Emerging crisis of all-out war in Middle East

Israeli forces are continuing military operations in Lebanon after assassinating Hezbollah’s top leader, Hassan Nasrallah, outside the capital Beirut on Friday. Fighter jets destroyed a military compound of Houthi, a Yemen armed group, on Sunday, and drone strikes targeted a Palestinian militant site in Beirut on Monday. The so-called “fifth Middle East war,” which began last October when Hamas, the militant group ruling the Palestinian Gaza Strip, launched a surprise infiltration into Israel, killing 1,200 civilians and kidnapping 250 others, is on the verge of plunging deeper into an all-out war between Israel and a pan-Iranian force.

The decision to escalate to all-out war rests with Iran, which has provided arms and funding to Hezbollah, Hamas, and the Houthis’ anti-Israeli military campaigns. Iranian Supreme Leader Ali Khamenei took matters into his own hands, saying, “Confront the evil Israel, and let Hezbollah take the lead.” However, it is unclear whether this is a directive for Iran to take firm actions, or a signal that Hezbollah will take the lead and Iran will only provide behind-the-scenes support. It is at a crossroads between all-out war and the status quo.

Israel’s aggressiveness has been a defining characteristic of the current Middle East war. It is argued that Israeli Prime Minister Benjamin Netanyahu, who has been cornered by his coercive politics since coming to power for the third time, is trying to address his political failures by escalating the war. In the case of the three airstrikes, the U.S., a top ally of Iran and peacekeeper, was not even notified in advance.

Such a decision by Israel is not unrelated to the U.S.’s changed status. The U.S. is no longer as willing or able to intervene in foreign conflicts as it once was. Successful shale gas development in the U.S. has made the country less dependent on Middle Eastern oil, and Trump’s diplomacy of “if we have money to help foreign countries, we’ll spend it at home” has made military intervention more difficult. With the once dominant power of the U.S. waning, there is more uncertainty in the Middle East than ever before.

The impact of the Middle East crisis is complex. Even if domestic industries in South Korea are not immediately affected, a full-scale and prolonged war would cause oil prices to fluctuate and commodity prices to rise. Inflationary pressures would build up, stirring up South Korea’s inflation rate, which recently decreased to under three percent. Interest rates and exchange rate policy could also be destabilized. South Korea needs to reexamine its oil supply safety net and secure alternative routes.

If the U.S. chooses to intervene militarily, South Korea will be asked to deploy troops or provide weapons. An appropriate contribution is inevitable. However, Iran, Hezbollah, and others may characterize South Korea as a hostile opponent, which could divide domestic public opinion. This is why the government must be careful to manage the situation.