A bill introduced by a far-right party calling on the government to annex the West Bank passed with a large majority in Israel's legislature on July 23. EPA
A bill introduced by a far-right party calling on the government to annex the West Bank passed with a large majority in Israel's legislature on July 23. EPA
A bill introduced by a far-right party calling on the government to annex the West Bank passed with a large majority in Israel's legislature on July 23. EPA
A bill introduced by a far-right party calling on the government to annex the West Bank passed with a large majority in Israel's legislature on July 23. EPA


Israel's Knesset vote on the West Bank is an alarming development


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July 25, 2025

To gauge how noxious Israeli politics has become, one need only consider what the past month has been like for Ayman Odeh, the Arab leader of a coalition of leftist parties. The Knesset, Israel’s legislature, moved to impeach Mr Odeh for a tweet earlier in the year in which he said he was “happy for the release of [Israeli] hostages and [Palestinian] prisoners” – the inclusion of both groups in the same sentence apparently too much for his detractors. Parliamentarians voted overwhelmingly – 73 to 14 – for Mr Odeh’s expulsion, but a boycott of the session by Ultra-Orthodox parties over an unrelated issue prevented the 90-vote threshold required from being met.

Then, last weekend, Mr Odeh was attacked on his way to an anti-war protest in central Israel. His assailants cracked the windshield of his car while he was inside, and chanted “Death to Arabs”. Police, Mr Odeh says, stood by and did nothing. The silence from his fellow parliamentarians has been deafening.

Yet it is little surprise, considering the anti-Arab mood in the Knesset appears to be at a fever pitch. On Wednesday, the legislature voted in favour of a non-binding motion to annex the West Bank, a Palestinian territory whose long-standing occupation by Israeli security forces is illegal under international law.

The West Bank is a critical part of historic Palestine and any future Palestinian state. Again, the vote was overwhelming, with 71 for to 13 against. The Knesset resolution called on the government “to apply Israeli sovereignty, law, judgement and administration” over large areas where illegal Jewish settlements are present, and noted the entire territory is “an inseparable part of the land of Israel”, to which Israel has a “natural, historical and legal right”.

The anti-Arab mood appears to be at a fever pitch

Ten Arab and Islamic countries, along with the Arab League and the Organisation of Islamic Co-operation, released a statement on Thursday roundly condemning the Knesset resolution. The statement, of which the UAE, Saudi Arabia and Egypt were signatories, called the resolution “a flagrant and unacceptable violation of international law”, adding it will “only fuel the growing tension in the region, exacerbated by the Israeli aggression on the Gaza Strip and the resulting humanitarian catastrophe”.

The resolution has been viewed by Israeli politicians as a largely symbolic measure, as it does not carry the force of law. But it is deeply problematic, both as an antagonistic barb against the dignity and rights of Palestinians and as a barometer of public sentiment. While it is true that the statements and votes of Members of the Knesset belie more nuanced public opinion, the picture is still disturbing. A poll conducted by The Jerusalem Post in February found that 35 per cent of Israelis favour a “Jewish-only state, from the river to the sea”. This would, in effect, include the prospect of annexation of the West Bank and the end of hopes for a Palestinian state.

The pro-annexation movement is about much more than territorial claims. It inherently denies Palestinians the right to exist as a national community – it is no coincidence the most prominent supporters of annexing the West Bank apply their logic to Gaza, too. The fact that it has become an ideological staple in the Knesset makes its success as eventual national policy much likelier, and that ought to alarm everyone in the region, as well as Israel’s allies in the West.

A generalised acceptance of lawlessness and oppression among most of a country’s politicians can have concrete consequences. Even if the annexation resolution is symbolic, the violent assault against Mr Odeh was very real.

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Will the pound fall to parity with the dollar?

The idea of pound parity now seems less far-fetched as the risk grows that Britain may split away from the European Union without a deal.

Rupert Harrison, a fund manager at BlackRock, sees the risk of it falling to trade level with the dollar on a no-deal Brexit. The view echoes Morgan Stanley’s recent forecast that the currency can plunge toward $1 (Dh3.67) on such an outcome. That isn’t the majority view yet – a Bloomberg survey this month estimated the pound will slide to $1.10 should the UK exit the bloc without an agreement.

New Prime Minister Boris Johnson has repeatedly said that Britain will leave the EU on the October 31 deadline with or without an agreement, fuelling concern the nation is headed for a disorderly departure and fanning pessimism toward the pound. Sterling has fallen more than 7 per cent in the past three months, the worst performance among major developed-market currencies.

“The pound is at a much lower level now but I still think a no-deal exit would lead to significant volatility and we could be testing parity on a really bad outcome,” said Mr Harrison, who manages more than $10 billion in assets at BlackRock. “We will see this game of chicken continue through August and that’s likely negative for sterling,” he said about the deadlocked Brexit talks.

The pound fell 0.8 per cent to $1.2033 on Friday, its weakest closing level since the 1980s, after a report on the second quarter showed the UK economy shrank for the first time in six years. The data means it is likely the Bank of England will cut interest rates, according to Mizuho Bank.

The BOE said in November that the currency could fall even below $1 in an analysis on possible worst-case Brexit scenarios. Options-based calculations showed around a 6.4 per cent chance of pound-dollar parity in the next one year, markedly higher than 0.2 per cent in early March when prospects of a no-deal outcome were seemingly off the table.

Bloomberg

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Updated: July 25, 2025, 5:47 AM