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The Israeli military today entered parts of Gaza that it has previously avoided, as it attempts to move as quickly as possible to finalize the destruction of Hamas. This comes as the humanitarian situation again slides into a dire situation amid what appears to be the failure of the U.S. & Israeli-backed plan to replace UN aid distribution mechanisms. Comments by the IDF chief of staff, however, have raised doubts about the sustainability of ground conflict, as the war drags on towards its second year, and Israel’s governing coalition becomes increasingly shaky. |
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Center of Gravity
What you need to know
Israeli forces press deeper into Deir al-Balah as war nears second year
In the past 24 hours, the Israel Defense Forces launched a renewed ground and air offensive in Deir al-Balah, the last major city in Gaza not previously entered by Israeli armor.
Tanks advanced into southern and eastern districts following large-scale evacuation orders and intense overnight shelling. Gaza’s health ministry reported more than 130 people killed and over 1,000 injured across the Strip, including civilians in displacement tents and several fatalities in Khan Younis. Israeli forces raided a World Health Organization facility in Deir al-Balah, briefly detaining several staff members. United Nations guesthouses and humanitarian warehouses were also struck, disrupting relief operations in the area.
Families of Israeli captives held in Gaza voiced concern over the offensive in Deir al-Balah, where it is generally believed that the majority of the hostages may be held.
Meanwhile, Israel Defense Forces Chief of Staff Herzi Halevi Zamir has ordered a 30 percent reduction in reserve forces stationed in front-line combat zones over the coming months, including a significant drawdown in Gaza.
Zamir acknowledged the growing strain on troops who have served nearly continuously for more than a year and a half. Many face mounting pressure from families and civilian employers.
As Zamir noted, Israel’s reserve army was never intended to sustain long, open-ended wars.
Although five divisions are officially assigned to Gaza, only portions of their personnel remain active on the ground, and those numbers will continue to decline.
Units that have operated in the Strip for extended periods will be withdrawn without replacement.
As the war continues, it will be waged with increasingly lean forces.
In parallel, Israeli aircraft struck Houthi positions near the Yemeni port of Hodeidah in retaliation for repeated attacks on Red Sea shipping. In retaliation, the Yemeni Houthi forces launched a missile at Israel’s Ben Gurion airport this morning, which was intercepted.
Diplomatically, a joint statement by the foreign ministers of 26 countries: including Australia, Japan, France, and the United Kingdom, called for an immediate end to the war.
The ministers condemned Israel’s aid distribution system as dangerous and dehumanizing, citing the deaths of more than 800 Palestinians while attempting to access food and water. They demanded full humanitarian access, rejected proposals to forcibly relocate civilians into so-called humanitarian cities, and warned against any unilateral demographic or territorial changes in the occupied Palestinian territories. The statement also described Israel’s settlement expansion, particularly the E1 plan near East Jerusalem, as a serious threat to the viability of a two-state solution. The ministers likewise condemned Hamas for the continued detention of Israeli hostages and demanded their immediate release.
And Israeli Prime Minister Benjamin Netanyahu’s government has been plunged into crisis over the past week, as key ultra-Orthodox coalition partners (Degel HaTorah, Agudat Yisrael, and Shas) withdrew support in protest against proposed changes to military service exemptions for Haredi men.
Their departure stripped the governing coalition of its parliamentary majority, triggering political instability and raising the prospect of early elections.
Although Shas has suggested it may still back select legislation, the coalition’s collapse underscores growing public resentment over the longstanding draft exemptions, which roughly 85 percent of Israelis now oppose.
Domestically, Netanyahu faces mounting political opposition as his enemies see his weakened position, while internationally, his government has come under pressure from the U.S. over recent Israeli military operations in Syria in support of the Druze forces aligned with Sheikh Hikmat Al Hijri.
With the Knesset about to begin a recess on 27 July, Netanyahu faces a narrow window to salvage his leadership and reassemble a viable governing bloc when the legislature sits again in October.
As the war approaches its second year, Israel’s campaign in Gaza is increasingly defined by dwindling manpower, intensifying negative international scrutiny, and a humanitarian emergency that shows no signs of abating.
Known Unknowns: The impact of U.S. tariffs on international trade & especially the U.S. bond market. Whether the U.S. and Iran will restart nuke talks. Relations of new Syrian government with Israel, international community & ability to maintain stability inside Syria. China’s triggers for military action against Taiwan. U.S. responses to China’s ‘grey zone’ warfare in the South China Sea and north Asia. Ukraine’s ability to withstand Russia’s war of attrition. The potential for the jihadist insurgency in Africa’s Sahel region to consolidate and spread.
Trump Administration
Move fast and break things
Criminal referral deepens rift between Trump allies and the Federal Reserve
Representative Anna Paulina Luna, a Republican from Florida and a close ally of President Donald Trump, has referred Federal Reserve Chair Jerome Powell to the Department of Justice for potential criminal prosecution on charges of perjury.
Luna contends that Powell made "materially false statements" under oath during testimony before the Senate Banking, Housing, and Urban Affairs Committee on 25 June 2025.
The accusations pertain to Powell's remarks regarding the Federal Reserve’s $2.5 billion renovation of the Eccles Building, the central bank’s headquarters in Washington, D.C. Luna maintains that Powell misrepresented critical details about the scope and justification of the project. The renovation has attracted the attention of Trump loyalists, who see it as a means to attack Powell, who Trump has threatened to sack numerous times (though he lacks the constitutional power to do so).
The criminal referral adds fuel to mounting pressure on the Federal Reserve by Trump administration figures and their congressional allies.
U.S. Treasury Secretary Scott Bessent, in an interview with CNBC on the same day, called for a comprehensive internal audit of the Fed’s activities outside its monetary policy remit. Bessent claimed that the institution has strayed into areas beyond its traditional authority, thereby jeopardizing its autonomy in setting interest rates and managing inflation. “The Fed’s conduct of monetary policy is a jewel box,” he said, arguing it must be protected from institutional overreach. Although Bessent did not weigh in on the legal specifics of the Eccles Building case, he questioned the judgment of committing to a multibillion-dollar construction effort while the central bank is reporting annual operating losses exceeding $100 billion.
Powell, originally appointed by President Trump and later reappointed by President Joe Biden, has come under growing pressure from Republican lawmakers who argue that he has failed to maintain the Federal Reserve’s focus on inflation control and employment. The controversy over the Eccles Building renovation, now enmeshed in claims of false testimony, has become a lightning rod for calls demanding tighter oversight of the central bank by the government.
Powell, whose term expires in early 2026, has not issued a public response to the referral.
The Department of Justice has not indicated whether it will pursue the matter.
The Middle East
Birth pangs in the birthplace of civilization
U.S., Iraq, & Türkiye deepening tensions amid drone attacks & pipeline rift
U.S. Secretary of State Marco Rubio is expected to hold a phone call with Iraqi Prime Minister Mohammed Shia' al-Sudani today amid rising tensions in northern Iraq, where a spate of drone strikes has recently targeted oil infrastructure operated by both U.S. and non-U.S. firms in the Kurdistan Region.
The attacks have triggered concern in Washington over the security of energy assets and the growing rift between Erbil and Baghdad, which risks conflict (last seen in October 2017 when Baghdad’s forces ejected Kurdish Peshmerga from Kirkuk following a Kurdish independence referendum).
The conversation will touch on unresolved political and financial disputes between Baghdad and the semi-autonomous Kurdistan Regional Government in Erbil, including the impasse over public sector salaries and federal budget allocations.
In an effort to ease that deadlock, the Kurdistan Region’s finance ministry announced this morning that it had deposited 120 billion Iraqi dinars in non-oil revenue into the Iraqi finance ministry’s account at the Central Bank of Iraq’s Erbil branch. In return, Baghdad has disbursed May salaries for Kurdish civil servants.
The move is aimed at breaking a months-long stalemate over revenue-sharing mechanisms and may lay the groundwork for resuming frozen budget transfers to the region.
Further complicating matters is Türkiye’s increasingly assertive posture. President Recep Tayyip Erdoğan has signed a decree initiating the termination of the longstanding Iraq–Türkiye Crude Oil Pipeline Agreement, signaling a significant reordering of regional energy alignments.
The decision, published in Türkiye’s Official Gazette yesterday, specifies that the original 1973 treaty and its annexes will be annulled on 27 July 2026.
The pipeline, which carries crude oil from Kirkuk and other northern Iraqi fields to the port of Ceyhan on the Mediterranean, has historically served as a strategic artery for Iraq’s energy exports. The agreement, most recently renewed in 2010, has underpinned decades of cross-border energy cooperation.
Erdoğan’s move follows a March 2023 ruling by a Paris-based arbitration court that found Türkiye in breach of the agreement for allowing Erbil to export oil independently beginning in 2014. Since the ruling, pipeline operations have remained suspended, with negotiations between Baghdad and Erbil over resuming exports yielding little progress.
The decision to terminate the agreement is widely viewed not only as retaliation for the legal setback, but also as a recalibration of Türkiye’s broader strategic role in Iraq’s energy sector, which has come under intensified scrutiny.
For the U.S., the timing is delicate. The continued halt of oil exports from the Kurdistan Region, combined with the collapse of the pipeline agreement, undermines U.S. leverage in a region where its influence is already challenged by Iran, Russia, China, and an increasingly assertive Türkiye. Iraq will hold national elections in November this year.
Cold War 2.0
It’s now the U.S. vs China, everyone else needs to pick a side
U.S.–Chinese dual national pleads guilty to stealing military sensor secrets
Chenguang Gong, a 59-year-old dual U.S.–Chinese citizen from San Jose, has pleaded guilty to stealing trade secrets linked to advanced missile detection systems developed for the U.S. military. Employed briefly in early 2023 as a circuit design manager at a defense contractor in Southern California, Gong transferred more than 3,600 files, many labeled “Export Controlled” or “For Official Use Only”, to personal storage devices over a four-week period.
The stolen materials included blueprints for infrared sensors capable of detecting nuclear, hypersonic, and ballistic missile launches, as well as technologies designed to help U.S. aircraft evade heat-seeking threats. Among the files were also designs for next-generation sensors engineered to identify low-observable targets and endure deployment in space, with an estimated economic value exceeding $3.5 million.
Gong had previously applied to several “Talent Programs” sponsored by the Chinese government, which are intended to recruit individuals with specialized scientific expertise to bolster military and technological advancement. Between 2014 and 2022, he submitted proposals focused on analog-to-digital converters and night vision sensor systems, frequently referencing proprietary technologies developed by his past employers.
Gong is currently free on a $1.75 million bond and faces a maximum sentence of ten years in federal prison. His sentencing hearing is scheduled for 29 September. The case is being investigated by the Federal Bureau of Investigation and multiple federal security agencies.
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What happened today:
1456 - Siege of Belgrade: Hungarian forces repel Ottoman assault, halting westward expansion. 1793 - Alexander Mackenzie reaches the Pacific Ocean, first transcontinental crossing of North America north of Mexico. 1933 - Wiley Post becomes the first person to fly solo around the world. 1946 - King David Hotel bombing in Jerusalem by Irgun kills 91, escalating tensions in British Mandate Palestine. 1951 - De facto peace begins in the Korean War as armistice negotiations open at Kaesong. 1972 - Viceroy of Uganda expelled; Idi Amin begins mass expulsion of Asians. 2011 - Oslo bombing and Utøya massacre in Norway by Anders Behring Breivik kills 77. 2022 - Russian missiles strike Odesa port hours after Ukraine grain export deal signed in Türkiye.
