Why in news?

Israel launched what it described as precise and targeted airstrikes on Iran early on October 26 in retaliation to an Iranian attack on Israel earlier this month. This appears to be a major escalation between the two enemy countries.

What’s in today’s article?

• Why did Israel attack Iran?
• Why are Israel and Iran enemies?
• Israel – Iran conflict and Impact on India

Why did Israel attack Iran?

• October 7 Hamas attack
  • Iran and Israel, with a long-standing hostile relationship, saw tensions worsen after the October 7 Hamas attacks.
  • Iran, which does not recognize Israel's right to exist, backs groups like Hamas and Hezbollah in their fight against Israel.
• Killing of commanders from Iran’s Revolutionary Guard Corps and response of Iran
  • On April 1, Israel struck the Iranian consulate in Syria, killing 16 people, including commanders from Iran’s Revolutionary Guard Corps (IRGC).
  • Iran responded on April 13 by launching a direct missile and drone attack on Israeli soil. Israel then targeted an Iranian missile defense system in Isfahan.
• Death of Hamas leader in Iran
  • The situation intensified on July 31 with the death of Hamas leader Ismail Haniyeh in Tehran, likely by Israeli intelligence agency Mossad.
  • On September 27, Israel assassinated Hezbollah leader Hassan Nasrallah in Beirut, also killing Iranian Brigadier General Abbas Nilforoushan.
  • On October 1, Iran responded with 200 ballistic missiles attack on Israel, causing minimal damage.
• Israel attacks Iran
  • Israel had vowed to hit back after Iran carried out a ballistic missile attack on Israel on 1 October.
  • The recent attack by Israel comes against this backdrop.

Why are Israel and Iran enemies?

• Iran's 1979 Islamic Revolution and its opposition to Israel
  • Iran and Israel, once allies, became adversaries following Iran's 1979 Islamic Revolution, which established a regime ideologically opposed to Israel.
  • Since then, Iran has refused to recognize Israel's right to exist, with its leaders calling for Israel’s destruction.
  • Supreme Leader Ayatollah Ali Khamenei has referred to Israel as a "cancerous tumor" that will be "uprooted and destroyed."
• Shadow war between these two countries
  • The two countries have engaged in a "shadow war," targeting each other's assets without claiming responsibility.
  • Tensions have escalated since the October attacks on Israeli communities by Hamas, a Palestinian group supported by Iran.
  • Israel views Iran as an existential threat due to its rhetoric, support of proxy forces like Hezbollah and Hamas, and its alleged pursuit of nuclear weapons, which Iran denies.

Impact on India

• Fears of Protracted Red Sea Disruption
  • A direct conflict between Israel and Iran would cause a prolonged disruption of the Red Sea shipping route.
  • India is especially vulnerable to these disruptions, as its trade with Europe, the US, Africa, and West Asia—valued at over $400 billion in FY23—relies heavily on the Suez Canal and Red Sea routes.
  • The involvement of Hezbollah's allies, such as the Houthi rebels in Yemen, heightens the risk of attacks on ships using this critical trade passage.
• Impact on Indian Petroleum Exports
  • In August 2024, India's exports fell by 9%, primarily due to a sharp 38% drop in petroleum product exports, which fell to $5.95 billion from $9.54 billion in August 2023.
  • Rising shipping costs and the crisis in the Red Sea have led importers to seek alternative sources, impacting Indian exporters' profitability, particularly standalone refiners.
• European Market Challenges
  • Europe, which accounts for 21% of India’s petroleum exports, has been affected by rising shipping costs.
  • A Crisil report from February 2024 warned that these additional costs would reduce profit margins for petroleum exports, compounding the challenges faced by Indian exporters.
  • India’s overall exports to the European Union increased by 6.8% this year, but sectors like machinery, steel, gems, jewellery, and footwear have faced declines.
  • The rising freight costs are expected to further strain Indian industries reliant on high-volume, low-value exports, making it difficult for them to stay competitive.
• Silver lining - Trade Opportunities in West Asia
  • Despite the conflict, India's trade with Gulf Cooperation Council (GCC) countries has grown by 17.8% between January and July 2024, according to a Global Trade Research Initiative (GTRI) report.
  • India’s exports to Iran also increased by 15.2% during this period, benefiting from the neutrality of regional players such as Saudi Arabia, the UAE, Kuwait, and Qatar, who have stayed out of the conflict.
• Risk to India-Middle East-Europe Economic Corridor (IMEC)
  • The ongoing conflict in West Asia could hinder the development of the IMEC, a strategic project announced during the G20 in 2023.
    • The IMEC plan comprises an Eastern Corridor connecting India to the Gulf region and a Northern Corridor connecting the Gulf region to Europe.
    • It will include a railway and ship-rail transit network, as well as road transport routes.  
  • The IMEC aims to reduce reliance on the Suez Canal by creating faster trade routes through a rail and ship network connecting India to the Gulf and Europe.
  • However, the widening conflict in the region threatens to delay or complicate the corridor’s progress, casting uncertainty over its future.