blind Spots: The focus on airstrikes and kinetic response underestimates the non-kinetic dimensions of ongoing conflicts, especially the cyber-physical terrain below the sea.
- Cable Infrastructure as a Battlefield: Undersea cables are viewed not just as telecom assets, but as contested military and geopolitical targets.
The Houthis, supported by Iranian drones and surveillance tech, represent a credible undersea cable threat vector, as confirmed in recent U.S. government assessments. In fact, attacks on undersea infrastructure have already occurred in the Red Sea, with documented cable sabotage attributed to proxy actors – the Houthis – in 2024.
As such, the global undersea cable threat vector is no longer a theoretical or war-game scenario, but something that is actually being planned for by nation-state actors and their proxies.
And while Iran and its proxies have been dealt a number of significant set backs by Israel and the U.S. over the past months, the impact of operations to target cables outweighs many larger kinetic efforts that have taken place. And analysts point out that while drone technology can be helpful in targeting locations and those entities involved in servicing this infrastructure, the cost and materiel requirements to damage and/or destroy undersea cables are actually quite low.
Previously, damage to cables occurred accidentally – by ships improperly dropping their anchor in/around areas where cables lay – occasionally damaging or breaking the line. Such a tact would/could provide the Houthis or others with plausible deniability, while causing significant damage to international communications.
In fact, for many analysts, the cutting of some/all undersea cables to Taiwan is viewed as a tripwire for a Chinese invasion of the island.
Therefore, analysts are concerned that as the international marketplace continues to grow more reliant on these cables for trade and communication, and as the international order fragments further, undersea cables will prove to be a regular target of attack.
