Iran wants to ‘punish Israel while avoiding all-out war’; regional financial markets tumble

Financial markets across the Middle East tumbled on Monday, as concerns over a potential Iranian attack on Israel added to bearish sentiment spawned by the ongoing global equity rout.

The patience of some Israelis is wearing thin after days of awaiting promised reprisals by Iran and its proxies for the killing last week of Hezbollah’s top commander in Beirut and the Hamas political leader in Tehran. One top legislator proposed pre-emption.

Iran says it wants to punish Israel, but avoid all-out war

Iran reiterated it wanted to avoid all-out war with Israel, even as it threatened to retaliate for last week’s assassination of a leading Hamas figure in its capital.

Tehran, which had already vowed revenge for the killing of Ismail Haniyeh, said it aimed to deter Israel from repeating similar moves. Israel has neither confirmed nor denied being responsible for his death.

“Reinforcing stability and security in the region will be achieved by punishing the aggressor and creating deterrence against Israel and its adventurism,” a spokesperson for Iran’s foreign ministry told reporters on Monday in Tehran.

The Islamic Republic did not want to escalate tensions but had the right, within the framework of international law, to punish Israel, he added.

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The comments come as Group of Seven and regional officials rush to avert a wider conflict.

G7 members had reached out to Iran to try to ensure its retaliation wasn’t serious enough to spark a regional war, according to people familiar with the matter.

Jordan’s foreign minister made a rare trip to Tehran over the weekend and Qatar, which has mediated between Iran and the US in the past, has also been in contact with the Islamic Republic, according to a person with knowledge of the matter.

Russian Security Council Secretary Sergei Shoigu also visited Iran for talks with new President Masoud Pezeshkian and other officials on Monday. It was unclear if Shoigu, regarded as one of Russian President Vladimir Putin’s closest allies, urged Tehran to temper its response to Israel.

Nasser Kanaani, the spokesperson for Iran’s foreign ministry, warned of “consequences” for any country supporting Israel, an apparent threat to the US and its allies as they rally to defend the Jewish state. General Michael Kurilla, head of Central Command, which oversees US forces in the Middle East, was in Israel on Monday for talks, an official briefed on the visit said.

Israel was in a “multifront war against Iran’s axis of evil,” Prime Minister Benjamin Netanyahu said on Sunday. “We are striking every one of its arms with great force. We are prepared for any scenario — both offensively and defensively.”

The US, which is moving a fighter jet squadron to the region and keeping an aircraft carrier nearby to help Israel, is pressing Netanyahu to redouble efforts to reach a ceasefire deal with Hamas over their war in Gaza. The US and Arab states believe an end to fighting in the Palestinian territory would calm the region.

The war in Gaza erupted when Hamas fighters swarmed into southern Israel on 7 October, killing 1,200 people and taking 250 hostage. Israel’s subsequent offensive on Gaza has killed around 40,000 Palestinians, according to health officials in the Hamas-run territory.

Israel, Middle East markets fall on Iran threat, global stock plunge

Financial markets across the Middle East tumbled on Monday, as concerns over a potential Iranian attack on Israel added to bearish sentiment spawned by the ongoing global equity rout.

Israel’s equity benchmark, the TA-35 Index, slid by as much as 3.1%, to trade at the lowest since February, extending last week’s 3.3% slide — the biggest weekly loss since last October. The shekel fell by as much as 1% against the dollar to trade nearly at a nine-month low, while its $3-billion eurobond maturing 2023 was quoted lower.

The latest losses were sparked in part by an Axios report that US Secretary of State Antony Blinken had told his G7 counterparts that Iran and its ally Hezbollah could attack as early as Monday. Citing three unidentified sources briefed on the call, Axios said Blinken saw the attacks starting in the next 24 to 48 hours.

However, regional markets were also feeling the heat from a global selloff that’s been fuelled by signs of a worse-than-expected US economic slowdown. The growth concerns also weighed on oil prices, sending crude futures to a seven-month low.

The Saudi Tadawul Index and Egypt’s Hermes benchmark shed as much as 3.7% and 5.8% respectively. Turkey’s Borsa Istanbul 100 Index was the hardest hit, sliding by more than 7% at one point.

Some impatient Israelis want to pre-empt Iran’s promised reprisal

The patience of some Israelis is wearing thin after days of awaiting promised reprisals by Iran and its proxies for the killing last week of Hezbollah’s top commander in Beirut and the Hamas political leader in Tehran. One top legislator proposed pre-emption.

“It is beneath our dignity to sit fretting rather than to take the initiative,” Yuli Edelstein, the head of parliament’s Foreign Affairs and Defense Committee and a senior member of Prime Minister Benjamin Netanyahu’s conservative Likud party, said in a speech. “We know how to do that, and we should be doing that.”

For its part, Iran reaffirmed that it wants to avoid all-out war with Israel, while again vowing to retaliate.

“Reinforcing stability and security in the region will be achieved by punishing the aggressor and creating deterrence against Israel and its adventurism,” a spokesperson for Iran’s foreign ministry told reporters on Monday in Tehran. The Islamic Republic did not want to escalate tensions but has the right, under international law, to punish Israel, he added.

Israel said its forces were on hair-trigger alert to carry out defensive and offensive missions as required.

Israel had activated a command bunker beneath the Jerusalem hills in anticipation of a major Iranian-orchestrated attack, said an Israeli official.

The “National Management Center”, a bunker located under the government complex in Jerusalem with an access point in the city’s western foothills, had been activated to enable decision-making in wartime, according to the official, who discussed the move on condition of anonymity.

President Joe Biden spoke with King Abdullah II of Jordan on Monday “on their efforts to de-escalate regional tensions”, according to the White House, “including through an immediate ceasefire and hostage release deal”.

Israelis drop suit against Bright Data 

Petitioners in Israel have filed a request to drop a proposed class-action suit accusing data-collection company Bright Data of selling minors’ personal information that it pulled from Meta Platforms’ Facebook and Instagram.

The motion to dismiss was filed in February, shortly after Meta lost a separate case against Bright Data over data harvesting from its social media platforms, according to an Israeli court filing seen by Bloomberg, which had not been previously made public.

Read more: Bright Data accused of scraping minors’ information from Instagram

The motion to dismiss resolved another legal case for the Israel-based startup, which has also fought off lawsuits from Meta and Elon Musk’s X Corp. relating to its data-scraping practices. A California court dismissed a similar complaint from X in May. DM 

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