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The global impacts of today’s war in Israel are not the same as 1973

President Biden labeled the Hamas attack on Israel “pure, unadulterated evil.” Footage and reports of the incident left nothing for the imagination in terms of clarity. And the world has received heartrending reports on Israel’s very tough response, and many more will undoubtedly follow.

So far, the current escalation has been most frequently compared with the Yom Kippur War in 1973, partly because Hamas broke through the border fence with Israel almost 50 years to the date after the start of that war, missing the exact anniversary by one day. But in many ways, the analogy goes awry.

During the Yom Kippur War, Egypt and Syria, supported by other Arab states, wanted to reclaim the territories that were lost in the 1967 Six-Day War. On Oct. 6, 1973, on the Jewish holy day of Yom Kippur, Egypt and Syria launched simultaneous surprise attacks on Israeli positions along the Sinai Peninsula and the Golan Heights. During the first days of the war, Israel experienced a very difficult time. However, U.S. support and rapid mobilization — following the initial surprise — were factors contributing to successful counterattacks and a ceasefire was ultimately reached on Oct. 25.

Although the war did not produce a clear military victor, it did make Israel acknowledge that peace with its neighbors was important. And some neighbors realized and accepted that the Jewish state was a fait accompli. Diplomatic rapprochements led to the 1978 Camp David Accords between Israel and Egypt, for example, with the recognition of Israel by Egypt and Israel’s withdrawal from Sinai.

The war had major economic consequences. In response to U.S. support for Israel, oil-exporting Arab countries announced an oil embargo against the U.S. and other Western countries. This led to a sharp increase in crude prices and triggered an energy crisis in the West.


Equity markets reacted very negatively to oil price increases and uncertainty. The S&P 500 index plunged over 10 percent in the month after the war broke out. It would then fall much further partly due to the oil embargo declared on Oct. 19; the index lost over 40 percent in just under a year from October 1973 to its low in September 1974.

Many analysts have warned that the geopolitical and economic consequences of the Hamas attack and its aftermath might be compared to those of the Yom Kippur War. But this comparison is flawed in many respects:

This shows that we have to be very careful in drawing comparisons with previous instances of escalation of the Israeli-Palestinian conflict and basing forecasts of the economic and geopolitical consequences of today’s war on what happened before.

Andy Langenkamp is a senior political analyst at ECR Research, which offers independent research on asset allocation, global financial markets, politics and FX, and interest rates.