Italian Foreign Minister Antonio Tajani holds a press conference at the end of the G7 foreign ministers meeting on Capri island, Italy, April 19, 2024.
| Photo Credit: REUTERS

Group of Seven Foreign Ministers warned of new sanctions against Iran on April 19 for its drone and missile attack on Israel, and urged both sides to avoid an escalation of the conflict.

Italian Foreign Minister Antonio Tajani, who chaired the meeting of Ministers of industrialised countries, said the agenda of the three-day meeting was changed on April 19 to address the latest developments.

Iran-Israel Crisis LIVE Updates, April 19, 2024

Early Friday, Iran fired air defences at a major air base and a nuclear site near the central city of Isfahan after spotting drones. They were suspected to be part of an Israeli attack in retaliation for Tehran’s unprecedented drone-and-missile assault on the country last weekend.

Mr. Tajani didn’t immediately address the incident, but said that G7 ministers condemned Iran’s weekend attack on Israel and urged both sides to exercise restraint.

“The political objective is de-escalation,” Mr. Tajani said in a closing press conference.

A wave of risk aversion swept over markets on Friday and sent investors chasing after traditional safety assets such as the Swiss franc and the yen following reports that Israel attacked Iran in an escalation of conflict in the Middle East. 

Markets initially reacted sharply to the news, which sparked a huge selloff in risk assets, caused oil and gold prices to surge, and ignited a rally in U.S. Treasuries and safe-haven currencies.Some of those moves were later retraced as few details emerged about the attack and an Iranian official told Reuters no missile attack took place. 

Still, the Swiss franc, a traditional safe-haven currency, remained 0.35% higher on the day at 0.9089 per dollar, having rallied 1% earlier in the session. Moves in the Swissie were more pronounced against the euro, with the common currency last 0.4% lower at 0.96685 francs, after sliding as much as 1.5% earlier. 

The yen rose roughly 0.2% to 154.38 per dollar, after having rallied more than 0.6% in a knee-jerk reaction to reports of the attack.”It’s pretty obvious the market is nervous,” said Moh Siong Sim, a currency strategist at Bank of Singapore.”I think markets are at this stage in a flight-to-safety mode … Right now, we’re still in a situation where we know something has happened. But we need to understand the degree of retaliation,” Sim said.- Reuters

Iran’s Ambassador to India Iraj Elahi.
| Photo Credit: The Hindu

India can play an important role in stopping Israel’s operations in Gaza, said Iran’s Ambassador to India Iraj Elahi, adding that Iran would also “welcome” any mediatory role by India to bring peace and stability to the region.

Mr. Elahi said Iran has kept India fully briefed about last week’s air attack on Israel, and said its main objectives, to “deter Israel” and demonstrate the “possible costs of transgressing red lines”, had been achieved. The U.S. White House has described Iran’s attack, sending about 350 drones and missiles on Israeli targets on April 13, a “spectacular and embarrassing failure”, as more than 90% were intercepted by the US, Israel and Jordan.

“This is what Israel and Western countries say. But the reality is something else, and the Israeli regime understood what Iran’s missile capability is. Every operation has its own objective. The main objective of this operation was to deter Israel and to warn them of the dangerous consequences of their reckless deeds,” Mr. Elahi told The Hindu in a written response to a question about the US statement. He said the operations had “proven” that all the “vital military bases” of the Israeli Defence Forces would be “easily accessible” if Iran decided to use “more developed weapons”.

Iran has said its attacks were a “legitimate” response to Israel’s bombing of the Iranian Embassy building in Damascus on April 1 that killed seven military advisors including a senior Iranian general, which Mr. Elahi said was a violation of the Vienna Convention and other conventions on the protection for diplomats. The Ministry of External Affairs’ response to both Israel’s attack and Iran’s counterattack has been seen as neutral, with no direct condemnation of either country but expressing serious concerns about the escalation of tensions in the region.

“I cannot speak for the Indian government. Each country has its own position in such situations. But what is certain is that attacking diplomatic places is prohibited according to international conventions,” Mr. Elahi said. He said India should condemn Israeli operations in Gaza in retaliation for the October 7 terror attacks by Hamas, that left more than 1,200 Israelis dead, and dozens taken hostage. More than 35,000 Palestinians have been killed in Israeli operations since then, mostly women and children.

“We believe that India can play a very important role in stopping” Israel operations in Gaza, Mr. Elahi said, adding that “the Indian government can play an active role in condemning these actions of Israel.” When asked whether India could play mediator in the region given its strong strategic ties with both Iran and Israel, the Iranian Ambassador said his government would “welcome any action to reduce tension and establish peace and stability in the region”.

Israel’s Ambassador Naor Gilon has said Iran’s attacks “cannot go unanswered”. “We have to make it clear to Iran that these are unacceptable, and our capabilities to retaliate are reasonable,” he told various news channels this week.

The Iranian Ambassador also said bilateral cooperation with India over the Chabahar port project, where India operates a terminal, is “going well”, and promised that there would be “good news in this regard in the coming days”. When asked about India’s 2018 decision to cancel import of Iranian oil due to U.S. sanctions, Mr. Elahi said that as an oil exporter, Iran was ready to sell to any country. “If there is a request from the Indian government to buy oil, Iran will definitely welcome it,” he added.

Israel’s Prime Minister Benjamin Netanyahu said on April 17 his country will decide how to respond to Iran’s unprecedented attack as world leaders called for restraint to avoid escalation.

The Israeli military has vowed to respond to Iran’s missile and drone weekend attack, prompting a diplomatic flurry aiming to calm a region already on the edge due to the Israel-Hamas war raging in Gaza since October 7.

Washington and Brussels have pledged to ramp up sanctions against Iran, while British Foreign Secretary David Cameron and his German counterpart Annalena Baerbock became the first Western envoys to visit Israel after the attack.

Mr. Netanyahu told the visiting ministers that Israel “will reserve the right to protect itself,” his office said.

The pair offered “all kinds of suggestions and advice” during a meeting, Mr. Netanyahu said. “However, I would also like to clarify: we will make our decisions ourselves.”

For his part, Mr. Cameron said that “we are very anxious to avoid escalation and to say to our friends in Israel: It’s a time to think with head as well as heart.”

Ms. Baerbock emphasised that “the region must not slide into a situation whose outcome is completely unpredictable.”

Tehran has vowed to hit back if its arch-foe Israel responds to the Saturday attack, which itself was launched in retaliation to a deadly strike on Iran’s Damascus consulate building earlier this month.

Iran military parade

As Iran marked its annual Army Day, it showed off a range of its weapons on Wednesday, including attack drones and longer-range ballistic missiles, in a military parade in Tehran.

President Ebrahim Raisi has warned after the attack that “the slightest act of aggression” by Israel would lead to “a fierce and severe response”.

In the large-scale assault late on Saturday, Iran and allied groups launched over 300 missiles and drones carrying a combined payload of 85 tonnes at Israel, according to the Israeli Army.

Damage and casualties were limited as Israel’s air defences intercepted most of them with the help of U.S., British, French and Jordanian forces.

Israel’s military chief Herzi Halevi has vowed “a response” to Iran’s first ever direct attack, while military spokesman Daniel Hagari stressed that Iran would not get off “scot-free”.

It remained unclear how and when Israel might strike, and whether it would target Iran directly or attack its interests or allies abroad in places such as Lebanon, Syria, Iraq and Yemen.

Lebanon’s Iran-backed Hezbollah group and Israeli forces have been exchanging near daily cross-border fire with Israel since the Gaza war began.

Hezbollah said it launched drones and missiles into Israel on Wednesday, which the army said wounded 14 soldiers, six of whom seriously.

U.S., E.U. to toughen sanctions

Israel’s top ally the United States has made clear it won’t join any attack on Iran, vowing instead to level more sanctions targeting Iran’s missile and drone programme, its Islamic Revolutionary Guard Corps and the Iranian Defence Ministry.

E.U. foreign policy chief Josep Borrell said Brussels was also working to expand sanctions against Iran, including its supply of drones and other weapons to Russia and to proxy groups around the Middle East.

Germany’s Ms. Baerbock said that Berlin and Paris were in favour of a European sanctions regime against Iranian drones to be extended to include “missile technologies in Iran’s arsenal”.

Mr. Cameron also urged the G7 to adopt new “coordinated sanctions against Iran,” ahead of a meeting with counterparts from the Western-led grouping in Italy.

Deadly strikes in Gaza

The sharply heightened Israel-Iran tensions have threatened to overshadow the Gaza war, even as deadly bombardment and combat raged on unabated in the besieged territory.

Talks toward a truce and hostage release deal have stalled for now, said Qatari Prime Minister Sheikh Mohammed bin Abdulrahman Al-Thani, a key mediator, despite months of effort also involving U.S. and Egyptian officials.

The Israeli military said Wednesday its aircraft had “struck over 40 terror targets throughout the Gaza Strip” over the past day.

When one strike hit the southernmost city of Rafah, where 1.5 million Palestinians are sheltering, Jamalat Ramidan said she “woke up to the sounds of girls shouting ‘mama, mama, mama’.”

As she fled the carnage alongside children, they stumbled over “body parts and corpses scattered all over the place,” Ramidan told AFP.

Vast areas of Gaza have been devastated by more than six months of war, while its 2.4 million people have suffered under an Israeli siege that has blocked most water, food, medicines and other vital supplies.

The war was triggered by an unprecedented attack on Israel by Hamas on October 7 that resulted in the deaths of 1,170 people, mostly civilians, according to an AFP tally based on Israeli official figures.

The militants also took about 250 hostages, of whom Israel estimates 129 remain in Gaza, including 34 who are presumed dead.

Israel’s devastating retaliatory offensive has killed at least 33,899 people in Gaza, mostly women and children, according to the Health Ministry in the Hamas-run territory.

Israel rejects famine claims

Israel has faced growing global opposition to the relentless fighting in Gaza, which the United Nations and aid agencies have warned has pushed the north of the territory to the brink of famine.

But Mr. Netanyahu rejected any claims about famine on Wednesday, saying Israel is doing “above and beyond” what is needed “on the humanitarian issue,” his office said.

The UN said it would launch an appeal on Wednesday for $2.8 billion to help Palestinians in Gaza and in the occupied West Bank.

The bloodiest ever Gaza war has also revived the push for Palestinian statehood as part of a two-state solution to the decades-long conflict.

The UN Security Council was preparing to vote Thursday on an Algeria-drafted resolution for full United Nations membership for a Palestinian state, diplomatic sources said.

However the veto-wielding United States has repeatedly expressed opposition to the move.

The global maritime industry is set for tougher and more challenging times due to the increasing tensions in the Middle East, causing supply chain disruption and increasing the probability of choking shipping routes, experts in Singapore said.

Iran launched 330 missiles and drones on Israel on April 13 in retaliation to an attack by Israel on a diplomatic mission of the Islamic Republic in Damascus on April 1 in which several people, including two top commanders, were killed.

There is a concern about the probability of a Persian Gulf shutdown though many maintain hope of defusing fierce tension in the region, a delegate at the opening of Singapore Maritime Week on Monday, told PTI. The Persian Gulf is a Mediterranean Sea in West Asia. It is connected to the Gulf of Oman in the east by the Strait of Hormuz, one of the world’s most strategically important choke points.

Economic, environmental costs

The diversion of each ship is estimated to cost $30 million through the Cape of Good Hope from the Suez Canal, according to Danish Sultan, managing director of PacMarine Services in Singapore.

The Suez Canal is an artificial sea-level waterway in Egypt, connecting the Mediterranean Sea to the Red Sea through the Isthmus of Suez and dividing Africa and Asia.

“With 80-85% of the global cargo transported by ships, the shipping industry will have to go on in any environment,” he pointed out.

Shipping costs have already gone up by three to four times compared to pre-Covid level, Colin Er Wen-Jie, director of the transport department at the Sumitomo Mitsui Banking Corp said at the Singapore Maritime conference being held April 15-19 and is attended by over 10,000 delegates.

Supply chain disruption is certain though hope is being maintained that both Iran and Israel will not blow up the situation.

Diverting a ship via Cape of Good Hope adds 12-13 days of additional journey compared with sailing through the Suez Canal, according to Sanjay Verma, director of Decarbonisation Solutions for Marine at Wartsila.

The “tonne mile increase will lead to a spike in shipping costs,” he said, adding that it would add to pollution and deflate all efforts being made for managing the climate as more and more fuel will be burned.

“Commodity prices, including oil, will be spiked,” Sanjiv Mishra, head of section, Date Centre Asia – Maritime at the DNV. The global shipping industry is playing an important role in transporting 80-85 per cent of the global trade, he stressed. “I hope the situation in the Middle East is controlled, and the supply chain is maintained,” he said.

“Sourcing of commodities would change,” added Punit Oza, Founder of Maritime NXT Pte Ltd in Singapore. Supply importing countries will switch to buying from nearer home markets even though it would be expensive, he added.

Trade from Asia will benefit due to the delivery of expensive goods and a spike in prices of essential food products and items. But the seafarers will suffer and the industry will face a manpower squeeze as sailors will not want to board ships and new recruits will be discouraged from joining the shipping industry, according to Captain Pradeep Chawla, CEO and Founder of MarinePALS.

“There will be fear of being captured,” he said, pointing to the 17 Indian seafarers held on board MSC Aries that had been captured by the Iranians.

Ship owners are more worried about their vessels out there and their board rooms are busy working out rescue efforts, diverting attention from the decarbonisation of the industry, said the shipping industry stalwart.

‘We set for a tumultuous market’

If the Persian Gulf is closed and other routes are choked, the US, as a net oil exporter, will benefit from higher prices, said an oil industry executive at the Maritime Week on condition of anonymity.

“We are set for a tumultuous market,” he added. “A war situation, which we hope never happens, will put pressure on the shipping industry and shipbuilders,” he said.

The Iranian threat had led to worldwide diplomatic initiatives to thwart a possible further conflagration in the region already struggling with Israel’s offensive in Gaza following a terror attack carried out by Hamas in its territory on October 7 and also regular exchange of fire between the Jewish state and Lebanese Shia faction Hezbollah, which joined the war in solidarity with Hamas.