FirstFT: Western countries step up efforts to prevent Israel-Hamas war escalating

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Palestinians continued to flee south after Israel ordered 1.1mn Gazans to leave the enclave’s north ahead of an expected ground offensive, as western nations ramp up efforts to prevent the war from spiralling into a regional conflict.

US president Joe Biden reiterated warnings to Iran against escalating the war, while his national security adviser Jake Sullivan said the White House had used back channels with Tehran “to make clear privately that which we have said publicly”.

They spoke after the US announced it would send a second aircraft carrier strike group to the eastern Mediterranean in a message of deterrence to Iran and Hizbollah, the powerful Lebanese militant group that Tehran backs.

Sullivan also said it was critical that Israel “embrace the rule of law and the laws of war”, underlining Washington’s shifting tone as it steps up the pressure on the Jewish state to minimise civilian casualties in its war with Hamas. US secretary of state Antony Blinken, who has been touring the region, is due to return to Israel today.

Western countries have publicly been highly supportive of Israel and its right to defend itself, given the scale of the attack by Hamas, which killed more than 1,400 Israelis and took dozens more hostage.

But privately, western leaders, ministers and diplomats in constant contact with Prime Minister Benjamin Netanyahu have pressed Israel about “proportionality”, protecting civilians and humanitarian access.

Netanyahu has vowed to “crush” Hamas, the Islamist militant group that has controlled Gaza since 2007. More than 2,300 people have been killed in the territory, according to Palestinian officials. Here are the latest updates as we head into the conflict’s second week.

• Gaza conditions worsen: Fears of a humanitarian disaster are mounting as hospitals in the besieged enclave run out of space to store the dead and fuel to run generators.

• Israelis pull together: Jewish Israeli society has been quick to mobilise and organise with relief operations and emergency services after Hamas’s devastating attack.

• ‘Mr Security’ tarnished: Netanyahu’s tough-talking image as Israel’s defender has been eroded as intelligence failings bring his political future into question.

• Iran’s pivotal role: The war has underscored the Islamic republic’s regional muscle, with the west seeing Tehran as key to preventing the conflict from spreading.

• Military analysis: Gaza’s underground tunnels are a powerful equaliser that will neutralise the IDF’s superior weaponry, tactics and technology, writes Daphné Richemond-Barak of Reichman University.

We have more on the war’s effects across the world below. And here’s what else I’m keeping tabs on today:

• Polish election: Results could come later today, with knife-edge exit polls predicting a return to power for opposition leader Donald Tusk.

• Bank of England: Chief economist Huw Pill speaks on the economic outlook at the OMFIF this morning, while deputy governor Sam Woods addresses the City Banquet at London’s Mansion House tonight.

• UK property: Rightmove publishes its house price index for the UK. Data from Savills shows London’s high-end property market remaining resilient in the face of a wider slowdown in the country.

• South Africa: The African Energy Week conference starts in Cape Town.

Don’t miss the first issue of our new Central Banks newsletter tomorrow. Chris Giles will use nearly 20 years of experience as the FT’s economics editor to provide weekly insights on interest rates and monetary policy. Sign up here if you’re a premium subscriber or upgrade your subscription.

Five more top stories

1. The Israel-Hamas war has unleashed a wave of antisemitism in Europe, with a big uptick in threats and insults targeting Jews in Germany, France, Italy and the UK over the past week. The French interior minister said there have been 189 threats and 65 arrests for antisemitism in the country, which has the biggest Jewish community after Israel and the US and a large Muslim population. Read our full story about the rising fear among Jews living on the continent.

2. British prisoners could be transferred to prisons elsewhere in Europe under legislation to be announced today. Justice secretary Alex Chalk will also outline plans to release imprisoned foreign nationals earlier than currently allowed and deport them to their home countries. Here’s more on the changes aimed at addressing the chronic space shortage in jails.

3. Spain’s central bank chief says eurozone rate-setters have probably done enough to tame inflation given the rout in the market for US government debt, which has in turn triggered a rise in borrowing costs in Europe. Pablo Hernández de Cos said recent rises in interest rates were not due to domestic factors such as euro area inflation, and have been driven by US market dynamics. Read his full interview with the FT.

4. Fears of a wider conflict in the Middle East are posing a fresh threat to the global economy, finance ministers and officials have warned. As delegates convened for IMF and World Bank meetings in Morocco, the mood darkened as the wider implications of the Israel-Hamas war mixed with underlying anxiety about persistent vulnerabilities in the global economy. Sam Fleming and Colby Smith report from Marrakech.

5. Exclusive: The UK’s top 100 law firms by revenue are concerned over costs as billable hours fall, according to a survey. Amid high inflation, staff and support function costs are growing at a faster rate than fee income, with firms worried they are unable to pass the burden on to their clients. Here’s more from PwC’s annual survey of the industry.

The Big Read

Lego is one of Europe’s biggest corporate success stories of the past decade. With essentially just one product in endless iterations, the Danish company has raced past Mattel and Hasbro to become by far the biggest toymaker in the world by sales, and on a different level altogether in terms of profits. With a portfolio that now extends to movies and theme parks, the family-owned business has big ambitions.

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Chart of the day

The Israel-Hamas war is heaping pressure on borrowing costs in neighbouring countries, with the gaps between the average yields on both Jordan’s and Egypt’s dollar-denominated bonds and equivalent US Treasuries shooting up this week. International investors have priced in more risk for owning the debt as worries grow that the conflict will rapidly escalate.

Take a break from the news

See how business schools stack up in this year’s FT Executive MBA Ranking — and read the findings from our latest FT EMBA report.

Additional contributions from Benjamin Wilhelm