Hamas-Israel Deal: Regional Implications & the Road Ahead

The war has fully transformed into an economic and political conflict against Hezbollah and Hamas. The Abraham Market is advancing and AoR is regrouping.

After fifteen months of war and 46,707 Palestinians killed in Gaza, the Qatar-held ceasefire negotiations culminated in a Trump-brokered deal signalling the first phase of a potential ceasefire between Israel and Hamas. The deal consists of a multi-phase prisoner exchange that has so far seen three Israeli female captives exchanged for 90 imprisoned Palestinians, 69 of whom are women and 21 children, from an original 95 previously announced by the Israeli Ministry of Justice. In addition, Israeli forces are to withdraw from all parts of Gaza into a buffer zone in the North. The war has been described as a tactical victory for the governing body of Gaza, Hamas, as their survival alone defies Israel’s primary war objective. Nevertheless, this victory has come at a great price: Gaza’s recovery is a mammoth task that is threatened by the potential resumption of fighting. Moreover, the West Bank faces increased existential threats of annexation, to which the Palestinian Authority (PA) is struggling to respond effectively.

Gaza's Destruction: The Fragile Road to Recovery

Hamas has survived. According to former US Secretary of State Antony Blinken, the military wing has recruited the same number of fighters lost, which are estimated to be over ten thousand. Among its war crimes, Israel has targeted key resources, destroying all sewage, water, and sanitation facilities. In July, Oxfam reported that all wastewater plants and desalination plants were completely destroyed by Israel, along with 70% of sewage pumps. The infrastructure damage has been so extreme, it has rendered the Strip unrecognisably apocalyptic under what the UN estimates to be 50 million tons of debris, with 60% of buildings, including 90% of housing units, damaged or destroyed. The scale of destruction is immense, and reconstruction will be slow.

Rebuilding will take time, and it will be difficult due to sanctions, the siege, and the lack of supply lines. Some aid has been provided, particularly from the UN, Gulf countries, and neighbouring Jordan and Egypt, whose aid trucks have been parked at Rafah since May. It’s not enough to address the scale of the destruction. Donors are likely waiting to see if the ceasefire holds and if a political process is put in place, and the same applies to investors. Without stability and a clear path forward, large-scale reconstruction efforts remain unlikely. Reconstruction is likely to be weaponised against Hamas.

There is also widespread resentment among the people. The official count of Palestinians killed, nearly fifty thousand, does not include the bodies still under the debris, which are currently estimated at 10,000. Moreover, over 110,000 have been injured, while many others are psychologically wounded, suffering from trauma that will have long-lasting effects on the population.

The Fallout in Israel: Growing Unrest and Rising Emigration

In addition to a reported $67.57 billion in tangible damages, the war succeeded in exacerbating tensions in Israel, both on a societal and governmental level, causing great chaos. The conflict has deepened divisions within the Israeli public and among political factions, leading to instability and widespread discontent. Since 7 October, there has been a 59% increase in emigration from Israel, a trend that is expected to rise as recent suggestions from the Nagel Commission, an advisor to the Ministry of Defence, recommend increases in the defence budget. These proposed increases are seen as threatening the quality of life for Israelis, particularly in other critical sectors such as healthcare, education, and infrastructure. The Israeli financial system is hurt by the continued downgrading of the country’s credit rating.

Within the Cabinet of Israel, tensions have escalated since Hamas’ 7 October operation, most recently with the resignation of Israeli army chief Major-General Herzi Halevi, who described his leadership as a "failure" in regards to protecting Israelis. Ben-Gvir, along with other members of the Otzma Yehudit party, also resigned in protest of the deal. Smotrich, however, reportedly remained in his position due to a promise from Prime Minister Benjamin Netanyahu of increased West Bank escalation and annexation.

Hamas, the PA, and Israel's Territorial Ambitions

The PA continues to express its ambition to regain control of Gaza, with regional support backing this aim. The Qatari Prime Minister has stated his hope to see the PA return to govern Gaza, after being ousted by Hamas in 2007. However, Hamas has proposed an alternative structure to bypass Fatah and take control of the Gaza Strip. This tension has led to a recent violent crackdown by the PA on resistance fighters in the West Bank, including those affiliated with Hamas, particularly in Jenin. The northern West Bank city is reportedly seen as a ‘litmus test,’ where Israel will assess the PA’s ability to control dissent, potentially influencing its plans for future rule in Gaza. In collaboration, Israel has exacerbated the crackdown by escalating its ongoing raids on the West Bank in the wake of the ceasefire, further heightening tensions and raising concerns about the potential for increased annexation of Palestinian territories. With the support of the US under Trump's administration, the Israeli government may feel emboldened to push forward with more aggressive territorial expansion; on the first day of his second presidency, Trump has already lifted sanctions on violent Israeli settlers through an executive order. This move could pave the way for further annexation of territories, signalling a shift in the political landscape that will have significant implications for the region.

An Opportunity for the Gulf

Regionally, the Axis of Resistance (AoR) has suffered a setback, with the Abraham Accords Market gaining more influence. The Gulf countries are dissatisfied with the current outcomes and, in response, are collaborating with the PA to suppress Hamas as the group's image of victory as an Islamist organisation directly threatens the stability of their regimes and risks triggering an Arab Spring 2.0. This threat is further compounded by the Hayat Tahrir al-Sham’s (HTS) recent ascension to power in Syria. Emirati officials have even reportedly stated they would send private military contractors to a post-war Gaza, under the guise of security and reconstruction efforts. These alleged statements suggest the Gulf may be preparing for direct military involvement in the region to protect their commercial interests and ambitions.

The war has fully transformed into an economic and political conflict against Hezbollah and Hamas. The GCC countries are leveraging their support for the new Lebanese President Aoun and to the PA to advance these trade route ambitions. Aoun is set to sign 22 bilateral agreements with Saudi Arabia in an upcoming trip, while the UAE has upped aid supplies to Lebanon and agreed to reopen the Emirati embassy in Beirut. However, even as economic measures take center stage, the possibility of military escalation remains, with tensions rising over potential strikes against Iran—another flashpoint that could intensify the already volatile situation in the region. Russia and China remain absent from exercising influence directly in Gaza but will likely use BRICS membership offer as leverage in the future.