Cables From The Diplomatic Frontlines - Turkey suspends all trade with Israel: background, incentives, and long-term prospects.

As Israel enters Rafah, Turkey imposes economic costs.

• Hamas agreed to a ceasefire which Israel now refused.

• This is not too surprising - after all, people like Ben-Gvir and Smotrich hold more leverage over Netanyahu than the US or the entire west: the former can end his political career in a second - which would then make it harder for Netanyahu to fight off bribery and fraud charges that he currently faces.

• In the meantime, the humanitarian condition in Gaza continues to deteriorate as Israel has now begun its entry into Rafah.

• (side note: and this is crossing Biden’s “red line”. It will be up to the US President to now enforce his red line or suffer the reputational stain of not delivering on his clear commitment - like Obama over his ‘‘red line’’ in Syria. There are some signs that Biden will not follow the ignanimous path and will end the blank check policies: the Biden admin has suspended deliveries of 3,500 GBU bombs. Many of these are 2,000 pound dumb bombs and are rightly denied to Israel - as discussed in previous cables, there is no place for these unguided indiscriminate weapons in an area as dense as Rafah.)

• And in response to the worsening humanitarian conditions in Gaza, and Israel’s continuous refusal to allow the delivery of Turkish aid, Turkey has now announced that (as of last week) it would suspend all trade with Israel, and that all imports and exports would be halted “until the Israeli Government allows an uninterrupted and sufficient flow of humanitarian aid to Gaza.”

• This is the latest escalation of economic pressure imposed by Turkey - which initially started in August with export restrictions on 54 different categories of goods - including key Israeli imports like cement and steel (Israel imports most of its steel from Turkey).

• Suspension of all imports and exports means a freeze on the annual trade volume of $6.8bn - a number that has reached its heights only recently.

• Although this is a significant escalation, some perspective is in order: Turkey and Israel share more economic and strategic interests than they don’t.

• And the abiding interests of both countries will ensure that both countries will in general align over the long-term.

• But before that, it is important to add some background to some of the current tensions and the recent history of the Israeli-Turkish relationship.

• We will then look at why Erdogan decided to escalate against Israel, and conclude by looking at shared interests and why this means that over the long-haul, both US allies will revert back towards alignment and de-escalation.