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한국어로 읽기 Leer en español In Deutsch lesen Gap اقرأ بالعربية Lire en français Читать на русском AbstractPurpose The purpose of this paper is to analyse the international political economy of Korea and its effects due to geopolitical tension between China and the USA. Design/methodology/approach Economic war between China and the USA has prolonged longer than expected. Aftermath of the COVID-19 pandemic, reforming the supply chain has been the centre of economic tension between China and the USA. Quite recently, with the rapid expansion of Chinese e-commerce platforms, distribution channels come upon a new economic tension between the two. And now is the time to pivot its pattern of conflict from competition into cooperation. In this end, economic diplomacy could be a useful means to give a signal of cooperation. From the view of economic diplomacy, this paper tries to analyse the projected transition of economic war between China and the USA with its implication on the trade policy of Korea. Findings As an implementation of economic diplomacy, China suggested the Belt and Road Initiative (BRI), enhancing trade logistics among related countries to gain competitiveness. In 2023, the Biden administration suggested the India-Middle East and Europe Economic Corridor as a counter to BRI, which will be a threshold for changing trade policy from economic war into economic diplomacy. As a result, it is expected China and the USA will expand their economic diplomacy in a way to promote economic cooperation among allied states, while the distribution channel war would continue to accelerate the economic tension between China and the USA. Korea has to prepare for and provide measures handling this geopolitical location in its trade policy or economic diplomacy. Originality/value This research contributes to the awareness and understanding of trade environments from the perspective of economic diplomacy. 1. Introduction The advent of globalisation has led to widespread economic integration, creating global production networks and markets. However, the COVID-19 pandemic has acted as a significant setback to this trend. In the wake of COVID-19, an economic war has arisen between China and the USA, centred on the restructuring of global supply chains following widespread disruptions. International political economy (IPE) examines the power dynamics between states and the structures of influence within regional economies. Consequently, economic diplomacy has gained unprecedented attention. Economic diplomacy focuses on government actions regarding international economic issues, distinct from political diplomacy through its market-oriented approach in foreign policy. Putnam (1988) categorises economic diplomacy into two levels: unilateralism and bilateralism. Unilateral economic diplomacy (or unilateralism) often relies on hard power, involving decisions on trade liberalisation or market protection without negotiation. Bilateral economic diplomacy (or bilateralism) or multilateral economic diplomacy (or multilateralism), by contrast, involves negotiation among trade partners, resulting in agreements such as regional or global free trade agreements (FTAs). A vast range of state or non-state actors engage in economic diplomacy, navigating the complex interplay between international and domestic factors. Defining economic diplomacy is extremely challenging, but one useful definition is “the broad concept of economic statecraft, where economic measures are taken in the pursuit of political goals, including punitive actions such as sanctions” (Blanchard and Ripsman, 2008).  Figure 1 Recent trend of economic diplomacy To exert influence internationally, ministers and heads of government strive to demonstrate their capacity for national security through two primary approaches, as shown in Figure 1 (above): economic war (or competition) and economic diplomacy (or international cooperation). In the context of global supply chain restructuring, the economic conflict between China and the USA has intensified, marked by threats of supply chain disruptions. This has led to emerging strategies aimed at “crowding out” the USA from global supply chains (去美戰略) or excluding China through alliances such as the Allied Supply Chain and Chip 4. While economic war is inherently “temporary” due to its painstaking nature, economic diplomacy or international cooperation offer a more “long-term” approach because it is gains-taking. This paper analyses the factors contributing to the prolonged nature of this economic war and explores potential outcomes of the supply chain tensions between China and the USA from the perspectives of IPE or geo-economics. In conclusion, it highlights the importance of preparing for trade policy adjustments and strategic economic diplomacy. 2. International trade war and strategic items2.1 Supply chain The supply chain encompasses a network of interconnected suppliers involved in each stage of production, from raw materials and components to the finished goods or services. This network can include vendors, warehouses, retailers, freight stations and distribution centres. Effective supply chain management is a “crucial process because an optimised supply chain results in lower costs and a more efficient production cycle” [1]. Within the supply chain, a leading company typically holds governance power, enabling it to coordinate scheduling and exercise control across the interconnected suppliers, resulting in reduced costs and shorter production times (Gereffi et al., 2005) [2]. Since the 2000s, forward and backward integration have been key strategies for managing time, cost and uncertainty in supply chains. For example, Toyota’s Just-In-Time (JIT) system demonstrated the efficiency of locally concentrated supply chains until disruptions from the 2011 East Japan Earthquake and the Thailand flood. Following supply chain shutdowns in 2020, many businesses shifted from local to global supply chains, utilising advancements of the information technology (IT) and transportation technologies to geographically diversify operations. As the need for a systematically functioning global supply chain has grown, a leading nation, much like a leading company, often assumes governance power in international trade and investment, as illustrated in Figure 2 (below), by aligning with the leadership of a dominant market competitiveness, which makes this leadership valuable.  Figure 2 Supply chain The COVID-19 pandemic dealt a severe blow to the global supply chain, causing sudden lockdowns that led to widespread supply chain disruptions. To mitigate the risks of future global disruptions, supply chains have begun restructuring to operate on a more regionally segmented basis. In this shift toward regional supply chains, China and the USA are at the centre, drawing allied countries within their spheres of influence. This alignment helps explain why the economic war between China and the USA has lasted longer than anticipated. 2.2 Strategic items China has restricted exports of two rare metals, gallium and germanium, which are critical to semiconductor production. Kraljic (1983) highlighted the importance of managing “strategic items” within the framework of supply chain management, as shown in Figure 3. Kraljic emphasises the need to strengthen and diversify critical items. The Kraljic matrix provides a valuable tool for identifying essential items that require focused management within the supply chain.  Figure 3 Kraljic matrix Kraljic identified the importance of managing “bottleneck items” in strategic supply chain management – items that present high supply risk but have relatively low business value. Due to the potential costs associated with non-delivery or compromised quality of strategic items, these must be closely monitored and controlled. From a risk management perspective, establishing medium-term business relationships and collaboration with suppliers is essential. For example, South Korea imports over 90% of its urea for agricultural and industrial purposes from China [3]. Heavily dependent on China for urea supplies due to pricing factors, Korea faced challenges when China imposed export controls on urea, underscoring Korea’s vulnerability within China’s sphere of influence. The European Union (EU) also faces challenges with critical raw materials (CRMs). China remains the EU’s sole supplier of processed rare earth elements, while Chile supplies 79% of its lithium. In response, the EU introduced the CRM Act (CRMA) to support projects aimed at increasing “the EU’s capacity to extract, process, and recycle strategic raw materials and diversify supplies from the third countries” [4]. 2.3 Resilient supply chain alliance In contrast to China’s approach of leveraging supply disruptions to strengthen its influence, the Biden administration in the USA has adopted a cooperative approach focused on building resilient supply chains (Pillar 2) through the Indo-Pacific Economic Framework (IPEF), which includes 14 member countries [5]. The need for resilient supply chains has been further underscored by the Russia–Ukraine crisis. The IPEF aims to address supply chain vulnerabilities by fostering global efforts to reduce risks associated with concentrated, fragile supply chains [6].  Figure 4 Resilient supply chain alliance In Figure 4, the EU Commission presented the Single Market Emergency Instrument (SMEI) in September 2022, a crisis governance framework designed to ensure the availability of essential goods and services during future emergencies. The SMEI operates on three levels: contingency planning, vigilance and emergency. The contingency planning phase focuses on collaboration among member states to mitigate supply chain disruption and monitor incidents. The vigilance phase can be activated when a significant disruption is anticipated, enabling specific measures such as mapping and monitoring supply chains and production capacities. Finally, the emergency phase is activated in cases of severe disruption to the functioning of the single market [7]. Establishing a resilient supply chain through international cooperation may be appealing, yet the reality often falls short of the ambition. In South Korea, the IPEF took effect on 17 April 2024, after an extended negotiation process, marking the first multilateral agreement on supply chains. As a result, during non-crisis periods, the 14 member countries will collaborate to strengthen international trade, investment and trade logistics. In times of crisis, member countries will activate a “crisis response network”. Conversely, opportunities for negotiation with China, South Korea’s largest trading partner, are essential for building supply chain resilience [8]. China has pursued an industrial policy focused on enhancing its supply chain management capabilities. In the semiconductor sector, the decoupling between China and the USA has become increasingly evident. Contrary to expectations, China has adopted a policy of internalising its supply chains, returning to the integration strategies of the 2000s rather than furthering globalisation. A promising opportunity for transformation between the two countries has emerged recently. Since 2015, China and South Korea have maintained bilateral FTA, and with the second phase of FTA negotiations currently underway, there is an opportunity to strengthen trade and investment ties, fostering positive progress through international cooperation. 2.4 China manufacturing exodus During the COVID-19 pandemic, China imposed sudden lockdowns without prior notice or preparation, halting production and logistics cycles. This “zero COVID” policy may have triggered a shift towards “de-risking” China from supply chain disruptions. Although China still offers significant advantages as “the factory of the world,” with vast market potential, prolonged trade tensions with the USA, intensified during the Trump administration, have prompted global manufacturers with substantial USA market bases to relocate operations amid rising geopolitical uncertainties. For example, Nike and Adidas have shifted much of their footwear manufacturing to Vietnam, Apple has begun iPhone production at a Foxconn in Chennai, India, and AstraZeneca has contracted production with India’s Serum Institute. In the pre-globalised era, defining the Rule of Origin (ROO) was straightforward, as a product’s components were usually manufactured and assembled within a single country. However, with the complexity of global supply chains, particularly since 2012, determining ROO has become a time-consuming and subjective process. ROO are classified as either non-preferential or preferential. The USA applies non-preferential ROO to restrict imports from countries like Cuba, Iran and North Korea, while offering trade preference programmes for others. Preferential ROO are used to determine duty-free eligibility for imports from approved countries [9], whereas non-preferential ROO play a crucial role in “country of origin labelling, government procurement, enforcement of trade remedy actions, compilation of trade statistics, supply chain security issues.” [10] China manufacturing exodus may negatively impact capital inflows into Hong Kong, traditionally seen as the Gateway to China. In 2023, Hong Kong’s initial public offering volume fell to a 20-year low of $5.9bn [11]. While China-oriented business remains in Hong Kong, which returns fully to Chinese control in 2047, non-China-oriented businesses have migrated to Singapore. As the certainty of contract and ownership rights forms the foundation of capitalism, this capital flight from Hong Kong is likely to persist. 3. Trade logistics and economic corridors Globalisation has allowed supply chains to leverage interdependence and interconnectedness, maximising efficiency. However, while these efficiencies have been beneficial, they have also created a fertile ground for friction between trade partners due to a “survival of the fittest” mindset and the principle of “winner takes all.” This interdependence has also highlighted vulnerabilities; the global supply chain struggled to manage the disruptions caused by COVID-19, prompting a shift towards regional integration initiatives, such as Association of Southeast Asian Nations, Regional Comprehensive Economic Partnership, United States–Mexico–Canada Agreement and Comprehensive and Progressive Agreement for Trans-Pacific Partnership. As the global economy seeks stability, collaboration over competition has become increasingly essential, with economic diplomacy emerging as a priority. The prolonged economic war between China and the USA arguably needs to shift towards economic diplomacy. The global supply chain is restructuring into regional supply chains, building resilience by operating in regional segments that can withstand crises. Michael Porter introduced the concept of value chain as “a set of activities that a firm performs to deliver a valuable product or service to the market.” [12] Complex finished goods often depend on global value chains, traversing multiple countries. As shown in Figure 5, the value chain consists of supply chain and trade channel components. While the focus has traditionally been on which country holds lead status within a regional supply chain, the emphasis is now shifting to how these regional segments can be interconnected and relayed. In this context, the supply chain competition may evolve into a “channel war” in international trade, where trade logistics will centre on the internal flow of goods, standardising channel processes and establishing authority over these channels.  Figure 5 Supply chain v. trade channel 3.1 Trade logistics It is natural for governments to seek environments that enhance competitiveness within in their countries. In terms of trade, effective trade logistics are essential for maintaining competitive advantage. As a prerequisite, a strong IT management infrastructure is indispensable. As shown in Figure 6, trade logistics encompass the internal flow of goods to market, integrating physical infrastructure with operating software – such as transport hubs, warehouses, highways, ports, terminals, trains and shipping vessels. Key areas of conflict in trade logistics involve the standardisation of channel processes and determining who holds governance over operation of these logistics systems. This is equally relevant within the digital economy. Recently, Chinese e-commerce – often referred to as C-commerce – has aggressively sought to gain control over digital distribution channels, interconnected delivery networks and trade logistics via digital platforms. Chinese platforms such as Taobao, Temu and AliExpress are actively working to increase their monthly active users (MAUs), positing themselves as counterweights to USA-based platforms such as Amazon and eBay in digital trade [13].  Figure 6 Trade logistics When the agenda of establishing international trade logistics is introduced to relevant trade members across various countries, initial progress and effective responses are often achieved. However, efforts soon encounter obstacles related to standardising logistics processes and establishing operational governance. Greater reliance on international institutions could help resolve these issues (Bayne, 2017). Yet governments frequently prioritise domestic interests, and after prolonged negotiations, the risk of international agreements failing increases. Amid the economic war between China and the USA, China launched a trade logistics initiative known as the Belt and Road Initiative (BRI), or One Belt One Road, in 2013. Often referred to as the New Silk Road, the BRI aims to establish economic corridors for trade logistics. The World Bank estimates that the BRI could boost trade flows by 4.1% and reduce trade costs by 1.1% [14]. In response, the Biden administration proposed the India-Middle East and Europe Economic Corridor (IMEC) in September 2023 to strengthen transport and communication links between Europe and Asia as a countermeasure to China’s BRI. IMEC has been well received by participating countries, with expectations of fostering economic growth, enhancing connectivity and potentially rebalancing trade and economic relations between the EU and China [15]. Both BRI and IMEC are ambitious projects aimed at boosting international trade through substantial investments in trade logistics infrastructure. Each seeks to assert governance over international trade channels, signalling that the supply chain war may soon evolve into a trade channel war between China and the USA. 3.2 Economic corridors Economic corridors are transport networks designed to support and facilitate the movement of goods, services, people and information. These corridors often include integrated infrastructure, such as highways, railways and ports, linking cities or even countries (Octaviano and Trishia, 2014). They are typically established to connect manufacturing hubs, high-supply and high-demand areas, and producers of value-added goods. Economic corridors comprise both hard infrastructure – such as trade facilities – and soft infrastructure, including trade facilitation and capacity-building measures. The Asian Development Bank introduced the term “economic corridor” in 1998 to describe networks connecting various economic agents within a region [16]. Economic corridors are integrated trade logistics networks, providing essential infrastructure for connecting regional segments of supply chains. As supply chains increasingly operate in regional “chunks,” linking these segments becomes ever more important. Economic corridors typically include a network of transport infrastructure, such as highways, railways, terminals and ports. Initiatives like the BRI and IMEC use economic corridors as instruments of economic diplomacy, shifting strategies from hard power to soft power, as shown in Figure 7. Because less-developed or developing countries often lack sufficient funding to invest in trade logistics, they tend to welcome these initiatives from developed countries, which offer international collaboration and support. However, these initiatives usually come with the condition that participating countries must accept standardised trade processes and governance led by the sponsoring developed country.  Figure 7 Economic corridor initiatives as economic diplomacy To succeed, economic corridors must meet three key conditions [17]. First, government intervention is essential, as economic corridor initiatives primarily involve public infrastructure investments beyond the scope of the private sector. In realising these projects, governments must reconcile three tensions to ensure their policies are mutually supportive: tensions between politics and economics, between international and domestic pressures and between governments and other stakeholders. Second, intermediate outcomes should be measured and demonstrated as results of economic corridors, allowing participants to experience tangible benefits throughout these longer-term projects. Finally, economic corridors should deliver broader benefits. Participants need incentives to utilise the infrastructure sustainably. These benefits may extend beyond economic welfare, such as wages and income, to include social inclusion, equity and environmental gains, which support the long-term viability of the infrastructure. 4. BRI vs IMEC4.1 Belt and Road Initiative (BRI) - Silk Road The BRI can be a modern-day realisation of the Silk Road concept, connecting Europe as a market base with China as a production base. Unlike the ancient Silk Road, which connected trade routes across Eurasia, the BRI poses potential challenges due to its extensive connectivity. Firstly, there are social and environmental externalities, such as increased congestion and accidents from concentrating traffic flows through limited links and nodes within trade networks. Secondly, while the connectivity may benefit the production and market bases at either end, regions situated between these hubs, through which highways and railways pass, may gain minimal advantage. Thirdly, there is often a mismatch between where costs and benefits are realised. Transit regions that facilitate network traffic often see fewer direct benefits compared to high-density nodes within the network. 4.2 India-Middle East and Europe Economic Corridor (IMEC) - The Spice Road The ancient Spice Roads once connected the Middle East and Northeast Africa with Europe, facilitating the exchange of goods such as cinnamon, ginger, pepper and cassia, which, like silk, served as a form of currency. The IMEC proposes a modern route from India to Europe through the United Arab Emirates (UAE), Saudi Arabia, Israel and Greece. Since its announcement in September 2023, some regional experts have expressed reservations about its feasibility, particularly regarding the connection between the Middle East and Israel. The project has faced delays due to the Israel–Hamas war. Despite these challenges, IMEC holds potential to drive economic growth and strengthen connectivity, especially as countries like Vietnam and India emerge as alternative manufacturing bases for companies relocating from China. For Saudi Arabia and the UAE, IMEC is not viewed as a challenge to China but rather as an opportunity to diversify their economies and solidify their roles within the Middle East region [18]. 5. Conclusion A new trade war between China and the USA has begun, with the Biden Administration’s introduction of IMEC as a counter to China’s BRI. This shift could soon transform the nature of economic war from a focus on supply chains to one on trade channels. The China manufacturing exodus was further accelerated by supply disruptions during the COVID-19 pandemic. Amidst the economic tensions between China and the USA, the restructuring of global supply chains into regional networks has made significant progress. With China maintaining its stance on export controls for strategic items, South Korea must prepare for resilient supply chain management. In relation to China–Korea FTA, which is currently undergoing its second phase of negotiation, South Korea should seek clarity on the transparency of China’s strategic item controls. The Committee on Foreign Investment in the United States (CFIUS) plays a key role in monitoring the quality of inbound investments; similarly, South Korea is experiencing increased inbound investment due to the manufacturing shift from China and should apply similar standards to evaluate investment quality. This emerging economic war between China and the USA is now marked by the competing initiatives of the BRI and IMEC. The BRI can be viewed as a modern Silk Road, linking China with Europe, while the IMEC seeks to establish a trade logistics corridor connecting Saudi Arabia, the UAE, Israel and Greece. The South Korean Government should take proactive steps to prepare for the evolving dynamics of the trade war between China and the USA. CitationOh, J.S. (2025), "International trade war - Spice Road against Silk Road", International Trade, Politics and Development, Vol. 9 No. 1, pp. 2-11. https://doi.org/10.1108/ITPD-06-2024-0031  Notes 1. https://www.investopedia.com/terms/s/supplychain.asp2. According to Gary Gereffi et al, 5 governance types of a lead company could be categorised as market, modular, relational, captive and hierarchy.3. Korea imports urea from 12 countries including Qatar, Vietnam, Indonesia and Saudi Arabia, in addition to China.4. https://single-market-economy.ec.europa.eu/sectors/raw-materials/areas-specific-interest/critical-raw-materials/strategic-projects-under-crma_en5. IPEF was launched on May 23,2022 at Tokyo. 14 member countries are Australia, Brunei, Fiji, India, Indonesia, Japan, Republic of Korea, Malaysia, New Zealand, Philippines, Singapore, Thailand, Vietnam and the USA. 4 Pillar of IPEF are Trade (Pillar 1), Supply Chain (Pillar 2),Clean Economy (Pillar 3) and Fair Economy (Pillar 4).6. Critics say “lack of substantive actions and binding commitments, instead focusing on process-driven framework building.” https://www.piie.com/blogs/realtime-economics/its-time-ipef-countries-take-action-supply-chain-resilience7. https://ec.europa.eu/commission/presscorner/detail/en/ip_22_54438. As of 2023, the first-largest trade partner of Korea is China (Trade volume of $267.66bn), the second is the US ($186.96bn) and the third is Vietnam ($79.43bn)9. As preferential ROO contain the labour value content requirement in the USMCA, it could increase compliance costs for importers. https://crsreports.congress.gov/product/pdf/RL/RL3452410. USITC(1996), Country of Origin Marking: Review of Laws, Regulations and Practices, USITC Publication 2975, July, pp. 2–411. https://www.barrons.com/articles/hong-kong-financial-center-china-46ba5d3612. Porter identifies a value chain broken in five primary activities: inbound logistics, operations, outbound logistics, marketing and sales and post-sale services. https://www.usitc.gov/publications/332/journals/concepts_approaches_in_gvc_research_final_april_18.pdf13. MAU is a metric commonly used to identify the number of unique users who engage with apps and website. MAU is an important measurement to the level of platform competitiveness in the digital trade logistics or e-commerce industry.14. https://home.kpmg/xx/en/home/insights/2019/12/china-belt-and-road-initiative-and-the-global-chemical-industry.html15. https://www.bradley.com/insights/publications/2023/10/the-india-middle-east-europe-economic-corridor-prospects-and-challenges-for-us-businesses16. The Asian Development Bank (ADB), which first used the term in 1998, defines economic corridors as important networks or connections between economic agents along a defined geography, which link the supply and demand sides of markets. http://research.bworldonline.com/popular-economics/story.php?id=350&title=Economic-corridors-boost-markets,-living-conditions17. Legovini et al. (2020) comments traditional cross border agreements of transport investment focuses only on a narrow set of direct benefits and cost. However, economic corridors can entail much wider economic benefits and costs such as trade and economic activity, structural change, poverty reduction, pollution and deforestation.18. Arab Centre Washington D.C. https://arabcenterdc.org/resource/the-geopolitics-of-the-india-middle-east-europe-economic-corridor/ References Bayne, N. (2017), Challenge and Response in the New Economic Diplomacy, 4th ed., The New Economic Diplomacy, Routledge, London, p. 19.Blanchard, J.M.F. and Ripsman, N.M. (2008), “A political theory of economic statecraft”, Foreign Policy Analysis, Vol. 4, pp. 371-398, doi: 10.1111/j.1743-8594.2008.00076.x.Gereffi, G., Humphrey, J. and Sturgeon, T. (2005), “The governance of value chain”, Review of International Political Economy, Vol. 12 No. 1, pp. 78-104, doi: 10.1080/09692290500049805.Kraljic, P. (1983), “Purchasing must be supply management”, Harvard Business Review, Vol. 61 No. 5, September.Legovini, A., Duhaut, A. and Bougna, T. (2020), “Economic corridors-transforming the growth potential of transport investments”, p. 10.Octaviano, B.Y. and Trishia, P. (2014), Economic Corridors Boost Markets, Living Conditions, Business World Research, Islamabad, October.United States International Trade Commission (USITC) (1996), “Country of origin marking: Review of Laws, Regulations, and Practices”, USITC Publication, Vol. 2975, July, pp. 2-4.Further readingPorter, M. (1985), Competitive Advantage: Creating and Sustaining Superior Performance, Free Press.Putman, R.D. (1988), “Diplomacy and domestic politics; the logic of two-level games”, International Organization, Vol. 42 No. 4, pp. 427-600.USITC (2019), “Global value chain analysis: concepts and approaches”, Journal of International Commerce and Economics, April, pp. 1-29.

I. Introduction Since October 7, 2023, when the Hamas attacked Israel, the Gaza war has entered its third year. Palestinians continue to endure an unprecedented level of violence, trauma, economic hardship, and uncertainty. The war has resulted in a staggering number of casualties and widespread displacement, in addition to massive destruction of physical assets in Gaza, significant reduction of economic output, increased violence in the West Bank, and widespread collapse of basic service provision across the entire Palestinian territories.  As of May 7, 2025, according to Wikipedia and Gaza’s Ministry of Health, 55000 fatalities (53,253 Palestinians and 1,706 Israelis) and more than 110,00 injuries have been reported in Gaza. More than half of the casualties are women, children, and the elderly. An estimated 1.9 million people, approximately 90 percent of Gaza’s population, are currently internally displaced. Seventy percent of Gaza’s Road network, more than 80 per cent of commercial facilities, and close to 90 percent of housing units in Gaza have either severely damaged or have been destroyed.  Since October 7, 2023, the UN has documented over 1,500 clashes between Israeli settlers and Palestinians in the West Bank, resulting in property damage, casualties, and displacement. Over 1,600 Palestinians, half of whom are children, have been displaced due to increased settlers’ violence and access restrictions. Additionally, existing fiscal constraints and growing security concerns have disrupted service provision in the West Bank.  On the macroeconomic front, the Gaza and West Bank face a collapse, which is unmatched in recent memory. The Palestine economy has faced significant contraction, evidenced by a reduced production, sharp decline in gross domestic product (GDP), and soaring unemployment rates. On the other hand, the Gaza war has had significant negative impacts on Israel. The economic and financial costs of war consist of the direct cost of military operations as well as the indirect losses that extend over the medium and long term. One of the most direct costs of the Gaza war was the recall of about 300,000 reservists in the early days, which meant that the Israeli government would bear the cost of conscription, and the Israeli economy would bear loss of output due to their absence from the workforce.Given these situations, this paper analyzes the economic effects of the Gaza war on Palestine and Israel. II. Literature on the Effects of Wars Wars have the potential to alter the parties and “transform the future” of belligerents (Ikle 1991) and they also bring about fundamental changes to the international system (Gilpin 1981).  Scholars in Economics have provided considerable analysis of the macroeconomic effects of a conflict across spatial levels: locally, nationally, regionally, and internationally. Some studies have examined the effects of specific wars such as the Syrian civil war (Kešeljević and Spruk, 2023) or the Iraq war (Bilmes and Stiglitz 2006). For example, an analysis estimated that the Russian invasion of Ukraine had an economic cost of 1% of global GDP in 2022 (Liadze et al. 2023) Others have examined the effects of war in general. For instance, Reuven Glick and Alan Taylor (2010) examine bilateral trade relations from 1870 to 1997 and find large and persistent negative impacts of wars on trade and hence on national and global economic welfare. Similarly, Vally Koubi (2005) investigates the effects of inter- and intrastate wars on a sample of countries and finds that the combined prewar, contemporaneous, and postwar effects on economic growth are negative.  A “war ruin” school emphasized that the destruction caused by wars is accompanied by higher inflation, unproductive resource spending on the military, and war debt (Chan 1985; Russett 1970). By contrast, a “war renewal” school argued that there can be longer-term positive economic effects from war because war can lead to increased efficiency in the economy by reducing the power of rent-seeking special interests, triggering technological innovation, and advancing human capital (Organski and Kugler 1980).  III. Economic Effects of the Gaza War1. Casualties  As Table 1 shows, since the Hamas attacked Israel on October 7, 2023, 55,000 people (as of May 7, 2025, 53,253 Palestinians and 1,706 Israelis) have been killed in the Gaza war according to the Gaza Health Ministry. Scholars have estimated that 80% of Palestinians killed are civilians. A study by OHCHR (The Office of the United Nations High Commissioner for Human Rights) found that 70% of the Palestinians killed in residential buildings or similar housing were children and women.  The majority of casualties have been found in the Gaza Strip. The Gaza Health Ministry’s total casualty count is the number of deaths directly caused by the war.  The 7 October attacks of the Hamas on Israel killed 1,195 people, including 815 civilians. A further 806 Palestinians have been killed in the occupied West Bank (including East Jerusalem).  2. Economic Effects of the Gaza War on Palestine  As Figure 1-1 shows, since October 7, 2023, Palestine’s economy has significantly contracted as a result of continued warfare. As Figure 1-2 shows, economic downturn started from the fourth quarter of 2023. In 2024, Palestine's GDP contracted by 27% compared to the previous year. The decline was driven by a 27% drop in industrial output in the Gaza Strip due to the ongoing Israeli occupation and attack. Especially, economic contractions were recorded in construction (-14.5%), services (-11.0%), financial and insurance activities (-5.3%), information and communication (-3.2%). However, Palestine’s economy began to recover in the fourth quarter of 2024, although it still marked a negative growth.   Figure 1-1: Palestine economic growth rate  Figure 1-2: Palestine economic growth (quarterly) As Figure 2 shows, industrial production in Palestine significantly decreased in 2024 as war has continued between Israel and Hamas. Industrial production in Palestine has been low, averaging -7.62 percent from 2012 until 2025. However, it reached a record low of -29.77 percent in June of 2024. Then industrial production in Palestine increased to 2.1 percent in March of 2025 over the same month in the previous year.   Figure 2: Industrial production in Palestine As Figure 3 shows, inflation rate in Palestine has significantly increased in 2023 and 2024, reaching all time high of 88.93 percent in November of 2024. High inflation resulted from resource shortages as a result of continued warfare and significant production decline. And then inflation rate in Palestine dropped to 1.88 percent in March and -2.51 percent in February of 2025. Inflation rate in Palestine averaged 4.95 percent from 1998 until 2025.   Figure 3: Inflation rate in Palestine As Figure 4-1 shows, unemployment rate in Palestine significantly increased after October 7, 2023, as economy continued to shrink and industrial production fell. Unemployment rate in Palestine increased to 35.20 percent in the first quarter of 2024 from 24.1 percent in the third quarter of 2023. It then dropped to 31.1 percent in the second quarter of 2024 and 28.8 percent in the fourth quarter of 2024. Unemployment Rate in Palestine has been remarkably high, averaging 24.07 percent from 1995 until 2024, reaching an all-time high of 35.60 percent in the third quarter of 2002 and a record low of 8.80 percent in the second quarter of 2000.    Figure 4-1: Unemployment rate in Palestine As Figure 4-2 shows, youth unemployment rate in Palestine increased from 38.40 percent in the first quarter of 2023 to 45.70 percent in the first quarter of 2024 and then slightly dropped to 42.60 percent in the third quarter of 2024 and 38.6 percent in the fourth quarter of 2024. Youth unemployment rate in Palestine has been remarkably high, averaging 41.85 percent from 2009 until 2024, reaching an all-time high of 49.90 percent in the second quarter of 2018 and a record low of 32.90 percent in the first quarter of 2011.   Figure 4-2: Youth unemployment rate in Palestine As Figure 4-3 shows, full-time employment in Palestine plunged to 628000 persons in the first quarter of 2024 from 1143800 persons in the third quarter of 2023. Then it increased to 705700 persons in the fourth quarter of 2024. Full-time employment in Palestine averaged 888133 persons from 2010 until 2024, reaching an all-time high of 1143800 persons in the third quarter of 2023 and a record low of 67900 persons in the first quarter of 2010.   Figure 4-3: Full-time employment in Palestine Despite the continued warfare in Gaza, as Figure 5 shows, exports in Palestine did not significantly decrease. On the contrary, exports in Palestine increased from 148.3 USD Million in August 2023 to 164.20 USD Million in December of 2024. Exports in Palestine averaged 68.15 USD Million from 2001 until 2025, reaching an all-time high of 164.20 USD Million in December of 2024 and a record low of 15.92 USD Million in April of 2002. Exports in Palestine maintained pre-war level in 2025, recording 140.70 USD Million in January of 2025. Top exports of Palestine in 2023 were scrap iron ($68.6M), tropical fruits ($53.8M), pure olive oil ($10.9M), and building stone ($7.56M).  Figure 5: Exports in Palestine Figure 6 shows, imports in Palestine significantly dropped in 2024 as warfare continued in Gaza. Imports in Palestine decreased to 420.30 USD Million in April 2024 from 747.20 USD Million in August 2023. Imports in Palestine averaged 370.00 USD Million from 2001 until 2025, reaching an all-time high of 750.60 USD Million in November of 2022 and a record low of 82.71 USD Million in April of 2002. According to media reports, there are severe food shortages in Gaza, but there is no information about the imports of food after 2023.   Figure 6: Imports in Palestine As Figure 7 shows, since October 7, 2023, government spending in Palestine has significantly declined in 2023 and early 2024, hitting a record low of 461.20 USD million in the first quarter of 2024. And then government spending in Palestine increased to 666.70 USD million in the fourth quarter of 2024 from 616.50 USD million in the third quarter of 2024. Government spending in Palestine averaged 797.95 USD million from 2011 until 2024, reaching an all-time high of 974.90 USD million in the fourth quarter of 2016 and a record low of 461.20 USD million in the first quarter of 2024.   Figure 7: Government spending in Palestine 3. Economic Effects of the Gaza War on Israel  As Figure 8 shows, since October 7, 2023, when the Hamas attacked Israel, government spending in Israel significantly increased as Israel government conducted massive military operations against the Hamas. Government spending in Israel increased from 84100 ILS (Israel new shekel) Million in the third quarter of 2023 to 97973 ILS Million in the fourth quarter of 2023 and 97018 ILS Million in the fourth quarter of 2024. Government Spending in Israel averaged 58676 ILS Million from 1995 until 2024, reaching an all-time high of 97973 ILS Million in the fourth quarter of 2023 and a record low of 39524 ILS Million in the third quarter of 1995.   Figure 8: Government spending in Israel As Figure 9 shows, as Israel government conducted massive military operations against the Hamas, military expenditure in Israel increased to 46505.30 USD Million in 2024 from 27498.50 USD Million in 2023. Military expenditure in Israel averaged 7742.87 USD Million from 1951 until 2024, reaching an all-time high of 46505.30 USD Million in 2024 and a record low of 57.60 USD Million in 1954.   Figure 9: Military expenditure in Israel As Figure 10 shows, Israel recorded a government budget deficit of -33793.00 ILS Million in December of 2023 from 14100 ILS Million in January 2023 because government spending, in particular military expenditure significantly increased. Government budget value in Israel averaged -3405.71 ILS Million from 2005 until 2025, reaching an all-time high of 22839.00 ILS Million in January of 2025 and a record low of -33793.00 ILS Million in December of 2023.   Figure 10: Budget Balance in Israel As Figure 11-1 & 11-2 show, Israel's economic growth plunged to -4.32 percent in the fourth quarter of 2023 from 3.44% in the third quarter of 2023. Israel experienced consecutive negative growth until the third quarter of 2024 as the ongoing conflict with the Hamas had taken a significant toll on economic activity. This marked the weakest growth since 2020, when the covid-19 pandemic severely impacted the economy. However, the Gross Domestic Product (GDP) in Israel expanded 5.46 percent in the fourth quarter of 2024 over the same quarter of the previous year. GDP annual growth rate in Israel averaged 3.73 percent from 1996 until 2024, reaching an all-time high of 16.27 percent in the second quarter of 2021 and a record low of -8.37 percent in the second quarter of 2020.  Figure 11-1: Israel's economic growth rate  Figure 11-2: Israel's GDP growth (quarterly) As Figure 12 shows, industrial production in Israel decreased 7.4 percent in December of 2023 and 9.8 percent in March 2024 and then increased 15.9 percent in December 2024. Industrial production in Israel averaged 5.66 percent from 1960 until 2025, reaching an all-time high of 62.70 percent in June of 1968 and a record low of -29.20 percent in June of 1967.   Figure 12: Industrial production in Israel As Figure 13 shows, unemployment rate in Israel decreased from 4.30 percent in January 2023 to 2.80 percent in November 2023 and 2.60 percent in December 2024. This decline seems to result from the fact that Israeli government called up tens of thousands of reservists to replace conscripts and active-duty soldiers. And then unemployment rate in Israel slightly increased to 2.9% in March 2025. Unemployment rate in Israel averaged 5.89 percent from 1992 until 2025, reaching an all-time high of 11.40 percent in March of 1992 and a record low of 2.60 percent in August & December of 2024.  Figure 13: Unemployment Rate in Israel As Figure 14 shows, the number of unemployed persons in Israel decreased to 119200 in December of 2024 from 184000 in January 2023. Unemployed persons in Israel averaged 192800 from 1991 until 2025, reaching an all-time high of 305400 in September of 2003 and a record low of 119200 in December of 2024.  Figure 14: The number of unemployed persons in Israel As Figure 15 shows, after October 2023, exports in Israel fluctuated between 4470 USD Million in October 2023, 5330 USD Million in March 2024, 4320 USD Million June 2024 and 5250 USD million in December 2024. Exports in Israel averaged 1836.30 USD Million from 1959 until 2025, reaching an all-time high of 6276.70 USD Million in March of 2022 and a record low of 10.80 USD Million in July of 1959.   Figure 15: Exports in Israel As Figure 16 shows, imports in Israel fluctuated between 8090 USD Million in August 2023, 7590 USD Million in December 2023, 7010 USD Million in August 2024, and 8318.70 USD Million in March 2025. Imports in Israel averaged 2500.72 USD Million from 1959 until 2025, reaching an all-time high of 10372.30 USD Million in May of 2022 and a record low of 33.10 USD Million in November of 1959.   Figure 16: Imports in Israel As Figure 17 shows, inflation rate in Israel decreased from 5.40 percent in January 2023 to 3.70 percent in October 2023 and 2.50 percent in February 2024. It then increased to 3.60 percent in August 2024 and 3.80 percent in January 2025. Inflation rate in Israel averaged 26.75 percent from 1952 until 2025, reaching an all-time high of 486.20 percent in November of 1984 and a record low of -2.70 percent in March of 2004.   Figure 17: Inflation rate in Israel As Figure 18 shows, despite on-going warfare in Gaza, gasoline price in Israel did not rise significantly. It increased from 1.82 USD/Liter in September 2023 to 1.98 and 2.14 USD/Liter in January and May 2024, respectively and then dropped to 2.06 and 2.04 USD/Liter in August 2024 and February 2025, respectively. Gasoline prices in Israel averaged 1.78 USD/Liter from 1995 until 2025, reaching an all-time high of 2.30 USD/Liter in June of 2022 and a record low of 0.73 USD/Liter in December of 1995.   Figure 18: Gasoline price in Israel IV. Conclusion The Gaza war has had negative impacts on both Palestine and Israel, but the negative effects were much bigger in Palestine than in Israel. The number of casualties was much higher in Palestine. Especially the war brought down Palestine economy, lowering economic growth, reducing industrial productions, and increasing inflation & unemployment in Palestine. The Israeli economy has also slowed down, and budget deficit increased. However, unemployment went down, and inflation has been stable between 2 and 5 percent. Trade has maintained a pre-war level, although there have been some difficulties. References Bilmes, Linda, and Joseph E. Stiglitz. 2006. The Economic Costs of the Iraq War: An Appraisal Three Years After the Beginning of the Conflict. Cambridge, MA: National Bureau of Economic Research. Chan, Steve. 1985. “The Impact of Defense Spending on Economic Performance: A Survey of Evidence and Problems.” Orbis 29 (2): 403–434.CIA Factbook. 2024. “Ukraine.”Gilpin, Robert. 1981. War and Change in World Politics. New York: Cambridge University Press.  Glick, Rouven and Alan Taylor. 2010. “Collateral Damage: Trade Disruption and the Economic Impact of War.” The Review of Economics and Statistics 92(1): 102-127.Iklé, Fred C. 1991. Every War Must End. New York: Columbia University Press.Kešeljević, Aleksandar, and Rok Spruk. 2023. Estimating the Effects of Syrian Civil War. Empirical Economics.  Koumi, Valley. 2005. “War and Economic Performance.” Journal of Peace Research 42 (1): 67-82. Liadze, Iana, Corrado Macchiarelli, Paul Mortimer-Lee, and Patricia Sanchez Juanino. 2023. “Economic Costs of the Russia-Ukraine War.” The World Economy 46: 874–886.Organski, A. F. K., and Jacek Kugler. 1980. The War Ledger. Chicago: University of Chicago Press. Russett, Bruce. 1970. What Price Vigilance? The Burdens of National Defense. New Haven: Yale University Press.

한국어로 읽기 Leer en español In Deutsch lesen Gap اقرأ بالعربية Lire en français Читать на русском The world economy is underperforming as a result of tight monetary policies, weaker global trade, a slowing Chinese economy and uncertainty around the US election. An escalation of conflict in the Middle East could increase uncertainties, harming inflation reduction efforts and hurting growth. It has been over a year since the Hamas-led attack on Israel. Israel’s response in Gaza has resulted in widespread destruction and significant loss of life. The conflict has since expanded beyond Gaza, involving the Houthis in Yemen, Hezbollah in Lebanon and Iranian strikes targeting Israel. In addition to the awful humanitarian cost of the conflicts, the war and the possibility of its further expansion pose significant repercussions for the global economy. This article discusses three potential ways in which the current conflict and a wider conflict in the Middle East could affect the global economy. Increased geopolitical uncertainties First and foremost, an escalation of the Middle East conflict could lead to greater geopolitical uncertainties. Figure 1 shows the evolution of the geopolitical risk (GPR) and geopolitical acts (GPRA) indices (Caldara and Iacoviello, 2022) – these are text-based measures of heightened uncertainties due to adverse geopolitical events such as wars, terrorism and international tensions. (See this article for more discussion about these measures.) Following the Hamas-led attack on 7 October 2023, both the overall GPR index and its ‘war and terror acts’ component spiked strongly, to a level higher than that seen during the ISIS attack in Paris in November 2015. Both indices eased significantly in the months following October 2023 despite the continuation of the conflict. But they jumped again following Israel’s attack on southern Lebanon in September 2024. As of mid-October 2024, the GPR and GPRA remain, respectively, 21% and 35% higher than their historical averages.   What might be the consequences of such elevated levels of risk? Research tells us that higher geopolitical risk raises oil prices (Mignon and Saadaoui, 2024). It also reduces global investment and increases inflation (Caldara et al, 2022). Greater geopolitical risk has a significantly negative impact on business and consumer confidence in several advanced economies (de Wet, 2023). This is because consumers typically cut non-essential spending and businesses postpone investment decisions during turbulent times. This reduces firm-level investment, particularly for businesses with higher initial investment costs and greater market power (Wang et al, 2023). Higher geopolitical risks also reduce global trade and financial flows, causing greater volatility in capital flows in emerging markets (Kaya and Erden, 2023). Oil production cuts and higher energy prices The second way in which the Middle East conflict could affect the global economy is its impact on energy prices, both directly through production cuts and indirectly through greater uncertainties. In response to Israel’s actions against its neighbours, the Organization of the Petroleum Exporting Countries (OPEC) could reduce oil production to penalise countries supporting Israel. A similar action in the 1970s led to a significant jump in oil prices, which contributed to years of stagflation, with higher global inflation and recessions in major economies. Before Israel's attack on Lebanon at the end of September, oil prices had been declining due to falling demand, particularly from China. On the supply side, oil production had increased in Canada and the United States, countering the production cuts by OPEC, and Saudi Arabia was expected to increase oil production from December. But the situation quickly reversed following Israel’s attack on Lebanon. Oil prices jumped by nearly $10 per barrel within a week, before easing by around $5 per barrel. While the immediate oil price impact of Israel’s attack has mostly faded, the potential for higher oil (and other energy) prices still poses a risk to global inflation and economic activity (Liadze et al, 2022). To provide further context for the potential scale of this impact, we can show what would happen if oil and gas prices were to remain $10 higher for two years than the baseline levels projected in the Summer Global Economic Outlook from the National Institute of Economic and Social Research (NIESR), using NIESR’s Global Macroeconometric Model (NiGEM). The results demonstrate that the $10 rise in oil and gas prices increases inflation by around 0.7 percentage points in major economies in the first year (see Figure 2). The impact is higher in China, where the economy relies relatively more on oil imports for its strong manufacturing industries. The inflationary pressures persist for two years despite central banks’ efforts to curb inflation by increasing interest rates.   The effect of higher oil and gas prices on real GDP is shown in Figure 3. In the scenario described above, GDP would fall by 0.1-0.2% in major economies immediately. Partly due to higher interest rates, real GDP would continue to weaken for three years following the shock. After this, economic activity would start to return to base levels as oil and gas prices revert to their levels in the baseline forecast.   Increased shipping costs and supply chain disruptions A wider conflict in the Middle East could also affect the economy through higher shipping costs and supply chain disruptions. Houthi attacks on commercial ships in the Red Sea in late 2023 showed that such disruptions can have a huge impact on global trade through shipping, which comprises 80% of world trade volume. Following the rocket attacks by the Houthi rebels, some commercial shipping re-routed from the Red Sea to the Cape of Good Hope, leading to significant delays in travel times and increased freight costs. As a result, the Shanghai Containerized Freight Index – a measure of sea freight rates – rose by around 260% in the second quarter of 2024 with additional disruptions to supply chains. Our analysis shows that an increase of 10 percentage points in shipping cost inflation can lead to import prices rising by up to around 1% and consumer inflation increasing by around 0.5% in OECD countries. As Figure 4 shows, the impact of shipping costs on inflation shows its full effects over six quarters. This means that inflationary concerns could be with us for the next year and a half as a result of higher shipping costs that may emerge from any possible escalation of the Middle East conflict.   Wider economic implications and policy responses While rising geopolitical risk and increased oil and shipping costs can each individually exert upward pressure on inflation and may slow down economic activity in the global economy, the combined impacts are likely to be greater. Countries with stronger trade and financial ties to the Middle East and those that rely heavily on oil imports as an input for domestic production would be most affected. On the monetary policy front, central banks may have to take a more hawkish stance in response to rising inflationary pressures from the Middle East conflict. This could lead to higher interest rates, which would further dampen economic activity, particularly in an environment where there are already recessionary concerns in some major economies. Beyond its immediate economic implications, an escalation of the Middle East conflict could trigger large-scale displacement of people, which would increase economic and social pressures on neighbouring countries. Many countries may also have to increase their military spending in response to growing regional tensions. Given that public debt levels are already elevated in many countries due to successive shocks to the global economy over the past decade, any additional defence spending could come at the expense of public infrastructure investments that would otherwise boost productivity growth. Overall, the global economy is already underperforming as a result of the lagged effects of tight monetary policies, weaker global trade, a slowing Chinese economy and uncertainties surrounding the upcoming US election and possible changes to US trade policy. A potential escalation of conflict in the Middle East could exacerbate the situation by increasing uncertainties, harming efforts to bring down inflation and reducing global GDP growth. Over the medium and long term, it could further damage the global economy, with the possibility of refugee crises as well as increased defence spending, making the effects more complex and longer lasting. This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Director-General, Your Excellencies, Distinguished Guests, Dear Friends, Young and Old, This week, as we have gathered here at the World Food Forum in the headquarters of the Food and Agriculture Organisation of the United Nations in Rome to discuss the necessary transformation of our agri-food systems, we must not only be conscious of targets missed or imperfectly achieved, but of the need for courage, and to generate new capacity to move to new models of better connection between economy, social protection, social justice and ecology. We are confronted with a climate and biodiversity emergency that cannot be handled by the tools that produced it or by the architecture of how we made decisions before. We are called upon to, once and for all, tackle with alternatives and sustained effort and innovation, the vicious circle of global poverty and inequality, global hunger, debt and climate change, our interacting crises. That is the context in which sustainable food systems must be achieved. I ask you all gathered today to respond in the most meaningful way within your capacity, within your generation, in a way that includes all generations, to the challenge set out by United Nations Secretary-General António Guterres in his recent statements: This is how the Secretary-General put it: “The Sustainable Development Goals aren’t just a list of goals. They carry the hopes, dreams, rights and expectations of people everywhere. In our world of plenty, hunger is a shocking stain on humanity and an epic human rights violation. It is an indictment of every one of us that millions of people are starving in this day and age.” It can be put right but we must change and there is work involved in upskilling in such a way that we can not only identify and critique assumptions of failing models but be able to put the alternative models in place. We have had so many broken promises. Only 15 percent of some 140 specific targets to achieve the 17 UN Sustainable Development Goals are on track to be achieved. Many targets are going in the wrong direction at the present rate, and not a single one is expected to be achieved in the next seven years. However, we have some reasons to be hopeful. When I look around this room today, I see so many engaged and committed people, including young people who have the enthusiasm, energy and creativity needed to tackle the serious structural causes of food insecurity and global hunger. But it is important to acknowledge that young people are not alone in seeking authenticity of words delivered into actions that have an ethical outcome. There are those who have spent their lives seeking a fairer world, one in which hunger would be eliminated – as it can be. We must recognise their efforts. We must work together to harness this collective energy and creativity into strong movements that will deliver, finally, a food-secure world for all. This will require, I suggest, moving to a new culture of sharing information, experiences, insights. As the cuts have taken effect, we must take the opportunity of developing a view, post-silo culture, of sharing insights, and I see FAO as uniquely positioned for this. As Glenn Denning, Peter Timmer and other food experts have stated, achieving food security is not an easy task given how food hunger is “deeply entwined with the organisation of economic activities and their regulation through public policies”, given, too, how governments and markets must work together, how the private, public and third sectors must work together. All of our efforts must have the character of inclusivity. Each of us as global citizens has a responsibility to respond. To ignore it would be a dereliction of our duty of care to our shared planet and its life-forms including our fellow humans and future generations. The Secretary-General’s pleas in relation to the consequences of climate change are given a further terrible reality in the increased and spreading threat of hunger, a food insecurity which is directly affected by the impact of climate change. For example, figures published by the Food and Agriculture Organization of the United Nations show that 26.2 percent of Africa’s population experienced severe food insecurity in 2021, with 9.8 percent of the total global population suffering from undernourishment the same year. It is time for us all, as leaders and global citizens, to take stock of how words are leading to actions, to increase the urgency of our response to what is a grave existential threat and to achieve change. It is clear, as the Secretary-General’s powerful statement shows, that we need to begin the work of reform in our international institutional architecture, such as UN reform at the highest level, including the Security Council and the Bretton Woods institutions, if we are to achieve what the Secretary-General has suggested is the challenge to “turn a year of burning heat into a year of burning ambition”. Let us commit then to sharing purposes, projects, resources, seeking a new culture for sustenance solutions. Those of us who have spent much of our lives advocating UN reform believe that its best prospects are in the growing acknowledgement of the importance of the vulnerabilities and frustrated capacity of the largest and growing populations of the world being represented, not only nominally but effectively, through a reform that includes reform of the Bretton-Woods Institutions. As Secretary-General Guterres has said on a number of occasions, it is time to reform what are 1945 institutions, including the Security Council and Bretton Woods, in order to align with the “realities of today’s world”. We have to acknowledge too that the development models of the 1950s and 1960s were part of the assumptions that brought us to the crises through which we are living. New models are needed and the good news is that a new epistemology, our way of looking at the world, of sufficiency and sustainability, is emerging. We are seeing good work already occurring. Good development scholarship is available to us. I reference, for example Pádraig Carmody’s recent book, Development Theory and Practice in a Changing World. Such work builds important bridges from the intellectual work that is so badly needed and is welcome at the centre of our discourse on all aspects of interacting crises, including global hunger, and the need to link economy, ecology and a global ethics. What we must launch now is a globalisation from below. Replacing the globalisation from above that has given us a burning planet and threatened democracy itself, with a globalisation from below of the fullest participation, we can establish and indeed extend democracy, offering accountability and transparency of our work together. Writers such as Pádraig Carmody are not alone in suggesting that achieving the Sustainable Development Goals provides the opportunity for moving past the worst contradictions of failed models and dangerous undeclared assumptions. The demise of hegemonic development theory and practice may be a result of several factors, such as the rise of ultra-nationalism around the world, the increasing importance of securitisation where the most powerful insulate their lives from the actions of the excluded, and the existential threat posed by the climate crisis. Such research adds to the growing body of development literature that argues for a pro-active, structural-focused, tailored approach to development. The Hand-in-Hand Initiative of the FAO, details of which were discussed at this week’s parallel session, is a most welcome initiative, one that aims to raise incomes, improve the nutritional status and well-being of poor and vulnerable populations, and strengthen resilience to climate change. It heralds a belated recognition too of the insufficiency of a reactive emergency response to famine and hunger crises. It suggests a move towards one that tackles the underlying structural causes of hunger. Young people will need patience and to dig sufficiently deep to achieve these necessary changes. They are right in seeking to be partners, so much more than being allowed as attendees. Hand-in-Hand recognises the importance of tailor-made interventions to food security, using the best available evidence in the form of spatial data, validated on the ground through local diagnostics and policy processes, to target the most food insecure, the most hungry, the poorest. It recognises that context-specific employment and labour market policies are part of the sustainability challenge. I believe that evidence from below is crucial to achieving globalisation from below and that it can be achieved by a reintroduction of new re-casted anthropology guided by, among others, the new African scholars now available, whose work is empirical and peer-tested, can be invaluable in giving transparency on projects and investments – a strategy for fact-gathering for empowerment of rural people so like the 1955 fact-gathering with rural people of the FAO – first published in 1955 and used by me in 1969! Young people must be about upskilling to be able to critique all of the assumptions guiding the policies on to their lives. A key objective for us now must be to strengthen institutional capacity on the ground, not only at the strategic level, but also fundamentally, so that the public, farmers, and other stakeholders’ institutions are enabled to participate in territories-based agri-food systems. Such a move is fundamental to a successful food security strategy. Our institutional architecture and the multilateral bodies within it, must be made fit for purpose if we are to tackle effectively and meaningfully our contemporary food insecurity crisis which is worsening according to the 2023 Global Report on Food Crises, with 258 million people across 58 countries suffering acute food insecurity. Perhaps most crucially, we must acknowledge, as United Nations Programmes such as the Hand-in-Hand Initiative does, the critical importance of partnership and collaboration in addressing global hunger. We must do everything we can to ensure cross-sectoral co-ordination, foster coherent development actions, under a common, shared vision. We must end all wasteful competitive silo behaviours, create a culture of openness and co-operation. The FAO is well positioned to lead on this with its new invigorated partnerships with the World Food Programme (WFP) and the International Fund for Agricultural Development (IFAD). Co-operation in the development and implementation of new models will be key to the achieving of any targets that seek to be sustainable and inclusive. For example, I suggest it will achieve best results if funders, such as the African Development Bank, are enabled and funded to work closely with research institutes, both at the national and international level, but particularly take account of field studies conducted over time at local level in the new anthropology so as to ensure that findings from the latest research feed into the design and implementation of any financial supports and investments. By providing a platform, a shared interactive transparent space for national authorities and producers, national and global businesses, multilateral development banks and donors to discuss and advance ways and means to finance the supported national food programmes, initiatives such as Hand-in-Hand are proving to be an effective flagship programme of the Food and Agriculture Organisation of the United Nations. Co-operation must work both ways. For example, the parts of the so-called ‘developed’ world suffering from problems of high levels of obesity and food wastage must learn from the deep knowledge and wisdom existing in the most populated continents, as well as the science, which points to a new ecological revolution, one in which agroecology – the bringing of ecological principles to develop new management approaches in agroecosystems – can play a fundamental role, especially for the poorest of our global citizens. We have seen the destructive impact of colonial models of agronomy promoting an over-reliance on a small number of commodity crops, herders incentivised to become less mobile and store less grain in order to maximise commodity crop production, and increasing imports in conditions of near monopoly of seeds, pesticides and fertilisers. This had the deadly effect of opening up farmers not only to the full force of extended droughts, the ravages of variable climate conditions, and a reliance on non-indigenous inputs, but also to global spaces where they have insufficient influence. We must retreat from these dysfunctional food systems model, with their related dependencies, with urgency and embrace models of sufficiency and effective local markets and see the value of making our way too that includes agro-ecological models that promote food security and development opportunities for the poorest people on our fragile planet. Adaptation and responding to the already changing climate is crucial for all of us, and especially in the most food-insecure nations. We must restore degraded ecosystems, introduce drought-resistant crops, ensure accessible digital services for smallholder farms, while creating new, sustainable green jobs for young people so that we may forge a smart, sustainable, climate-resilient development path for the continent. This week we have to acknowledge the many challenges we face including, inter alia, the energy, climate and biodiversity crises, war and conflict which exacerbate food insecurity, ensuring enabling policy environments, and reaching the long-term goal of sustainable food system transformation. Any agri-food initiative, be it for Africa, the Middle-East, Central or South America, or other food-insecure regions, must place inclusivity at its core. Specifically, more vulnerable, smallholder farmers must be targeted for inclusion as programme beneficiaries, not just large-scale, industrial level farmers and ever-expanding commercial plantations. Research has shown that irresponsible agri-business deals are sometimes falsely legitimated by the promotion of alleged achievement of Sustainable Development Goal Number 2 at any cost, without care as to consequence, ignoring the reality that smallholders need enabling policies to enhance their role in food production; that food insecurity is linked to rights, processes, and unequal access to land resources; and that dispossession disproportionately affects women farmers. On this latter issue of gender, achieving zero hunger requires gender-inclusive land and labour policies. Actions must prioritise the inclusion of women and girls who are more food insecure than men in every region of the world. Women must have a right to land recognised and enshrined. The gender gap in food security has grown exponentially in recent years, and will only deteriorate further in the absence of targeted intervention. Women are obviously the most impacted victims of the food crisis, thus they must be a part of the solution. Women produce up to 80 percent of foodstuffs. Empowering women farmers can thus serve as a transformative tool for food security. However, female farmers have, research tell us, limited access to physical inputs, such as seeds and fertiliser, to markets, to storage facilities and this must be addressed. Climate change, and our response to it, addressing global hunger and global poverty, exposing and breaking dependency is a core theme of my Presidency. It is the most pressing existential crisis that our vulnerable planet and its global citizens face. Throughout the world, young people and the youth sector have been at the vanguard of efforts to tackle climate change. Young people have demonstrated, time and again, how well-informed and acutely aware they are of the threat that climate change poses, as well as its uneven and unequal impacts. May I suggest to all of you that, as young innovators and future leaders in your respective fields, you will be at your best, achieve the greatest fulfilment for yourself and others, when you locate your contribution within a commitment to be concerned and contributing global citizens. Take time to ask how is my energy in the tasks of hand and brain being delivered and for whose benefit. May I suggest, too, that you will be remembered and appreciated all the more if you work to ensure that the results of science, technology are shared and that all human endeavours are allowed to flow across borders for the human benefit of all and with a commitment to ecological responsibility and inclusivity. Offer your efforts where they can have the best effect for all. Locate yourselves in the heart of the populated world, as Nobel Laureate William Campbell did with his research on river blindness. Changing our food systems is, however, let us not forget, an intergenerational challenge that requires an inter-generational approach. We must now empower youth to be in the driver’s seat to build a new, better, transparent model of food security in a variety of different settings. Let us endeavour, together, in our diverse world, to seek to build a co-operative, caring and non-exploitative global civilisation free from hunger, a shared planet, a global family at peace with nature and neighbours, resilient to the climate change that is already occurring, one based on foundations of respect for each nation’s own institutions, traditions, experiences and wisdoms, founded on a recognition of the transcendent solidarity that might bind us together as humans, and reveal a recognition of the responsibility we share for our vulnerable planet and the fundamental dignity of all those who dwell on it. Thank you. Beir beannacht.

Prime Minister Benjamin Netanyahu, this afternoon, at the Presidential Palace in Nicosia, at the joint statement with Cypriot President Nikos Christodoulides and Greek Prime Minister Kyriakos Mitsotakis:  "Since the founding of this Eastern Mediterranean partnership between our three democracies, our relations have flourished bilaterally and trilaterally in ways that people found hard to imagine. I found it hard to imagine that it wasn't the case, when we have three very—in some ways, very similar countries.  Hundreds of thousands, by now millions, of Israelis have come here, both as entrepreneurs, as investors, as technologists, as tourists, as diplomats. That is very natural. The reason it's natural is that we feel very comfortable with the culture.  I saw that last night when we were having dinner, the three of us, in here, in Limassol, on the seaside, and Israelis walked by and they said hello. And you could see the Cypriot counterparts do the same. It's a very comfortable, informal Mediterranean democratic culture that we have that has historic roots and modern manifestations.  This people-to-people base is now obviously going, takes on a different capacity in three main areas that we discussed. They all have to do with energy. The first one is gas. The second one is electricity. The third one is fire.  On gas, we're discussing the possibilities that we'll have to decide soon, about how Israel exports its gas. And the same decisions have to be made by Cyprus. And we're looking at the possibility of cooperating on this. Those decisions will be made I think in the next three to six months. Probably closer to three months.  The second thing, on the electricity connector. Both Israel and Cyprus are islands. Crete, part of Greece, is an island. There is an electricity connector that is being organized right now from mainland Greece to Crete to Cyprus. We would like to have it connected obviously to Israel, and possibly to the east of Israel, so that we can use, we can optimize the use of electricity. We discussed now the mechanism of how to advance this.  The third thing is fire. The world is getting hotter, not only because the warmth of our relationship. That's the good side, but because the climate getting more punitive, with the eruption of fires that are, truly endanger our countries.  We have communicated, we've cooperated on firefighting planes. We're talking about going well beyond that into AI systems for early detection, and other things that we're developing separately. We're going to do it better together in a variety of ways that we agreed upon as well.  On terror, we've had instances now of cooperation between Israel and Cyprus, and Israel and Greece, where our security forces cooperated to stop terror, Iranian-backed terror.   I have to say that I think there's something else that could develop, and we discuss it at great length. There is now the possibility that we might have the expansion of the Abraham Accords to normalization with Saudi Arabia. All three countries view that as a great possibility, but they also see that this could lead to a connection between India, the Arabian Peninsula, Israel, Cyprus, Greece, and Europe. There is a natural, geographic connection, but it could be also something that would lead to many, many rewards for our peoples and for our countries. I think we all see eye-to-eye on that.  I have to say that it's a pleasure to have, to receive your hospitality and to see my old friend, Kyriakos, here, and you as well, Nikos. We have a wonderful friendship and we look forward to seeing you, as we say, next year in Jerusalem."  Prime Minister Netanyahu added:  "We like your food. We like your dairy products. We like your yogurt.  So as I told the leaders, and I'm telling you right now, we are going to soon open our dairy products market, which is long overdue. I think Israelis are going to be a lot happier, and your producers are going to be a lot happier. So be prepared for that. We can enjoy the benefits of each other's economies in the most direct sense. We intend to open the dairy market very soon to Greek and Cypriot—and other—imports. May the best yogurt win. You have a pretty good chance at winning."