Israeli Attacks on Iran

Between 2010 and 2024, Israel allegedly conducted dozens of operations – including targeted assassinations, drone strikes, and cyberattacks – on Iran. The attacks increased in both range and sophistication. Many of the targets were connected to Tehran’s controversial nuclear program, which Israel has long considered an existential threat. In 2022, Israeli drones also reportedly hit two facilities linked to Iran’s increasingly advanced drone program. Following is a brief prepared by the United States Institute of Peace

Israel was blamed for the killing of five nuclear scientists, including Mohsen Fakhrizadeh, the father of Iran’s nuclear program, between 2010 and 2020. It also reportedly targeted military commanders responsible for operations abroad, including three Revolutionary Guard generals visiting Syria in April 2024

In July 2024, Iran accused Israel of assassinating Ismail Haniyeh, the political chief of Hamas, during his visit to Tehran for the inauguration of President Masoud Pezeshkian. The following is a timeline of attacks on Iran allegedly carried out by Israel since 2010. 

Jan. 12, 2010: Masoud Ali Mohammadi, a physics professor at Tehran University, was killed by a remote-controlled bomb planted on a motorcycle. The device detonated as he left home in northern Tehran to go to work. The government described Ali Mohammadi as a nuclear scientist but said he did not work for the Atomic Energy Organization of Iran. State media blamed Israel and the United States for the assassination.

June 2010: The Stuxnet computer virus, allegedly developed by Israel and the United States, was detected in computers at the Bushehr nuclear power plant. The virus then spread to other facilities. By September, 30,000 computers across at least 14 facilities—including the Natanz facility—were reportedly infected. The virus caused the engines in IR-1 centrifuges to increase their speed and eventually explode. At least 1,000 centrifuges of the 9,000 installed at Natanz were destroyed, the Institute for Science and International Security estimated. After conducting investigations, Iran blamed Israel and the United States for the virus. 

Nov. 29. 2010: Professor Majid Shariari, a member of the nuclear engineering faculty at Shahid Beheshti University in Tehran, was killed in his car on his way to work. His wife was wounded in the blast. Ali Akbar Salehi, the head of the Atomic Energy Organization of Iran, said that Shariari was involved in one of the country’s biggest nuclear projects but did not elaborate.Accounts of the assassination varied. A Western intelligence expert said that an explosive was planted on the vehicle beforehand and detonated remotely. Iranian media reported that men on motorbikes attached bombs to cars belonging to Shariari and another scientist, Fereydoon Abbasi Davani, on the same day. Abbasi Davani, an advisor to the Defense Ministry and a professor at Imam Hossein University, and his wife were injured in a separate blast. Local media described Abbasi Davani as one of Iran’s few specialists who could separate isotopes, a key step in producing enriched uranium for nuclear energy or to create fuel for a nuclear weapon. Abbasi Davani was sanctioned by the United Nations in 2007 for involvement in nuclear or ballistic missile research. President Mahmoud Ahmadinejad blamed the United States and Israel for the attacks.

April 2011: Iran’s cyber defense agency discovered a virus nicknamed “Stars” that was designed to infiltrate and damage its nuclear facilities. The virus mimicked official government files and inflicted “minor damage” on computer systems, according to Gholam Reza Jalali, the head of Iran’s Passive Defense Organization. Iran blamed the United States and Israel.

July 23, 2011: Darioush Rezaeinejad, an electrical engineer working at a national security research facility, was killed by two gunmen on a motorcycle in Tehran. State media initially identified the man as Darious Rezaei, a physics professor. Hours later, state media backtracked and said the victim was Darioush Rezaeinejad, an electronics student. Deputy Interior Minister Safarali Baratloo claimed that he was not involved in the nuclear program. But a foreign government official and a former U.N. nuclear inspector alleged that Rezaeinejad was working on high-voltage switches, parts necessary to start explosions needed to trigger a nuclear warhead. Iran blamed the United States and Israel for the assassination.

Nov. 13, 2011: Iran said it had contained Duqu, the third virus aimed at disrupting Iran’s nuclear program. Duqu used programming code that was also used in the 2010 Stuxnet attack.

Jan. 11, 2012: Mostafa Ahmadi Roshan, a chemical engineering graduate, was killed after two people on a motorbike placed a bomb on his car in northern Tehran. Roshan and the driver died, and at least two other people at the scene were reportedly injured. Iran identified Ahmadi Roshan as a supervisor at the Natanz Uranium Enrichment facility. It held Israel and the United States responsible for the killing. “The bomb was a magnetic one and the same as the ones previously used for the assassination of the scientists, and the work of the Zionists [Israelis]," deputy Tehran governor Safarali Baratloo claimed.

April 2012: Iran discovered the “Wiper” malware erasing the hard drives of computers owned by the oil ministry and the National Iranian Oil Company. “Wiper” appeared to be similar in design to Duqu and Stuxnet, thought to have been developed by Israel and the United States. Iran blamed the United States and Israel for the attack.

May 9, 2012: Iran announced that a virus dubbed “Flame” had infected government computers and had tried to steal government data. Israel and the United States had deployed the Flame virus to collect intelligence and to prepare for a wider cyberwarfare campaign, The Washington Post reported. In Israel, Vice Prime Minister Moshe Yaalon did not confirm the nation’s involvement but acknowledged that Israel would use “all means... to harm the Iranian nuclear system.”

Jan. 31, 2018: A Mossad team raided a warehouse in Tehran that housed a vast archive of Iran’s nuclear program. The agents used torches to cut through 32 safes. The team smuggled some 50,000 pages and 163 compact discs out of the country. On April 30, Israeli Prime Minister Netanyahu announced that Israel obtained some 100,000 “secret files that prove” Iran had earlier lied about not having a nuclear weapons program. He also alleged that Tehran worked to “expand its nuclear weapons know-how for future use” even after the 2015 nuclear accord. Netanyahu presented maps, charts, photographs, and videos with details about Project Amad to design, produce and test nuclear weapons. Western intelligence had claimed for more than a decade that Iran had a covert nuclear weapons program.

Oct. 28, 2018: The head of Iran’s civil defense agency claimed that it had neutralized a “new generation” of the Stuxnet virus attempting to damage communications infrastructure. Iranian officials blamed Israel for the attack. “Thanks to our vigilant technical teams, it failed,” Telecommunications Minister Mohammad Javad Azari Jahromi said.

May 9, 2020: A cyberattack hit computers that regulate maritime traffic at Shahid Rajaee port on Iran's southern coast in the Persian Gulf. The disruption created a traffic jam of ships that waited days to dock. Iran acknowledged that it had been hit by a foreign hack. Israel was reportedly behind the cyberattack, although it did not claim responsibility, according to The Washington Post.

July 2, 2020: An explosion caused extensive damage to Iran’s main nuclear enrichment site at Natanz and set the program back months. The blast damaged a factory producing advanced IR-4 and IR-6 centrifuges that could enrich uranium faster than the IR-1 centrifuges allowed under the 2015 nuclear deal. “It’s possible that this incident will slow down the development and expansion of advanced centrifuges,” said Behrouz Kamalvandi, spokesman for the AEOI. Israel reportedly planted a bomb in the facility, The New York Times and The Washington Post reported.

Nov. 27, 2020: Mohsen Fakhrizadeh, a prominent nuclear scientist, was assassinated in a roadside attack about 40 miles east of Tehran. Western and Israeli intelligence had long suspected that Fakhrizadeh was the father of Iran’s covert nuclear weapons program. He was often compared to J. Robert Oppenheimer, the father of the American atomic bomb. He kept a low profile for most of his career. His name was not widely known even in Iran until he was sanctioned by the United Nations in 2007 and the United States in 2008. 

Details on the attack varied. Iran’s defense ministry initially reported that several gunmen opened fire on Fakhrizadeh’s car, but Ali Shamkhani, the secretary of the Supreme National Security Council, later said that  “electronic equipment” triggered by remote control killed the scientist.

Iran blamed the killing on Israel. Foreign Minister Javad Zarif condemned the killing as terrorism. “This cowardice—with serious indications of Israeli role—shows desperate warmongering of perpetrators,” he tweeted. On November 30, Israeli Intelligence Minister Eli Cohen told local radio that he did not know who was behind the raid. But a senior U.S. administration official told CNN that Israel was responsible. 

April 11, 2021: An explosion at Natanz hit the power supply for centrifuges and caused damage that could take up to nine months to fully repair, The New York Times reported. Alireza Zakani, head of Parliament’s Research Center, said that “thousands of centrifuges” were destroyed during the blackout. He claimed that 300 pounds of explosives had been smuggled into the facility in equipment that had been sent abroad for repair.

Iran blamed Israel. “The Zionists want to take revenge because of our progress in the way to lift sanctions,” Foreign Minister Mohammad Javad Zarif said. “They have publicly said that they will not allow this. But we will take our revenge from the Zionists.”

American and Israeli intelligence officials told The New York Times that Israel played a role in the sabotage. Unnamed intelligence sources told Israeli media that the Mossad was responsible for a cyberattack that caused the blackout.

July 9-10, 2021: Hackers caused chaos at train stations nationwide by posting fake messages about cancellations on display boards. The messages urged passengers to call 64411, the number for a hotline run by the Supreme Leader’s office. On the next day, websites tied to the Ministry of Roads and Urbanization reportedly went down. Iran blamed Israel and the United States.

An Israeli-American cybersecurity company, however, concluded that Indra, a group of hackers who identify as opponents of Iran’s theocratic regime, was most likely responsible. The code used in the attack resembled code in previous attacks claimed by the group in 2019 and 2020.

June 23, 2021: An Israeli quadcopter drone, launched from inside Iran, struck a facility in Karaj for manufacturing centrifuges for the nuclear program. Satellite photos showed damage to the roof and suggested that a fire had broken out. Iran later blamed Israel for the attack.   

Oct. 26, 2021: A cyberattack knocked out the system that allows Iranians to use government-issued cards to purchase fuel at a subsidized rate. The outage impacted all 4,300 gas stations in Iran. Consumers either had to pay the regular price, more than double the subsidized one, or wait for stations to reconnect to the central distribution system. By October 30, some 3,200 out of 4,300 stations had been reconnected to the system. Iran blamed Israel and the United States.

Feb. 14, 2022: Six Israeli quadcopter drones reportedly destroyed hundreds of drones at a base near Kermanshah in western Iran. The base was Iran’s primary manufacturing and storage facility for military drones. Lebanese television station Al Mayadeen, which is linked to Hezbollah and Iran, claimed that the drones were launched from Iraqi Kurdistan. Iran blamed Israel for the attack. 

April 30, 2022: The Israeli press reported that Mossad agents in Iran had earlier kidnapped and interrogated Mansour Rasouli, an agent of the IRGC Qods Force. In a confession aired on Israeli television, Rasouli admitted that he had been directed by the Qods Force to assassinate an Israeli diplomat in Turkey, an American general in Germany, and a Jewish journalist in France. He was reportedly released in Iran after the interrogation. On May 8, Iran International, a London-based television station, broadcast video footage of Rasouli claiming to have been tortured into providing a false confession. 

May 22, 2022: IRGC Colonel Hassan Sayyad Khodaei was shot five times outside of his home in Tehran. Two gunmen on motorcycles reportedly opened fire while he sat in his Kia Pride. Khodaei’s role in the IRGC has been disputed. Israeli officials alleged that Khodaei was the deputy commander of Unit 840, an IRGC unit reportedly tasked with kidnapping and assassinating foreigners, including Israeli officials and civilians. Others claimed that Khodaei advised Iran-backed fighters in Syria and coordinated shipments of drone and missile technology to Syria and Lebanon’s Hezbollah. Majid Mirahmadi, a member of the Supreme National Security Council, alleged the assassination was “definitely the work of Israel.”

May 25, 2022: Quadcopter suicide drones, laden with explosives and reportedly launched from inside Iran, hit the Parchin military complex 37 miles southeast of Tehran. The drones damaged a building where drones had been developed by the Ministry of Defense. One engineer was killed and another person was injured. IRGC Commander Hossein Salami pledged retaliation against unspecified “enemies”; the attack was similar to others in Iran and Lebanon attributed to Israel.   

May 31 and June 2, 2022: In separate incidents, two scientists – one in Yazd and one in Tehran – reportedly died from poison in their food. Initial reports claimed Ayoub Entezari, an aerospace engineer, worked on missiles and airplane turbines for a military research center in Yazd. Officials later claimed that Entezari worked for a civilian industrial company. Kamran Aghamolaei, a geologist in Tehran, died on June 2. Iranian officials blamed Israel for their deaths, according to The New York Times.

Jan. 28, 2023: Suicide drones equipped with explosives struck a military facility in central Isfahan just before midnight. Israel’s Mossad intelligence organization was reportedly responsible, senior intelligence officials told The New York Times. The site was an advanced weapons-production facility, sources familiar with the attack told the Wall Street Journal. The operation was a major success, foreign intelligence sources told The Jerusalem Post.  

Iran did not immediately blame a particular country or group. But an unnamed Iranian official told al Jazeera that Israel appeared to be responsible. “Israel knows very well that it will receive a response, as happened in the past,” the official warned. “Those who play with fire are the first to get burned if they decide to start a regional war.” Iran claimed that air defenses downed one small quadcopter but that two others exploded above the site and caused “minor roof damage” to a munitions factory. The quadcopters, which have a short range, were likely launched from inside Iran.

April 1, 2024: An Israeli airstrike killed three generals in Iran’s Revolutionary Guards and four other officers at a consulate abutting the Iranian embassy in Damascus. Technically, the consulate was considered sovereign Iranian territory. The attack was an unprecedented escalation in the decades-long shadow war between Israel and Iran. The three generals were part of the Qods Force, the external operations branch of the Revolutionary Guards has aided, armed and coordinated with Iran’s so-called Axis of Resistance network in Syria, Lebanon, Iraq and Yemen since the 1980s. 

The precision strike, reportedly by two F-35s, targeted a meeting between Iranian officers and Palestinian militia leaders to discuss the war in Gaza. The fatalities included:

General Mohammad Reza Zahedi, long-time coordinator of Iran’s covert operations in Syria and Lebanon

General Mohmmad Hadi Haj Rahimi, Zahedi’s deputy

General Hossein Aman Allahi, chief of the general staff of the Qods Force in Syria and Lebanon

Hussein Youssef, a member of Hezbollah, a Lebanese Shiite militia and political party backed by Iran

April 19, 2024: Israel reportedly launched overnight strikes in Iran in response to Tehran’s April 13-14 largely ineffective attack of more than 330 drones and missiles. The targets, weapons used, and extent of damage caused by Israel's alleged attack were unclear. Initially, U.S. officials told media that Israel had launched missiles and hit a site in Iran. Experts assessed that Israel used an air-launched missile based on photographs of missile debris recovered in Iraq. But Iranian sources only reported the use of small drones. Media and officials attributed the small-scale attack to “infiltrators” rather than Israel. A senior Iranian official told Reuters that Tehran did not plan to retaliate against Jerusalem, which did not claim responsibility.    

In central Isfahan province, antiaircraft defense systems downed a suspicious object resulting in explosions, Major General Abdolrahim Mousavi, the chief of Iran’s conventional military, the Artesh, told state media. Three small drones were reportedly intercepted near an air base. Hossein Dalirian, a spokesman for Iran’s civilian space agency, said that there had been “no air attack from outside” Iran’s borders. “They have only made a failed and humiliating attempt to fly quadcopters, and the quadcopters have also been shot down.”

Isfahan province was home to a major airbase, a missile production complex and nuclear research facilities. But local media reported that no damage was caused to any military or nuclear sites. The International Atomic Energy Agency (IAEA), the U.N. nuclear watchdog, confirmed that Iran’s nuclear sites were unharmed.  

July 31, 2024: Ismail Haniyeh, the political leader of the exiled wing of Hamas and its chief negotiator on issues of war and peace, was assassinated during a visit to Tehran for the inauguration of President Masoud Pezeshkian. He had also met just hours earlier with Supreme Leader Ayatollah Ali Khamenei, a sign of Haniyeh’s standing with Iran. The stunning attack, widely assumed to be by Israel, evoked rage in Iran and from its network in the so-called Axis of Resistance.

 

Khaled Meshaal to be new Hamas leader

Khaled Meshaal, tipped to be the new Hamas leader, became known around the world in 1997 after Israeli agents injected him with poison in a botched assassination attempt on a street outside his office in the Jordanian capital Amman.

The hit against a key senior figure of the Palestinian militant group, ordered by Israeli Prime Minister Benjamin Netanyahu, so enraged Jordan's then-King Hussein that he spoke of hanging the would-be killers and scrapping Jordan's peace treaty with Israel unless the antidote was handed over.

Israel did so, and also agreed to free Hamas leader Sheikh Ahmed Yassin, only to assassinate him seven years later in Gaza.

For Israelis and Western states, Hamas which has directed suicide bombings in Israel and fought frequent wars against it, is a terrorist group bent on Israel's destruction.

For Palestinian supporters, Meshaal and the rest of the Hamas leadership are fighters for liberation from Israeli occupation, keeping their cause alive when international diplomacy has failed them.

Meshaal, 68, became Hamas' political leader in exile the year before Israel tried to eliminate him, a post that enabled him to represent the Palestinian Islamist group at meetings with foreign governments around the world, unhindered by tight Israeli travel restrictions that affected other Hamas officials.

Hamas sources said Meshaal is expected to be chosen as paramount leader of the group to replace Ismail Haniyeh, who was assassinated in Iran in the early hours of Wednesday, with Tehran and Hamas vowing retribution against Israel.

Senior Hamas official Khalil al-Hayya, who is based in Qatar and has headed Hamas negotiators in indirect Gaza truce talks with Israel, has also been a possibility for the leadership as he is a favourite of Iran and its allies in the region.

Meshaal's relations with Iran have been strained due to his past support for the Sunni Muslim-led revolt in 2011 against Syrian President Bashar al-Assad.

Israel has assassinated or tried to kill several Hamas leaders and operatives since the group was founded in 1987 during the first Palestinian uprising against the occupation of the West Bank and Gaza.

Meshaal has been a central figure at the top of Hamas since the late 1990s, though he has worked mostly from the relative safety of exile as Israel plotted to assassinate other prominent Hamas figures based in the Gaza Strip.

After the wheelchair-bound Yassin was killed in a March 2004 airstrike, Israel assassinated his successor Abdel-Aziz Al-Rantissi in Gaza a month later, and Meshaal assumed the overall leadership of Hamas.

Like other Hamas leaders, Meshaal has grappled with the critical issue of whether to adopt a more pragmatic approach to Israel in pursuit of Palestinian statehood - Hamas' 1988 charter calls for Israel's destruction - or keep fighting.

Meshaal rejects the idea of a permanent peace deal with Israel but has said that Hamas, which in the 1990s and 2000s sent suicide bombers into Israel, could accept a Palestinian state in the West Bank, Gaza Strip and East Jerusalem as a temporary solution in return for a long-term ceasefire.

The October 07, 2023 attack on Israel by Hamas-led militants from Gaza, which killed 1,200 people and led to the kidnapping of over 250 people, according to Israeli tallies, made the militant group's priorities clear.

Israel retaliated with airstrikes and an invasion of Gaza that have killed over 39,000 Palestinians, pursuing a campaign to eradicate Hamas that has reduced much of the densely populated coastal enclave to rubble.

Meshaal said the October 07 Hamas attack returned the Palestinian cause to the center of the world agenda.

He urged Arabs and Muslims to join the battle against Israel and said Palestinians alone would decide who runs Gaza after the current war ends, in defiance of Israel and the United States who want to exclude Hamas from post-war governance.

Meshaal has lived most of his life outside the Palestinian territories. Born in Silwad near the West Bank city of Ramallah, Meshaal moved as a boy with his family to the Gulf Arab state of Kuwait, a hotbed of pro-Palestinian sentiment.

At the age of 15 he joined the Muslim Brotherhood, the Middle East's oldest Islamist group. The Brotherhood became instrumental in the formation of Hamas in the late 1980s during the first Palestinian uprising against Israeli occupation.

Meshaal became a schoolteacher before turning to lobbying for Hamas from abroad for many years while other leaders of the group have languished for long periods in Israeli jails.

He was in charge of international fund-raising in Jordan when he barely escaped assassination.

Netanyahu played an accidental but important role in establishing Meshaal's militant credentials when he ordered Mossad agents to kill him in 1997 in retaliation for a Jerusalem market bombing that killed 16 people and was blamed on Hamas.

The suspected assassins were caught by Jordanian police after Meshaal was injected with poison in the street. Netanyahu, then in his first term as premier, was forced to hand over the antidote for the poison, and the incident turned Meshaal into a hero of the Palestinian resistance.

Jordan eventually closed Hamas' bureau in Amman and expelled Meshaal to the Gulf state of Qatar. He moved to Syria in 2001.

Meshaal ran Hamas, a Sunni Muslim movement, from exile in Damascus in 2004 until January 2012 when he left the Syrian capital because of President Assad's fierce crackdown on Sunnis involved in an uprising against him. Meshaal now divides his time between Doha and Cairo.

His abrupt departure from Syria initially weakened his position within Hamas, as ties with Damascus and Tehran, which were vital for the group, gave him power. With those links damaged or broken, rivals based within Gaza, the birthplace of Hamas, began to assert their authority.

Meshaal himself told Reuters that his move affected relations with Hamas' main paymaster and weapons supplier Iran - a country Israel believes poses by far the greatest threat to it because of its ambitious nuclear program.

In December 2012, Meshaal paid his first visit to the Gaza Strip and delivered the main speech at Hamas' 25th anniversary rally. He had not visited the Palestinian territories since leaving the West Bank at age 11.

While he was abroad, Hamas asserted itself over its secular rival, the Western-backed Palestinian Authority (PA), which has been open to negotiating peace with Israel, by seizing control of Gaza from the PA in a brief 2007 civil war.

Friction between Meshaal and the Gaza-based Hamas leadership surfaced over his attempts to promote reconciliation with President Mahmoud Abbas, who heads the Palestinian Authority.

Meshaal then announced that he wanted to step down as leader over such tensions and in 2017 was replaced by his Gaza deputy Haniyeh, who was elected to head the group's political office, also operating overseas.

In 2021, Meshaal was elected to head the Hamas office in the Palestinian diaspora.

 

What after Haniyeh killing?

The targeting of two senior militant leaders in two Middle Eastern capitals within hours of each other — with each strike blamed on Israel — risks rocking the region at a critical moment.

The strikes come as international mediators are working to bring Israel and Hamas to agree to a cease-fire that would wind down the devastating war in Gaza and free hostages. Intense diplomatic efforts are also underway to ease tensions between Israel and Hezbollah after months of cross-border fighting.

The assassination of Hamas’ top leader Ismail Haniyeh in Tehran and the strike against senior Hezbollah commander Fouad Shukur in Beirut could upend those painstaking attempts to defuse a Middle East powder keg. Iran has also threatened to respond after the attack on its territory, which could drag the region into all-out war.

Here’s a look at the potential fallout from the strikes:

Gaza cease-fire negotiations

Haniyeh’s assassination could prompt Hamas to pull out of cease-fire negotiations being mediated by the United States, Egypt and Qatar, though it has yet to comment on the issue.

But given Haniyeh’s role, a senior Egyptian official with direct knowledge of the negotiations said the killing will highly likely have an impact, calling it “a reckless act.”

“Haniyeh was the main link with (Hamas) leaders inside Gaza, and with other Palestinian factions,” said the official, who met with the Hamas leader multiple times in the talks. “He was the one we were meeting face-to-face and talking about the cease-fire.”

Qatari Prime Minister Mohammed Bin Abdul Rahman al-Thani condemned the attacks.

“How can mediation succeed when one party assassinates the negotiator on the other side?” he wrote on the social media platform X.

US Secretary of State Antony Blinken said he didn’t want to speculate on the effect, but the events renewed the “imperative of getting the cease-fire,” which he said they are working toward on a daily basis

Hezbollah has said that it will halt its fire on Israel if a Gaza cease-fire is reached.

Israeli Prime Minister Benjamin Netanyahu has argued that military pressure will prompt Hamas to agree to a deal, but previous killings of senior figures have not appeared to increase the chances for an agreement.

People in Gaza expressed sadness and shock over Haniyeh’s killing and worried that a cease-fire deal was slipping away.

“By assassinating Haniyeh, they are destroying everything,” said Nour Abu Salam, a displaced Palestinian. “They don’t want peace. They don’t want a deal.”

The increasingly desperate families of hostages held in Gaza urged for their loved ones to be released.

“I’m not interested in this assassination or that assassination, I’m interested in the return of my son and the rest of the hostages, safe and sound, home,” said Dani Miran, whose son Omri, 46, was kidnapped from Kibbutz Nahal Oz on October 07, 2023.

Risk of broader war

The strikes also raised alarm among some diplomats working to defuse tensions in the region.

“The events in Tehran and Beirut push the entire Middle East to a devastating regional war,” said one Western diplomat.

The diplomat — whose government has engaged in concerted diplomacy to prevent an all-out war between Israel and Hezbollah, but is not directly involved in cease-fire or hostage negotiations — called the killing of Haniyeh a “serious development” that has “almost killed” a possible cease-fire in Gaza, given its timing and location.

She said that Haniyeh’s killing inside Tehran while attending the inauguration of an Iranian president “will force Tehran to respond.”

The assassination in Tehran is not the first time that Israel has been blamed for a targeted attack on Iranian soil, but it’s one of the most brazen, said Menachem Merhavy, an expert on Iran from the Hebrew University of Jerusalem.

Israel hasn’t taken responsibility for the strike, though it vowed to kill all of Hamas’ leaders over the Oct. 7 attacks. Merhavy thinks it’s unlikely that Iran will respond directly to Israel, such as with the barrage of 300 rockets in April after a suspected Israeli strike in Syria that killed two Iranian generals in an Iranian consular building.

He believes Iran is more likely to send its response via Hezbollah.

“Iran knows that its capability of hurting Israel is much more significant from Lebanon,” said Merhavy.

The location of Haniyeh’s assassination was just as important as the strike itself, he said.

“The message was to Iran and the proxies, if you thought in Tehran you’re protected, we can reach you there as well,” said Merhavy. “Reconsider your relations with Tehran, because they cannot protect you on its own soil.”

Finding the replacement

Although Haniyeh’s name has more international recognition, the strike on Hezbollah commander Fouad Shukur, if successful, is “much more important from a functional point of view,” said Michael Milshtein, an Israeli analyst of Palestinian affairs at Tel Aviv University and a former military intelligence officer.

He said Shukur was involved in the day-to-day management of Hezbollah’s strikes on Israel, including, according to Israel, the rocket attack on Majdal Shams that killed 12 youths on Saturday. Israel said its hit in Beirut on Tuesday killed him but Hezbollah has not confirmed that.

“If Hezbollah is considering how to act or to respond, one of the main question marks is how they’re going to manage a war without Shukur,” said Milshtein.

Others said Shukur, if he is in fact killed, will easily be replaced.

“Hezbollah has thick layers of commanders and leaders, and the killing of 1 or 10 or 500 will not change the equation,” said Fawaz Gerges, of the London School of Economics.

Gerges said Haniyeh is a much more symbolic leader and is far removed from the day-to-day operations in Gaza.

“Even though the assassination of Haniyeh is a painful blow for Hamas, it will make no difference in the military confrontation between Israel and Hamas,” and Gerges.

He noted that Israel has a long history of assassinating leaders of Palestinian groups, but those strikes have little impact as the leaders are quickly replaced.

Courtesy: Associated Press

 

 

Iran: Pezeshkian sworn in as President

Masoud Pezeshkian was sworn in as Iran's new president on Tuesday, after winning an election earlier this month by promising to improve ties with the world and ease restrictions on social freedoms at home.

"We will pursue constructive and effective interaction with the world based on dignity, wisdom, and expediency," Pezeshkian told a parliament session attended by foreign dignitaries and broadcast live on state television.

According to Reuters, his victory has lifted hopes of a thaw in Iran's antagonistic relations with the West that might create openings for defusing its nuclear standoff with world powers.

Pezeshkian takes office at a time of escalating Middle East tensions over Israel's conflict with Hamas in Gaza and cross-border fighting with Hezbollah in Lebanon.

Iran, which backs the groups which describe themselves as the "Axis of Resistance" to Israel and US influence in the Middle East, has accused the United States of supporting what it calls Israeli crimes in Gaza.

"Those who supply weapons that kill children cannot teach Muslims about humanity," Pezeshkian said to chants of "Death to America," and "Death to Israel".

Leaders of Iran's Palestinian allies Hamas and the Islamic Jihad as well as senior representatives of Yemen's Tehran-backed Houthi movement and Lebanon's Hezbollah attended the ceremony.

Pezeshkian, who is expected to name his cabinet within two weeks, replaces Ebrahim Raisi, who was killed in a helicopter crash in May.

As the ultimate authority in Iran, Supreme Leader Ayatollah Ali Khamenei has the final say in all state matters, including foreign and nuclear policy.

He must also approve Pezeshkian's selections for key cabinet posts, such as the foreign, oil and intelligence ministers.

As well as mounting pressure from the West over Tehran's fast-advancing nuclear program, Pezeshkian faces the huge task of breaking Iran free of the crippling US sanctions, re-imposed after Washington ditched Iran's 2015 nuclear deal with major powers.

Indirect talks between Tehran and Washington to salvage the nuclear accord with six major powers have stalled since 2022, with both sides accusing the other of unreasonable demands.

"My government will never succumb to bullying and pressure ... Pressure and sanctions do not work ... and the Iranian people should be spoken to with respect," said Pezeshkian.

 

 

 

 

 

 

 

 

Russian crude drives dark fleet demand

Dark fleet tankers and risky Suez transits are having little impact on India’s soaring imports of Russian crude, now running at 20 times the volume shipped prior to the invasion of Ukraine.

Analysis by New York broker, Poten & Partners, has revealed that Indian imports of heavily sanctioned Russian crude have increased to almost 1.8 million barrels a day (bpd), up from just 88,000 bpd prior to the invasion in February 2022.

At that time, Russia ranked ninth on India’s list of oil suppliers, with Iraq, Saudi Arabia and the UAE supplying about 60% of the country’s crude. The three Middle East nations were followed by the US and Nigeria.

Prior to the invasion, Russian crude had not been attractive to Indian refiners because of logistical constraints. None of Russia’s main export ports in the Baltic, the Black Sea or the Far East can load VLCCs, Poten pointed out, so Russian cargoes were shipped aboard Aframax and Suezmax tankers.  

However, the picture changed dramatically following the 2022 invasion when western nations imposed sanctions on Russian crude. This was largely driven by price. Until the invasion, ‘Dated Brent’ and Urals crude had traded broadly in parity but, following sanctions, ‘official’ Urals prices were an average of US$10-20 lower. Since deals involving Russian crude are shrouded in secrecy, Poten’s analysis has revealed that actual discounts could be much higher, possibly as much as US$40 a barrel.  

Much of the new Soviet crude was bought based on spot prices and arranged by Russian oil traders, many of them in Dubai, who charge ‘significant commissions’ for their services. But over recent months, the discount of Urals to Brent crude has narrowed, making the crude less attractive.

Meanwhile, the tanker trade from Russia to India has become more challenging, Poten said. Sanctions now restrict the use of Western shipping services including owners, brokers, and insurers when the Soviet crude price exceeds the ‘price cap’ of US$60 per barrel. This has forced Indian importers to rely on tankers in the so-called dark fleet – ships that may be old, poorly maintained, with dodgy crews and questionable insurance cover.

The dangers of the dark fleet have been highlighted by the recent collision between the Sao Tome and Principe VLCC Ceres I and the Singapore-registered product tanker Hafnia Nile, where the VLCC later attempted to flee the scene of the accident.

The US and EU are trying to ‘tighten the noose’ around these sanctions-busting shipowners. The availability of suitable ships could soon become a problem, possibly even limiting Russia’s export possibilities. At the same time, conflict in the Middle East is making this worse.

The dark fleet tankers on the route from Russia to India often take the shortcut through Suez, Poten said, even though the Houthis are increasing their strikes against ships in the Red Sea and Bab Al-Mandeb Straits. But the voyage round the Cape takes far longer and is much more expensive.

Despite these setbacks, Poten reports that Indian refiners are now in dialogue with Soviet suppliers on term deals, rather than spot contracts. This could reduce transaction costs by cutting out the middlemen.

“It would also suggest that the boost in ton-mile demand that has helped trigger the sustained increase in tanker rates may be here to stay,” Poten concluded.  

Courtesy: Seatrade Maritime News

 

Wishes are horses and beggars are riders

Reportedly, Pakistan has sought the re-profiling of more than US$27 billion in debt and liabilities with friendly nations — China, Saudi Arabia and the UAE — to secure a 37-month IMF bailout package and ease energy sector foreign exchange outflows and consumer tariffs.

Finance Minister Muhammad Aurangzeb on Sunday said Islamabad had already asked the friendly bilateral trio of lenders to roll over its more than US$12 billion annual debt portfolio by three to five years to secure the IMF board’s approval for a US$7 billion economic bailout.

This is on top of Islamabad’s request to Beijing to convert imported coal-based projects to local coal and re-profile more than US$15 billion in energy sector liabilities to create fiscal space amid difficulties in timely repayments.

Pakistan has a peculiar financial arran­gement with these three countries in the shape of commercial loans and SAFE deposits that are rolled over every year and form major part of the IMF program in terms of external financing needs.

Pakistan has now requested the maturity period of these loans — US$5 billion from China, US$4 billion from Saudi Arabia, and US$3 billion from the UAE — to be extended to at least three years, offering greater predictability under the IMF program.

Speaking at a news conference after returning from China, Finance Minister said the Chinese side acknowledged Pakistan’s foreign exchange difficulties and wanted to help in new business ventures and the re-profiling of energy sector payments besides playing its role in supporting Pakistan’s case at the IMF board as one of the major stakeholders.

He said the process of debt and equity rescheduling had been started and would now go to the working groups with relevant financial institutions and sponsors of Chinese projects for which Pakistan was hiring local Chinese consultants.

“Between now and the IMF board meeting we have to ensure confirmation of external financing” from friendly bilateral partners, the minister said. However, he explained that the Chinese energy sector debt re-profiling had nothing to do with the IMF program as other prior actions had been completed and structural benchmarks were under implementation.

Minister said he was in contact with the Chinese, Saudi and UAE finance ministers for extension in debt rollover for three years and they had assured their support that would place Pakistan at a very comfortable position in terms of external financing gap.

“I can assure you we are at a very good place on external financing for the next three years, including year-one, year-two and year-three,” he said.

Without going into details, he said the IMF had worked out a financing needs assessment for three years that also included its own US$7 billion Extended Fund Faci­lity. After rollovers from friendly countries, the remaining external financing gap would become very manageable, he said.

Responding to a question, the minister said Pakistan was not seeking any incremental financing from friendly countries. “The only incremental thing is an extension in maturity period for three years instead of yearly rollovers,” he said.

Minister said that the issue of energy sector repayments was initially taken up by Prime Minister Shehbaz Sharif with President Xi Jinping of Chian during his visit to Beijing and followed it up with formal letters to Prime Minister Li Keqiang.

As part of the process, Finance Minister along with Power Minister held meetings with Chin­ese finance and energy ministers and the governor of the Chinese central bank to understand the context of Pakistan’s ability to pay, economic stability and relief in energy tariffs.

He said the two sides discussed conversions of Chinese power projects to local coal and how to take their technical, logistical and financial parameters forward.

Secondly, financial re-profiling would also need to be discussed with banks and project sponsors one by one. “They have recognized this and the process would now move forward on that basis,” Minister said.

He said the re-profiling of CPEC debt was also discussed the governor of Chinese central bank and “we would need to go for project by project given the CPEC structure”.

“Very positive discussions have taken place from my perspective,” he said, adding the debt of Chinese independent power producers (IPPs) was manageable as their legal payments were being made, but the issue pertained to return on equity to project sponsors mainly because of foreign exchange which required to be rescheduled to create fiscal space.

Minister, however, clarified that Pakistan was seeking the re-profiling of payments and not “haircuts” — debt waiver or interest rate cuts.

He stressed the importance of long-term structural solutions for economic challenges. He acknowledged the difficulties faced by all segments of society due to high interest rates, energy prices, currency devaluation and increased tax burdens but emphasized the necessity of tough measures given the loss of fiscal space.

“We have no more choice of doing what we have been doing in the past for short-term relief and objectives.”

Responding to a question, the finance minister said Pakistan has moved forward with both the United States and China, aiming to advance the phase two of CPEC under which Chinese business were to relocate to Pakistan, while the US was Pakistan’s largest trading partner and the European Union had provided the GSP Plus status to help prop up Islamabad’s exports.

He said that during his visit to China, he also engaged with his counterpart and the central bank chief to explore opportunities in the Chinese capital market — the second largest in the world — through Panda bonds. He said Pakistan would register for the US$1 billion equivalent of Panda bonds but tap around the equivalent of US$150 million to US$200 million.

Minister said industrialists should also acknowledge that Paki­stan’s economy was such that it immediately ran into a foreign exchange crisis as it tried faster economic growth, and hence, it would be prudent not to fall again into the import restriction regime that could be more painful.

He hoped the stability in foreign exchange and macroeconomic indicators would soon improve Paki­stan’s credit rating and gradually move towards export-led growth, FDI creating exports and return to the international capital markets.

Past efforts for public sector rightsizing did not bear fruit because of large portfolios, the minister said, adding that he was pushing for “bite-size” restructuring by taking only five shortlisted ministries — Kashmir Affairs and Gilgit-Baltistan, Safron, Industries and Production, IT and Telecom, and Health — in the first instance while protecting the rights of workers and asset values.

 

 

Pakistan: SBP reduces policy rate by 100bps

At its meeting today, the Monetary Policy Committee (MPC) of State Bank of Pakistan (SBP) decided to cut the policy rate by 100 basis points to 19.5%, effective from July 30, 2024.

The Committee observed that the June 2024 inflation was slightly better than anticipated. The Committee also assessed that the inflationary impact of the FY25 budgetary measures was broadly in line with earlier expectations.

The external account has continued to improve, as reflected by the build-up in foreign exchange reserves held by SBP despite substantial repayments of debt and other obligations.

Considering these developments – along with significantly positive real interest rate – the Committee viewed that there was a room to further reduce the policy rate in a calibrated manner to support economic activity, while keeping inflationary pressures in check.

The Committee noted the following key developments since its last meeting:

First, the current account deficit narrowed sharply in FY24 and forex reserves of SBP reserves improved significantly from US$4.4 billion at end June 2023 to above US$9.0 billion.

Second, the country reached a staff level agreement with the IMF for a 37-month EFF program of about US$7.0 billion.

Third, sentiment surveys conducted in July showed a worsening in inflation expectations and confidence of both consumers and businesses.

Fourth, international oil prices have remained volatile in recent weeks, whereas prices of metals and food items have eased.

Lastly, with the ease in inflationary pressures and labour market conditions, central banks in advanced economies have also started to cut their policy rates.

Taking stock of these developments, the Committee assessed that, despite today’s decision, the monetary policy stance remains adequately tight to guide inflation towards the medium-term target of 5 to 7 percent. This assessment is also contingent on achieving the targeted fiscal consolidation, timely realization of planned external inflows and addressing underlying weaknesses in the economy through structural reforms.

Real Sector

Latest high-frequency indicators continue to reflect moderate economic activity. Auto and POL (excluding FO) sales and fertilizer offtake increased on MoM basis in June.

Large-scale manufacturing also recorded a sharp improvement in May 2024, mainly driven by the apparel sector.

The growth in agriculture sector, after showing a strong performance in FY24, is expected to slow down in this fiscal year.

Latest satellite images and input conditions for Kharif crops also support this assessment. However, activity in the industry and services sectors is expected to recover, supported by relatively lower interest rates and higher budgeted development spending.

Based on this, the MPC assessed FY25 real GDP growth in the range of 2.5 to 3.5 percent as compared to 2.4 percent recorded last year.

External Sector

After recording surpluses for three consecutive months, the current account posted a deficit in May and June, in line with the MPC’s expectation. These deficits were largely due to higher dividend and profit payments and a seasonal increase in imports, which more than offset a significant increase in exports and workers’ remittances.

Cumulatively, the current account deficit in FY24 narrowed significantly to 0.2% of GDP from 1.0% in the preceding year. This, along with the revival of financial inflows, helped build the SBP’s FX reserves. Looking ahead, the MPC expects a modest increase in imports, in line with the growth outlook.

At the same time, the continued robust growth in workers’ remittances, along with an increase in exports, is expected to contain the current account deficit in the range of 0 - 1.0 percent of GDP in FY25.

The Committee assessed that the expected financial inflows, including planned official flows under the IMF program, would help finance this current account deficit and further strengthen the FX buffers.

Fiscal Sector

The government’s revised estimates indicate improvement in fiscal balances during FY24, as the primary balance turned into a surplus and the overall deficit declined from last year. However, amidst a shortfall in budgeted external and non-bank financing, the government’s reliance on the domestic banking system increased significantly.

The Committee expressed concern on increasing reliance on banks for deficit financing, which has been squeezing borrowing space for the private sector. For FY25, the government has set the primary surplus target at 2.0% of GDP.

The MPC emphasized on achieving the envisaged fiscal consolidation and timely realization of planned external inflows to support overall macroeconomic stability, and build fiscal and external buffers for the country to respond to future economic shocks.

Money and Credit

The MPC noted that the trends and composition of monetary aggregates during FY24 remained consistent with the tight monetary policy stance. Broad money (M2) and reserve money grew by 16.0% and 2.6%, respectively, well below the growth in nominal GDP.

Almost the entire growth in M2 was led by bank deposits, while currency in circulation remained almost at last year’s level. As a result, the currency to deposit ratio improved, as it declined from 41.1% at end June 2023 to 33.6% at end June 2024. At the same time, the improvement in external account increased the contribution of net foreign assets in monetary expansion.

Meanwhile, the growth in net domestic assets of the banking system decelerated amidst subdued demand for private sector credit. The Committee viewed these developments as favorable for the inflation outlook.

Inflation Outlook

As expected, headline inflation rose to 12.6%YoY in June 2024 from 11.8% in May. This increase was primarily driven by higher electricity tariffs and Eid-related increase in prices, which were partly offset by the downward adjustments in domestic fuel prices.

Core inflation, meanwhile, has steadied around 14 percent over the past two months. The MPC assessed that while the inflationary impact of the FY25 budget is largely in line with expectations, the available information indicates that the full impact of these measures may now take some time to fully reflect in domestic prices.

At the same time, the Committee noted risks to the inflation outlook from fiscal slippages and ad-hoc decisions related to energy price adjustments.

On balance, after considering these trends – and accounting for the sufficiently tight monetary policy stance and ongoing fiscal consolidation – average inflation is expected to remain in the range of 11.5 to 13.5 percent in FY25, down significantly from 23.4 percent in FY24.