FirstFT: Israel’s war cabinet readies for invasion

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Israel’s new unity government last night pledged to change the “strategic reality” of the Hamas-controlled Gaza Strip, as it tightened its siege of the enclave ahead of an expected ground offensive.

Prime Minister Benjamin Netanyahu formed the emergency war cabinet and unity government earlier in the day with Benny Gantz, head of the centre-right opposition National Unity party, in response to Saturday’s deadly attack by Hamas.

“The nation of Israel is united, and now the leadership is united. We’ve put aside all other considerations because the fate of our country hangs in the balance,” Netanyahu said.

The war cabinet’s three principals are Netanyahu, Gantz and defence minister Yoav Gallant from the prime minister’s Likud party. The deal is a bid to bypass the rift in Israeli politics ahead of what threatens to be a deeply challenging and prolonged military campaign and suggests deeply divisive policies like those to reform the judiciary will be put on hold.

The agreement came as the siege brought down Gaza’s power supply after the enclave’s only power station ran out of fuel. Israel has cut off electricity, water and fuel to the territory which is home to 2.3mn people. Read the latest on the conflict.

Military briefing: A ground offensive to root out Hamas militants in Gaza will test the Israel Defense Forces’ urban warfare skills.
Human toll: Dozens of bodies — including those of women and children — line the streets of Kibbutz Be’eri, a farming community attacked by Hamas gunmen.
Gaza Strip: Living conditions in the coastal enclave have been described as “catastrophic” by the UN after five days of bombing by Israeli warplanes.
Hizbollah: Intensifying clashes on Israel’s border with Lebanon have raised fears that the Iran-backed group could join the war.
Rachman Review podcast: Our chief foreign affairs commentator talks to the historian and writer Lawrence Freedman about what led to the catastrophic events of the past week in Israel and what options the Netanyahu government has.

Here’s what else I’m keeping tabs on today:

Gaza war: US secretary of state Antony Blinken arrives in Israel today for talks with the new government. Follow developments on our live blog.
Economic data: The US will release its consumer price index for September. Economists expect the annual rate of inflation to fall to 3.6 per cent from 3.7 per cent in August. Nicholas Megaw previews the release.
Company results: US carrier Delta Air Lines, pharmacy chain Walgreens Boots Alliance, and fast-food chain Domino’s Pizza all report their latest quarterly earnings before the opening bell.
Nasa mission to Psyche: The US space agency launches an 8-year expedition to discover the secret life of the metal-rich asteroid Psyche, named after the Greek goddess of the soul.

Five more top stories

1. Steve Scalise narrowly won the Republican nomination to serve as the next US House Speaker. Scalise, the majority leader, defeated Jim Jordan, who chairs the judiciary committee, in a vote among House Republicans on Wednesday. “We have a lot of work to do,” he said in a short speech after his victory was announced. But he still faces a vote by the full House, which Republicans control by a slim margin.

2. Goldman Sachs has sued the government of Malaysia over disputed payments that the Wall Street bank argued were not being recognised as part of its 2020 settlement over the 1MDB money-laundering scandal. The complaint marks the latest chapter in Goldman’s role in the multibillion-dollar embezzlement scheme involving the Malaysian state investment fund.

3. Microsoft has received a demand for $28.9bn in back taxes from the US Internal Revenue Service. The agency has been investigating Microsoft’s use of transfer pricing, a practice that critics claim is used by companies to unfairly shift profits to low-tax countries to minimise their liabilities. Here’s more on one of the biggest corporate tax disputes.

4. Federal Reserve officials agreed in September that the US central bank should “proceed carefully” on interest rate decisions, according to minutes from their latest meeting. Members of the Federal Open Market Committee said there were “two-sided” risks in pursuing its 2 per cent inflation target after leaving rates unchanged. Read more on the Fed’s latest minutes.

5. China’s HongShan is plotting to expand globally after splitting from Sequoia Capital earlier this year due to political pressure. With the domestic economy slowing down, the plans could see the venture capital group investing in foreign companies targeting the Chinese market or those founded by overseas Chinese entrepreneurs. Read the full story.

News in-depth

ExxonMobil chief executive Darren Woods this week placed a $60bn bet on his contention that oil and gas will remain central to the world’s energy mix. The oil company yesterday agreed to buy Pioneer Natural Resources, making it the dominant producer in the Permian Basin of Texas and New Mexico. Here’s what the deal will mean for the oil major’s business.

We’re also reading and listening to . . .

Biden’s choice on Israel: It will be tempting to offer Israel unconditional support, but Joe Biden’s overriding goal should be to break the cycle of escalating violence, writes Edward Luce.
FT Investigation: Customs records reviewed by the Financial Times supports longstanding allegations that Adani Group has been inflating fuel costs for millions of Indians.
Luxury sector: Slowing sales at LVMH signal a retreat among aspirational buyers in Europe and the US, as the sector bids farewell to the “roaring” pandemic years.

Chart of the day

The EU’s debt pile is set to reach €900bn by the end of 2026 as the bloc borrows to fund coronavirus recovery programmes and support for Ukraine, but investors are finding its bonds less attractive than some of those of individual European countries.

Bar chart of debt outstanding (€mn) showing EU becomes major issuer

Take a break from the news

The Rolling Stones’ new album Hackney Diamonds represents a risk. It requires us to believe, contrary to evidence, that the Mick Jagger-Keith Richards songwriting partnership is no longer semi-defunct. But the record shows fresh life for the band in its old age, writes FT music critic Ludovic Hunter-Tilney.