DAY 314 OF THE WAR: Possible Progress in Doha, Barrages in North, Settler Violence in the West Bank, El Al Reports Record Profits

Tel Aviv Diary, August 15, 2024

Zoom Briefing Sunday, August 18th, 6 PM Israel, 4 PM GW, 11 AM EDT, 8 AM PDT

If you are in Great Britain, you can hear me Friday morning at 9:15 on LBC

The negotiators are meeting tonight in Doha and will continue discussions tomorrow after spending the night there. This is a positive sign. It does appear like Netanyahu has granted the negotiating team sufficient autonomy to potentially secure an agreement. According to one report, the Egyptians have informed Hamas that the status of the Philadelphi Corridor is left for them to negotiate directly with Israel. The outcome remains uncertain, but there is guarded optimism in Israel that a framework agreement may be reached. If successful, numerous details will need to be addressed, such as the identities of the terrorists to be released, the timing of these releases, and other specifics. We can only hope for the best outcome.

Former Defense Minister Benny Gantz issued the following public statement today aimed at Bibi Netanyahu:

At first, you hesitated to [authorize the Army to] maneuver [in Gaza], then you hesitated to shift the [military] effort northward, and for months, you hesitated to pursue a hostage deal out of fear for the fate of your coalition. It's time for you to stop worrying about the government's fate and focus solely on the fate of the country. For once, be courageous.

END OF THE LINE IN GAZA?

The New York Times featured a lead story titled “In Gaza, Israel’s Military Has Reached the End of the Line, U.S. Officials Say.” The article asserts that the IDF has achieved all that it can militarily in Gaza, exceeding U.S. expectations by significantly damaging Hamas and achieving complete freedom of movement throughout Gaza. However, the article also suggests that there is little more the military can achieve. John Kirby, Spokesman for the U.S. National Security Council, echoed this sentiment.

THE NORTH

Meanwhile, the war continues. In the North there were seven separate barrages targeting communities along the border. We remain on alert for potential attacks from both Hezbollah in the North and from Iran. Today, the White House announced that, to their knowledge, Iran still intends to launch an attack, which could occur at any time.

GAZA

The IDF announced today that it had destroyed more than 50 tunnels along the Egyptian border since entering Rafah, although not all of them were active. The IDF Spokesman described the actions in Gaza in the last 24 hours as follows:

In Rafah, combat teams from the Givati and Nahal Brigades, under the command of Division 162 and in coordination with the Air Force, eliminated approximately 20 militants who posed a threat to Israeli forces during airstrikes in the area. Additionally, a structure housing a tunnel shaft was destroyed.

In Khan Younis, a joint operation by the Air Force and the fire control center of Division 98 resulted in the elimination of several militants operating in a Hamas weapons storage facility. In another airstrike, a tactical-level Palestinian Islamic Jihad (PIJ) militant, who was involved in launching attacks against Israeli forces and the Gaza periphery, was also killed.

In central Gaza, Division 252 continues its operations in the corridor area, collaborating with the Air Force. The forces eliminated a militant squad and destroyed a weapons storage facility.

Over the past 24 hours, the Air Force has destroyed more than 30 Hamas terrorist infrastructure sites, including booby-trapped buildings, underground facilities, and weapons storage sites.

WEST BANK

Tonight, a large number of Jewish right-wing settlers entered the Palestinian village of Jit near Nablus, burned cars, and attacked Palestinians. According to Palestinians reports, one person was killed and another severely injured. The attacks tonight, which appear to have gone beyond what has been done in the past, have been universally condemned across the Israeli political spectrum.

President Herzog wrote:

I strongly condemn the riots tonight in Samaria. This is an extreme minority that harms the law-abiding settler community, the entire settlement movement, and Israel's reputation and standing in the world, especially during such a sensitive and difficult time. This is not our way, and certainly not the way of the Torah and Judaism. Law enforcement agencies must act immediately against this serious phenomenon and bring those who break the law to justice.

HAMAS HEALTH MINISTRY REPORTS vs. LEADING ISRAELI JOURNALIST

Today, the Hamas Ministry of Health announced that the number of people killed in Gaza has now passed 40,000.

Israel journalist Doron Kadosh published the following report on Telegram to explain the figures, assuming that these numbers are accurate.

A few words about the number of Palestinian casualties in Gaza, which officially crossed 40,000 today:

The IDF reports that about 17,000 militants have been definitively killed since the start of the war (i.e., militants whose bodies were seen and counted by the forces one by one). The IDF estimates that in addition to these militants whose bodies were counted, there are many others who could not be seen and counted—such as militants killed in airstrikes on buildings, who were buried under the rubble, and militants killed in underground tunnels. Rough estimates suggest there may be several thousand more since the start of the war. Hamas does not officially publish the number of militants killed in its ranks, and the numbers reported by the Gaza Health Ministry include both militants and civilians without distinction.

This suggests that the ratio of killed militants to killed civilians in Gaza is likely close to 1:1 (one civilian killed for every militant killed). This ratio is considered favorable compared to other conflicts and wars around the world in recent decades.

It is common to compare the war in Gaza to other battles where Western armies (or Western-supported forces) fought against terrorist organizations within a civilian and urban environment. According to global data, while about 50% of those killed in the Gaza war are civilians, in the Iraq War, 67% were civilians, and in the Gulf War, 88%. In Mosul, Iraq, between 9,000 and 11,000 civilians were killed, compared to 3,000-5,000 ISIS militants. In Raqqa, Iraq, about 4,100 civilians were killed, compared to about 1,900 ISIS militants.

Assuming none of these figures are highly reliable, one can only estimate generally: the IDF's kill ratio in Gaza is much lower than that of any other army, given the urban nature of the fighting and the enemy embedded within the population. In other wars where the nature of the fighting is entirely different from that of the IDF, there are also better ratios: in the Russia-Ukraine war, for example, the civilian death rate is about 30%, with a similar rate in the war in Afghanistan.

Professor Amichai Cohen, a senior fellow at the Israel Democracy Institute, said in an interview with Galey Zahal (IDF Radio) that indeed, in a global comparison, the combatant-non-combatant ratio in Israel's war in Gaza is much better, but the main international criticism directed at Israel does not concern the overall numbers but rather specific incidents:

The overall ratio is an important part of the picture because it shows that the IDF is careful to follow the rules, especially when dealing with an enemy like Hamas, whose method is to entrench itself within the civilian population. But the laws of warfare also examine events individually—and there are specific cases that are the subject of growing international criticism.

Professor Cohen suggests caution when looking at the overall picture. It is also interesting to examine the secondary arenas in which Israel has been fighting since October 7—where the ratio of civilian to militant casualties is even better because the nature of the fighting there is, of course, very different from how Israel operates in Gaza:

In Lebanon and Syria—according to security data provided to us, there have been 583 casualties—of whom 413 were Hezbollah militants, 110 were Palestinians and other terrorist organizations, and 59 were civilians. In other words: 10% of the casualties are civilians—one civilian for every nine militants. This indicates very precise and careful airstrikes by the IDF.

And in Judea and Samaria—the number of Palestinian casualties is about 590. Of these, according to IDF sources, about 6 were non-combatants. In other words: a ratio of one civilian killed for every 99 militants killed. In this arena, the IDF takes great care not to harm Palestinian civilians, only militants—to prevent the Palestinian population in Judea and Samaria from being drawn into the cycle of terror. This policy is, of course, completely different from that employed in Gaza, where the objectives of the war are different.

Everything stated in this report is true, but unfortunately, it is somewhat irrelevant. Firstly, while the proportion of civilian casualties is lower than in previous campaigns, one has to take the aggregate number into account. Secondly, the media environment in which we are living plays a crucial role. While working on today’s history segment, I revisited Ehud Barak’s book on the period of the second Intifada, where he discusses how the presence of Al Jazeera and other media outlets, which amplified every image and incident and contributed to the outrage that fueled the second Intifadah. The impact of media is so much more pronounced today. Lastly, unlike other situations mentioned, in our case, there is a sophisticated propaganda machine operating both in Gaza and globally that uses these deaths to undermine Israel’s position.

EDUCATION

Only 12% of teachers in the partisan Haredi education networks—specifically the Independent Education systems of Agudat Yisrael and B’nei Yosef of Shas—hold academic degrees. This figure sharply contrasts with the nearly 100% of teachers in the general, religious, and Arab state education systems and 56% in the state-Haredi education system, who possess academic credentials. These findings come from a study by the Knesset Research and Information Center, commissioned by MK Moshe Tur-Paz from Yesh Atid and authored by researcher Eti Weisblai. At a time when these Haredi networks are fiercely advocating for salary increases for their teachers, alleging they are capable of teaching a full core curriculum, these statistics significantly challenge their ability to deliver on that promise.

ECONOMY

The Consumer Price Index (CPI) in Israel rose by 0.6% in July, which is at the upper end of early predictions. This increase means that, for the first time since the beginning of 2024, inflation (the rate of price increase over the past 12 months) has exceeded the Bank of Israel's target range of 1%-3%. As a result, the expected reduction in interest rates may be postponed.

According to the Central Bureau of Statistics, notable price increases were observed in seasonal categories such as vegetables and fruits, which rose by 3.2%. The culture and entertainment sector saw a 1.8% increase, while housing and maintenance each increased by 0.8%, and food and transportation costs both rose by 0.5%. On the other hand, significant price decreases were recorded in the clothing and footwear category, which fell by 2.4%, and in furniture and home equipment, which decreased by 0.6%.

BUSINESS

Israel Aerospace Industries

Another major deal for Israel Aerospace Industries (IAI) has been secured with the Ministry of Defense. The government-owned company will supply the ministry with defense systems related to its "core business activities" for a total of 2 billion shekels. The delivery of these systems will take place over the next three years.

This announcement follows IAI's recent report of achieving its highest quarterly results ever, with a record-breaking order backlog of $22.2 billion and a 13% increase in sales, totaling $160 million. Just last week, IAI reported an even larger deal involving the sale of weapons to a foreign client for $2 billion, mediated by the Ministry of Defense. It is believed in the defense industry that this deal involves air defense systems. Additionally, about a month and a half ago, IAI disclosed another significant transaction worth approximately $1 billion, which, according to foreign reports, involved the sale of a spy satellite to Morocco.

El Al Airlines

The limited competition in the aviation market due to the Gaza conflict has led El Al to achieve its highest quarterly profit in history, earning $147 million in Q2 2024—a 150% increase from Q2 2023.

Revenues grew 33% year-over-year, reaching $839 million, driven by an 8% rise in available seat kilometers, thanks to fleet expansion from 45 to 47 aircraft. Additionally, a 24% increase in income per seat kilometer, due to higher occupancy rates (92.4% vs. 86.8% in 2023), and a 17% rise in revenue per passenger kilometer contributed to this growth

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El Al's market share at Ben Gurion Airport jumped to 43.2%, up from 23.9% in Q2 2023, despite a decrease from 62% in Q1 2024 as foreign airlines gradually returned. The airline also saw significant market share gains on its key routes to North America (88.2% vs. 35.5% in Q2 2023) and the Far East (69.3% vs. 42.8%).

This revenue surge led to a $391 million cash flow surplus in Q2 2024. El Al announced the purchase of 20 Boeing 737 Max aircraft for $1.5 billion, with delivery expected between 2028 and 2031, as part of a strategic plan to increase seating capacity by 40%- 45% in narrow-body aircraft and 35%- 40% in wide-body aircraft.

El Al also reduced its net financial debt from $1.7 billion at the end of 2022 to $611 million by Q2 2024, with expectations to eliminate debt by year-end. A 107% increase in freight revenue, reaching $57 million, further boosted profits, largely due to reduced foreign airline flights and the Houthi blockade in the Red Sea..

Discount Bank

Discount Bank concluded the second quarter of 2024 with a net profit of 1.04 billion shekels and a return on equity of 14.1%, according to the bank's financial reports published this morning (Thursday). The bank noted that the return on equity from banking activities in Israel reached 17.6%.

The board of directors of Discount Bank (+1.83% 2000) approved a dividend distribution of 30% of the net profit, amounting to 313 million shekel.

Credit loss expenses totaled 258 million shekels. Additionally, the reports revealed that since the start of the "Iron Swords" war, the cost of Discount Bank's support for customers and the community is estimated at 361 million shekels.

Bank Leumi

During the second quarter of 2024, Bank Leumi reported a net income of approximately NIS 2.3 billion ($612 million), showing a slight decrease compared to NIS 2.5 billion ($665 million) in the same period last year. The return on equity (ROE) for this quarter was around 16%, but when excluding a NIS 0.6 billion ($160 million) deduction related to the investment in Valley National Bank, the adjusted ROE was 20.2%. The bank also continued to improve its efficiency ratio, achieving 28.7% in Q2 2024, down from 29.5% in the corresponding quarter of the previous year. Public deposits grew by 8.8%, and the loan portfolio expanded by 5.9% compared to Q2 2023. The bank declared a dividend of NIS 908 million ($242 million) for the quarter, with NIS 681 million ($181 million) distributed as a cash dividend and the rest as a share buyback, representing 40% of the net income for the quarter.

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A PIECE OF HISTORY

Yesterday, I posted an important history section entry about the failed summit between Barak and Arafat, which was made available exclusively to paid users. If you would like to read this entry, I have added this section on HistoryCentral, and the link is provided here:

Second Intifadah Begins

With the collapse of the Camp David summit, the question of what would come next loomed large. Even before the summit, the Israeli government had received disturbing intelligence suggesting that the Palestinians might resort to violence to further their aims. Upon returning, Barak survived a no-confidence vote in the Knesset, but his coalition had already crumbled. However, with the Knesset on a three-month summer recess, Barak had a small window to try to reestablish a government coalition.

Barak attempted to break the stalemate with Arafat by inviting him to his house for dinner. Although the meal was convivial, it ultimately served no purpose. In September, Ariel Sharon requested permission to visit the Temple Mount. While the government, under the leadership of Ehud Barak, would have preferred that Sharon not make his visit, consultations with the security services—which also advised against his going—yielded no intelligence suggesting the visit would be problematic. The Israeli government also checked with Jibril Rajoub, Arafat’s West Bank security head, who indicated that he had no problem with the visit as long as Sharon did not go on a Friday and did not enter the mosques.

On September 28, 2000, Sharon visited the Temple Mount, where he had a photo opportunity. Initially, it seemed this would be a one-day tempest. However, that evening, Israel received intelligence that Arafat was planning large-scale protests after Friday prayers throughout the West Bank and in Jerusalem. The Israeli government asked the U.S. to intervene, and Secretary of State Madeleine Albright called Arafat. However, as Dennis Ross later wrote: “We now know Arafat did not lift a finger to stop the demonstrations which produced the second intifada.”

The next day, following Friday prayers, Muslims began hurling rocks and small boulders at Jews below. In the ensuing clashes, dozens of Israelis and Palestinians were injured, and five Palestinians were killed. The following day, Palestinians opened fire on Israeli troops near the settlement of Netzarim. The soldiers returned fire, and when it was over, ten Palestinians lay dead. However, one image that became a significant catalyst for the Second Intifada was a photograph of a 12-year-old boy named Mohammed al-Durrah, seen hiding behind his father. Al-Durrah was killed that day, most likely by Palestinian fire, but that did not matter. In the era of 24/7 television news, including Al Jazeera, the image played a significant role in inciting the violence that followed.