Fdd's overnight brief

Israel

Israeli short-term interest rates could continue to decline as ​long as there are no ‌unexpected changes in the inflation environment, Bank of Israel Governor Amir Yaron said ​on Monday. – Reuters

Israel has launched its fifth competitive process to search for more natural gas in the country’s ​economic waters, Energy Minister Eli Cohen said on Monday, seeking to ‌bolster domestic reserves while increasing exports. – Reuters

Hamas, just more than 1000 days after it threw the Middle East into region-wide war, is attempting to recuperate its losses, reclaim control of Gaza, and cash in on sympathy for the terror organization on Western streets and around the Arab world. – New York Sun

Belgian Foreign Minister Maxime Prévot said Monday that he has instructed his Cabinet to move toward a decision on recognizing Palestinian statehood. The move comes after the militant group Hamas announced earlier in the day that it would dissolve the body that has governed Gaza for the best part of 20 years. – Politico

The Israeli parliament approved a bill in its first reading on Monday to set up a commission of inquiry into the security failings that led to the Hamas attack on October 7, 2023. – Agence France-Presse

An Iran-linked hacking group has created a new framework to attack Israeli organizations in the government and IT sectors while evading traditional detection and analysis systems, Israeli cybersecurity company Check Point disclosed in a report released on Monday. – Jerusalem Post

Prime Minister Benjamin Netanyahu warned that if the US gives Turkey F-35 fighter jets, it may upset the balance of power in the Middle East and threaten Israeli air superiority in the region during an interview with Fox and Friends on Monday. – Jerusalem Post

Israeli Foreign Minister Gideon Sa’ar condemned Turkey’s foreign minister for what he labeled a “clear call for genocide” against the Jewish people, according to a statement on Monday. – Jerusalem Post

Israel has dismissed Hamas’ announcement that its government is resigning, calling the move a public relations stunt aimed primarily at winning favor with the United States. According to Israeli political sources, “The ‘resignation’ of the Hamas government is meaningless because all ministry employees, except for the ministers themselves, will remain in their positions.” – Arutz Sheva

Sean Durns writes: Hamas, it seems, is once again playing for time and money. The latest war has severely damaged Iran. Hamas needs time to rebuild and knows that Iran will, too. Hamas’s strategy echoes an earlier one adopted by its rival Fatah. […] But that very night, speaking in Arabic on Jordanian television, Arafat reassured his audience that the fight against Israel would continue. He spent the next decade telling naive Westerners that he wanted peace while simultaneously writing checks to suicide bombers murdering Israeli civilians in cafes, buses, and hotels. The Board of Peace has it right. In the Middle East, as elsewhere, actions speak louder than words. By refusing to set down its arms and explicitly renounce its charter, Hamas is making its intentions clear. One only has to look past the group’s ceaseless barrage of propaganda to see it. – Washington Examiner

Russia and Ukraine

Russia’s latest missile attack on the Ukrainian capital, which killed at least 12 people and wounded close to 50, has exposed a grim reality: Ukraine has virtually run out of Patriot interceptors that stop ballistic missiles. – Wall Street Journal

Ukrainian troops returned home from training in the United States and Germany three years ago adept at the standard way of using the Patriot system so critical to air defenses. But with limited supplies and nonstop Russian barrages, they quickly realized that they would need to rewrite the rules. – New York Times

U.S. President Donald Trump said on Monday that a resolution to the more than four-year-old war in Ukraine is “getting ‌closer than people realize” and that he will talk about Ukraine during talks in Turkey this week at a NATO summit. – Reuters

Ukrainian drones struck Russia’s largest oil refinery in Omsk, deep in Siberia, on Monday in what would be one of Ukraine’s ​longest-range attacks of the war, Kyiv’s military said on Monday. Local Russian authorities confirmed the strike. – Reuters

Volodymyr Zelenskyy is in good spirits ahead of talks with Donald Trump and other NATO leaders at their summit in Turkey, according to a person who spoke with him in recent days. The Ukrainian president has grounds for confidence. – Bloomberg

Editorial: The carrots are more complicated. The alliance should be clear that the unconquered territory in the Donbas that Putin still covets is off the table. Instead, the focus should be on a monitored truce followed by limited, reversible sanctions relief tied to Russian compliance with its terms, including the return of prisoners and deported Ukrainian children. Putin’s long history of broken promises means the Kremlin should receive no down payment for future pledges. Although Europe has rightly led in supporting Ukraine, US credibility is also on the line. A full peace may not be possible for some time, but a truce looks increasingly feasible. Western pressure now should help convince Putin it’s the least bad option left. – Bloomberg

Editorial: No doubt, as Ukraine continues to frustrate Moscow, the killer in the Kremlin will once again rattle his nuclear saber again. Trump mustn’t flinch in the face of these threats. Putin knows any nuclear attack would result in a response that would spell the end of Russia entirely. This war, which was strictly Putin’s choosing, is now in its fifth year and has cost Moscow dearly in treasure, lives and global reputation. It’s not sustainable for Russia. Brave Ukraine has accepted its role as a buffer between civilization and barbarism. Our and NATO’s shared financial burden, while significant, is nothing compared to the thousands of Ukrainian sons, brothers and husbands who have been lost, or to the sacrifice of decimated Mariupol. President Trump, stand up for Ukraine in Ankara. It’s the least we can do. – New York Post

Alexander Gabuev writes: As it reaches out to Putin, Europe will want to simultaneously shore up relations with the U.S. foreign policy community. It should invest in structured discussion formats with both Democrats and Republicans who have real-world experience negotiating European security issues with the Kremlin. This will help the continent tap a deep well of American experience in crisis diplomacy, on which its own track record is thin. It will also help build a common language on these crucial issues that can be used on both sides of the Atlantic. For all of Europe’s military investments, the reality is that no better system of managing security in Europe can emerge without American buy-in. Washington’s nuclear arsenal, its commanding position in NATO, and its leadership in many military technologies are simply too important. The Kremlin will want the United States to be a party to any agreement it makes with Europe. – Foreign Affairs

Lebanon

On a beachfront in the coastal city of Tyre, war has finally abated just enough for children to play in the waves and families to gather under parasols as life slowly returns to southern Lebanon. – Reuters

IDF Northern Command officials believe there is no set deadline by which the military will evacuate several points north and south of the Yellow Line in southern Lebanon. When it eventually happens, however, the Lebanese Armed Forces is expected to be the military that will search the area, destroy Hezbollah infrastructure and strip it of terrorists, Walla learned on Tuesday. – Jerusalem Post

Israeli Ambassador to the United States Yechiel Leiter said Monday that Jerusalem views the framework deal it inked last month with Lebanon as superseding the memorandum of understanding that Washington signed with Iran just over a week earlier. – Times of Israel

Lebanese President Joseph Aoun on Monday ruled out the possibility of a direct meeting with Prime Minister Benjamin Netanyahu. “There is no truth to reports of a meeting with Netanyahu. I am not considering it, and I will not respond to it as long as the Israeli attacks against Lebanese citizens and violations in their territory continue,” Aoun told the Lebanese An-Nahar newspaper. – Arutz Sheva

Korean Peninsula

A commentary carried by North Korean state media KCNA on Tuesday criticised Japan’s ​military expansion, saying its overseas aggression was “not hypothetical ‌but reality” and citing Japanese plans to develop unmanned submarines capable of anti-ship attacks. – Reuters

South Korean President Lee Jae Myung on Monday ordered officials to move ​quickly to get to work on major chip and AI projects announced ‌last week. He warned that delays in permits, land acquisition, and securing power and water supply could undermine the country’s bid to dominate advanced industries. – Reuters

South Korea launched its historic ​24-hour onshore spot dollar-won ‌trading system on Monday as part of efforts ​to broaden currency convertibility ​as it aims to ⁠win an upgrade ​to developed market status on ​the MSCI global index. – Reuters

South Asia

Riots inside a Sri Lanka prison on Sunday and Monday killed at least 23 people and left 15 critically injured, the authorities said, in one of the worst outbreaks of violence among inmates in decades. – New York Times

Indonesia and India have signed a deal on the BrahMos cruise ​missile system, the Indonesian presidential palace said on Tuesday after a ‌meeting of their two leaders. Indian Prime Minister Narendra Modi met President Prabowo Subianto as part of his two-day visit to Indonesia, his first trip to the Southeast Asian country ​since 2023. – Reuters

India’s anti-terrorism agency said it filed charges on Monday against Hafiz Saeed, ​founder of Pakistan-based Islamist militant group Lashkar-e-Taiba (LeT), over ‌an attack on tourists in Indian Kashmir last year that triggered a conflict with Pakistan. – Reuters

Pakistan has quietly begun mediating between Libya’s rival eastern and western power centres, two Pakistani sources said, in a previously unreported Pakistani effort that ​would further raise its diplomatic profile if it succeeds. – Reuters

At least ​eight Rohingya Muslims, including women and children, were killed and several others injured early on ‌Monday after heavy monsoon rains triggered multiple landslides at refugee camps in southeastern Bangladesh, officials said. – Reuters

Sana Shinwari writes: I am proud of my brothers. I am glad they are in school, and I want them to learn, grow and build their futures. But I cannot celebrate their first day back without thinking about my sisters, my cousins and the more than 2 million girls who stayed behind that morning. Five years is long enough. The girls of Afghanistan have been patient and resilient. They have learned in secret and held on to hope longer than anyone should have to. They are not asking for sympathy; they are asking for what the Taliban took from them: a chance to learn. – Washington Post

Europe

The European Union was built on consensus. Nations that once bludgeoned each other found common purpose, yielding years of economic growth. Now, as that expansion has stalled, the bloc is exploring a radical idea to get its mojo back: abandoning the unity that has defined it for decades. – Wall Street Journal

Marine Le Pen, the French far-right leader, faces a legal reckoning on Tuesday that could disqualify her from running for France’s presidency next year and bring down the curtain on a family dynasty that has dominated far-right politics in the country for half a century. – New York Times

At a construction site in the northwest English city of Manchester, a huge hunk of steel was being hoisted onto the skeleton of a 12-story office block. When the structure is complete, it will have space for around 2,000 workers in a development with 2,000 homes, a 650-bed hotel and a riverside park. – New York Times

Britain on Monday imposed sanctions on two ​Russian research institutes and senior staff it said were linked to ‌Moscow’s chemical weapons programme and involved in developing toxins used to poison Russian opposition activist Alexei Navalny. – Reuters

NATO Secretary General Mark Rutte will insist at this week’s alliance summit that member states are keeping their promise to boost defence spending. Yet progress has been uneven and the push is already stretching some national budgets. – Reuters

Britain, the Netherlands, Finland and Poland are making “significant progress” ​on the new Multilateral Defence Mechanism and aim ‌to establish it by 2027, the countries said in a joint statement on Monday. – Reuters

Britain said its aircraft carrier in the Norwegian Sea was repeatedly approached by a Russian patrol ​aircraft, before being escorted away by UK fighter jets, ‌in the latest incident risking a potential escalation between NATO and Russia. – Reuters

Italy’s defence minister stressed the importance of good transatlantic relations on Monday after U.S. President Donald ​Trump again goaded erstwhile ally Giorgia Meloni, the ‌Italian prime minister. Meloni last month accused Trump of fabricating a story about her after the U.S. president told an Italian TV channel that ​she had “begged” him to take a photo with ​her at a G7 summit in France. – Reuters

Germany will ramp up spending on defense and security to more than €200 billion ($228 billion) by the end of the decade, amounting to a third of the federal budget as Europe’s No. 1 economy pushes to rearm. – Bloomberg

A five-day power outage in Berlin in January was caused by a terrorist attack, a state-appointed commission said, describing the incident as a “wake-up call” for cities across Germany. – Bloomberg

The European Commission’s bid to advance Serbia’s EU membership application is set to fall short of the backing needed from member countries, exposing a growing rift over how countries should earn their way into the bloc. – Politico

David Ignatius writes: Meanwhile, Europe is in Russia’s gunsights, and European leaders are discussing how to prepare for a wider war. Where is the de-escalation button? That’s a question that Russian oligarchs are increasingly asking, according to intelligence sources. Herman Gref, the head of the state-controlled Sberbank, warned publicly last week that the Russian economy “simply cannot survive for a prolonged period” under current pressures. Who could contain this spiraling war and push the two bloodied combatants toward a peace agreement? The answer now as on Inauguration Day is Donald Trump, the would-be peacemaker. At the NATO summit in Ankara, the world will see whether he’s serious about the task. – Washington Post

Mark Rutte writes: NATO is not standing still, and it is not going back. We adapt. We evolve. That means making tough decisions. It is no secret that NATO members do not always agree, but I have always believed that open and honest conversations are a strength, not a weakness. They’re the core of the democratic systems we all hold so dear. We are confident enough to have differences and to overcome them and come out stronger. In Ankara, we will show how we are investing in defense, rebalancing our security and strengthening industry so that we can continue to stay safe in a more dangerous world. – Washington Post

The Americas

Seeing how twin earthquakes had leveled apartments and devastated northern Venezuela last month, web developers in Argentina and Colombia were desperate to help despite being far away. – New York Times

That response dwarfs what the United States has promised for earthquake-ravaged Venezuela, a country the Trump administration says it is now running after seizing its leader this year. So far, the U.S. has put forward $300 million, deployed a much smaller force of about 900 U.S. military personnel and not announced a halt to deportations of Venezuelans. – New York Times

The death toll ‌from Venezuela’s twin earthquakes has risen to 3,535, authorities said on Monday, while nearly 18,000 people remain homeless more than a week after the disaster struck the capital and nearby coastal areas. – Reuters

Brazilian Senator Flavio Bolsonaro plans to urge the Trump administration at a Washington hearing on Monday to delay a proposed ‌25% tariff on Brazilian goods until after the country’s October election, seeking to distance himself from U.S. levies blamed on his camp. – Reuters

Peruvian leftist presidential ​candidate Roberto Sanchez ‌conceded the election to conservative ​Keiko Fujimori ​on Monday, days after ⁠electoral authorities declared ​her the ​winner. Sanchez and his party said on Monday ​in a ​statement they “recognized that the ‌National ⁠Elections Board had officially proclaimed the electoral ​results.” ​The ⁠final tally gave Fujimori ​50.135% of ​the ⁠vote in the June 7 ⁠runoff. – Reuters

Colombian President-elect Abelardo De La ​Espriella on Monday ‌said retired Major General Jorge Eduardo Mora ​will serve as ​defense minister in his ⁠administration, tasked with ​carrying out a ​promised crackdown on illegal armed groups and criminals. – Reuters

Colombia’s outgoing leader said he doesn’t recognize the legitimacy of the incoming government of President-elect Abelardo de la Espriella, escalating tension as the nation prepares for a transfer of power on Aug. 7. – Bloomberg

United States

U.S. prosecutors are seeking leniency at next-week’s sentencing of a Turkish-Iranian businessman who admitted to helping Iranians and their government evade sanctions and who provided key testimony at a 2017 corruption trial that strained relations between the U.S. and Turkey. – Associated Press

The Trump administration’s Middle East diplomacy is mostly about crisis management right now, but one key envoy has been quietly working on longer-run plans to tilt the region in a US-friendly direction. – Bloomberg

US President Donald Trump said he expected to meet with Chinese counterpart Xi Jinping around Sept. 24, which would coincide with the UN General Assembly in New York that month. – Bloomberg

Fewer than half of Americans believe that NATO would support them if attacked, according to an internal alliance poll seen by POLITICO. – Politico

Defense

The US will resume troop rotation in Poland, overturning an earlier decision that led to a strain in ties between the two North Atlantic Treaty Organization allies, Poland’s top defense official said. – Bloomberg

A series of deals due to be signed at Tuesday’s NATO Defence Industry Forum would shift some production and maintenance of U.S.-designed weapons systems to Europe, according to planning documents obtained by POLITICO. – Politico

The U.S. is in talks with Germany and other European nations about establishing co-production of Raytheon’s ​AIM-120 AMRAAM missiles and a maintenance facility for ‌Lockheed’s PAC-3 Patriot missiles in Europe, a source told Reuters. – Reuters

Lance Landrum and Erin Bailey write: Solving the drone dilemma requires more than a ban; it requires a vision. The US must pursue a sustainable approach that connects the strategic intent of Executive Orders with the statutory requirements of the NDAA and the regulatory oversight of the FCC. By operationalizing these policies through programs like the Blue List, the US begins to build a resilient, trusted ecosystem for autonomous flight. The path forward for the US and NATO is clear: we must treat drone components as critical infrastructure. Security and supply chain access are not competing interests; they are two sides of the same coin of national sovereignty. Only by securing the silicon can we truly secure the skies. – Center for European Policy Analysis