Israel’s record war budget approved; UK defence secretary blocks ‘dangerous’ aid drops in Gaza

UK Defence Secretary Grant Shapps has prevented British aid drops over the Gaza Strip due to concerns about the risk to civilians, people familiar with the matter said, underscoring the challenges facing allied efforts to get supplies into the war zone.

BP and the United Arab Emirates’ state oil firm suspended a $2-billion bid to buy a major stake in Israel’s NewMed Energy as the war in Gaza upends politics across the region.

Israel’s record war budget gets final nod after last-minute snag

Israel’s Parliament gave final approval on Thursday to a revised 2024 budget swollen by defence outlays that will bring spending to an all-time high.

The vote in the Knesset overcame delays after several members of Prime Minister Benjamin Netanyahu’s ruling coalition threatened to derail the measure if their budgetary requests weren’t met. The fiscal plan envisages a deficit of 6.6% of gross domestic product, a shortfall set to be among the widest for Israel this century.

Expenditure will total 584 billion shekels ($160-billion), up almost 70 billion shekels from the budget’s pre-war version. Defence spending alone will go up by 55 billion shekels.

The budget that emerged from weeks of controversy reflects the competing pressures the government needs to balance as the military campaign against Hamas enters its sixth month. The fiscal costs of Israel’s worst armed conflict in 50 years have forced the government to rely far more on debt to fund its needs and pay a war bill the central bank estimates at 255 billion shekels over 2023-2025.

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The surge in spending, alongside an expected drop of 36 billion shekels in revenue, forced budget cuts and led to a separate parliamentary approval of a set of adjustments involving new taxes. But political disagreements at the last minute meant some measures were left out, shrinking the original 25 billion shekel package by almost 10% for 2024-2025.

Grant Shapps blocks UK aid drops in Gaza over risk to civilians

UK Defence Secretary Grant Shapps has prevented British aid drops over the Gaza Strip due to concerns about the risk to civilians, people familiar with the matter said, underscoring the challenges facing allied efforts to get supplies into the war zone.

A plan was drawn up by British officials for the Royal Air Force (RAF) to parachute aid packages into Gaza, alongside similar efforts by allies including the US, Egypt, France and Jordan, the people said. Increasing the supply of humanitarian aid into Gaza has been a central objective of the UK and other countries that have warned of the risk of famine in the Palestinian territory during the Israel-Hamas war.

However, Shapps refused to sign off on the use of RAF planes to carry out the missions, the people said, speaking on condition of anonymity discussing operational decisions that have not been made public. The defence secretary rejected the idea because of concerns that the air drops were dangerous, a person familiar with his thinking said, citing reports that previous missions carried out by allies had accidentally killed Palestinians.

Five people died when a parachute failed to deploy and a parcel fell on them, the Hamas-run health ministry said last week. US officials have denied that its air drops killed anyone on the ground.

Israel has been conducting a military campaign in Gaza aimed at destroying Hamas, which is designated a terrorist organisation by the US and UK, after the group attacked southern Israel on 7 October, killing some 1,200 people and kidnapping 250 more. More than 30,000 Palestinians have been killed since the fighting began, according to health officials in the Hamas-run territory.

The allies are seeking alternative routes to get aid into Gaza, as pleas for Israel to allow more in via land borders get tangled in negotiations for a ceasefire and hostage releases. Israel inspects all cargoes going into Gaza, something it says is necessary to ensure they don’t carry military or fuel supplies for Hamas.

Humanitarian agencies say only small amounts of food and medicines can be sent by air. Frustrated with Israel’s stance, the Biden administration is trying to build a temporary port on the Mediterranean coast to receive supplies.

The decision not to join allies in airdropping aid has frustrated UK government officials who have been seeking to increase humanitarian support for people in Gaza. “We are doing all we can to increase aid into Gaza,” Foreign Secretary David Cameron told the House of Lords on Tuesday.

“The people of Gaza are in desperate humanitarian need and the whole of government is united in supporting aid deliveries,” the UK government said in a statement. “We are doing everything we can to get far more aid in, exploring new routes and pressing Israel to open more crossings and lift restrictions.”

BP and UAE’s $2bn Israel gas deal suspended as war rages

BP and the United Arab Emirates’ state oil firm suspended a $2-billion bid to buy a major stake in Israel’s NewMed Energy as the war in Gaza upends politics across the region.

The companies halted talks because of “uncertainty created in the external environment,” according to a statement from NewMed. Despite the pause, the Israeli firm said BP and Abu Dhabi National Oil “again expressed interest in the proposed transaction.”

Shares of NewMed fell as much as 8% in Tel Aviv.

The deal was announced in March last year, highlighting the burgeoning financial ties between the UAE and Israel since the normalisation of diplomatic relations. At the time, the countries said the political accord would lead to billions of dollars of investment.

But negotiations between NewMed, BP and Adnoc were thrown off course by the Hamas attack on Israel, which strained ties with Arab states as Israeli forces launched an assault on Gaza.

A person familiar with the deal said the regional conditions since the conflict began made it difficult to complete the transaction. As soon as the situation calmed down, there was a possibility it could go ahead, the person said. DM