Welcome to this week’s Great Game, where we try to assess the market risks of current geopolitical events. This week – Israel-Hezbollah and Venezuela!

War in Lebanon?

Situation:
Once again, we’re discussing a potential widening of the Israel-Gaza conflict as missiles and drones are exchanged between Israel and Hezbollah in Lebanon. This weekend, a missile killed 12 Israeli civilians and the Israeli government was forced to respond. Hezbollah claimed to have no knowledge of the attack and the Israeli government decided on a limited response, so far not triggering an escalation.

What’s next:
For now, it seems that the parties have contained the situation somewhat. Both sides are in dialogue with their respective partners and allies and there seems to be a thought process on both sides and not blind acceleration towards war.

The external pressure on Israel to de-escalate and refrain from open warfare into Lebanon is massive, but on the other hand, the internal pressure from far-right groups is also growing to fix the Hezbollah situation “while we’re at it”. Simultaneously, it would absolutely benefit Netanyahu’s chances of retaining his power position to carry out a succesful campaign against Hezbollah – an enemy where Israel doesn’t necessarily have to occupy any territory or get their hands too dirty with ground operations.

Risk assessment:
I believe the situation is contained for now and the most likely scenario (~ 70%)