FT : The region at the heart of Germany’s economic stagnation

The region at the heart of Germany’s economic stagnation
Facing higher energy costs and the transition to electric vehicles, once prosperous industrial districts are struggling to adapt

Bernd Hofmann founded his engineering firm 56 years ago. He’s seen many ups and downs since then — the oil price shock of the 1970s, the upheaval of German reunification in 1990, the global financial crisis of 2008. But nothing like this.

“It’s one of the worst phases I’ve ever experienced,” the 80-year-old says.

Hofmann’s company Femeg, which makes water meters, safety valves and precision parts for the car and chemical industries, is the victim of a downturn that is raising serious doubts about the future of the country’s much-vaunted, export-led business model.

Germany’s economy is stuck in a rut. Its exports and manufacturing output are in decline, inflation is suppressing consumer demand and the construction industry is reeling from high interest rates.

Business leaders are sounding the alarm. Virtually “every European economy is growing, apart from Germany’s”, says Rainer Dulger, head of the BDA, the country’s main employers’ organisation. “That’s a clear signal we have to act.”

Indeed, the IMF predicted this month that Germany would be the worst-performing major economy this year, with GDP set to shrink by 0.5 per cent. It cited slower demand from its trading partners and weakness in sectors that are sensitive to high interest rates. In contrast, the US economy is forecast to grow by 2.1 per cent and France’s by 1.0 per cent.

Experts are clear on why Germany is facing such a uniquely grim outlook. It took a much bigger hit from last year’s surge in energy prices than many other large economies, partly because it has so many big gas-guzzling manufacturing firms. The ECB tightening monetary policy to tackle inflation has also taken its toll, as has a sluggish recovery in trade with China, Berlin’s biggest trading partner.

Robert Habeck, economy minister, admitted earlier this month that Germany was emerging from the crisis “more slowly than we expected”.

But some of the challenges the country faces are more long-term. Companies increasingly complain about the rising cost of doing business in Germany — the burden of climate policies, high taxes and expensive energy. They point to the dire shortage of skilled workers and excessive bureaucracy.

“We’re talking to the government about artificial intelligence and in their offices they still all have fax machines,” says Dulger. “It just doesn’t fit.”

Meanwhile the rise of electric vehicles — and China’s advances in the EV market in Europe — threaten an industry that was long a pillar of Germany’s economic success.

Nowhere is this process more evident than in the district of southwestern Germany where Femeg and a clutch of other medium-sized engineering companies are based. A recent survey by the think-tank IW Consult identified Donnersbergkreis, named after the eponymous mountain that dominates the surrounding landscape, as one of the most challenged regions in Germany.

The researchers looked at the two big transformations currently under way in the country: the shift to a carbon neutral economy, which will put pressure on energy-intensive and high carbon-emission industries such as steelmaking and chemicals; and the switch to electric cars.

They found that six of Germany’s 400 districts and towns would be particularly hit by these processes, and Donnersbergkreis was one of them.

For Bernd Hofmann, a reckoning is coming. “[The government] always told people here ‘we’re the best, the biggest, the greatest, and the sun will never set,” he says. “For years, the only way was up. And we fell into a kind of lethargy. [ . . .] The next few years are going to be tough for all manufacturers.”

‘All the lights will go out here.’
If there is a poster child for Donnersbergkreis’ economic woes, it is BorgWarner, a US-based car parts maker currently in the throes of a massive restructuring.

The company’s factory in Kirchheimbolanden, the regional centre of Donnersbergkreis, specialises in turbochargers, small turbines that force more air into a car engine’s combustion chamber to produce more power. It is the town’s biggest employer.


The company was long a market leader in the device. But demand has been declining for years, says Andreas Denne, head of BorgWarner Turbo Systems. The first blow was the Volkswagen emissions scandal of 2015, which, he says, caused a “collapse in the diesel market”. Then came the “whole discussion around electric cars”.

Initially BorgWarner hoped its prized gizmos still had a future; they could, after all, be deployed in so-called “mild hybrids”, which use a traditional combustion engine alongside a 48-volt battery. They also hoped conventional petrol and diesel engines might hold up for years to come.

The EU dashed those hopes with their decision to ban new vehicles with petrol and diesel engines by 2035. BorgWarner has since announced plans to cut the workforce at Kirchheimbolanden from about 1,600 in 2021 to 650 by 2028.

“For years we were used to growth, growth, growth,” says Denne. “From here we sent turbochargers out into the world. But times have changed, and anyone who has anything to do with combustion engines is affected.”

So are all the local companies that supply BorgWarner. Our “historical fixation on turbochargers” is a “major challenge,” says Rainer Guth, head of the Donnersbergkreis district council. Take Femeg: providing parts for the devices made up 80 per cent of its automotive business.

Other nearby companies, too, are oriented to the auto industry. One is Gienanth, a big iron producer established in 1735 in Eisenberg, the biggest town in Donnersbergkreis, which found early fame a century ago by making parts for Bugatti racing cars.

It now produces components for locomotive and ship engines, and for the emergency generators used in hospitals or data centres. It also makes brake callipers for commercial vehicles and crankshaft bearing caps for BMW engines — a side of the business that will inevitably be affected by the phaseout of combustion engines.

Gienanth says it has spent the past few years “collaborating with customers on product solutions for EVs”. It is also “expanding and diversifying its product portfolio”, for example by working with the Berlin start-up STUR on making cast iron saucepans.

Donnersbergkreis is not a grimy relic of Germany’s fossil-fuel past. The region is plastered with wind turbines and solar panels. It boasts a Japanese-owned factory that makes surveillance cameras. Just beyond its borders lies the city of Kaiserslautern, where Automotive Cells Co, a joint venture between Mercedes-Benz, Stellantis and TotalEnergies, is building a gigafactory to produce lithium-ion battery cells for EVs.

But while some parts of the region are reviving, others are in decline. An hour’s drive away from Donnersbergkreis lies Saarlouis, home to a big Ford factory with a near-60 year history — and a bleak future.

Ford said last year it would stop building cars at the plant and construct its next generation EVs in the Spanish city of Valencia instead. This month it announced that talks to sell the factory to a big unnamed investor had failed. More than 3,000 jobs are at risk.

The slow demise of petrol-powered cars is one issue facing Donnersbergkreis; the huge surge in energy costs another. Reiner Bauer, the district’s head of business development, says many of the region’s energy-intensive companies were long seen as “innovative, profitable, with model training programmes and excellent management”. But the energy crisis changed all that.

“When you’re facing spiralling energy costs, you’re just no longer competitive internationally,” he says.

He cites the example of Heger, an iron foundry near Kaiserslautern making parts for wind turbines. The company declared insolvency in September last year: it said it was paying €700,000 a month for electricity, up from €100,000 before the price surge, and could no longer pass that increase on to customers. “The energy prices are killing us,” Johannes Heger, managing director, told local media at the time.


Another company paying a lot more for energy these days is BASF, the world’s biggest chemicals group, which is a 40-minute drive away from Donnersbergkreis in Ludwigshafen, on the Rhine. It has been forced to shut down several of its most energy-intensive production lines, including for ammonia, cyclohexanol, which is an ingredient of soaps and plastics, and TDI, used to make foam mattresses. Some 700 jobs will be affected.

The government is fatalistic about such developments. “We only produced ammonia here because we had access to cheap Russian gas — and now that’s gone,” says one senior official. “I don’t think Germany will be manufacturing basic chemicals, plastics and ammonia in 2035. Maybe it just makes more sense to produce them in Saudi Arabia, where energy is cheaper.”

But that’s not how it is seen in Donnersbergkreis. The district is home to hundreds of commuting BASF workers, who have watched in alarm as the company builds a new €10bn petrochemicals plant in China and downsizes in Europe.

“If such a company were to shift operations abroad because of high energy costs or a shortage of skilled workers in Germany, all the lights will go out here,” says Guth.

Building problems
It’s not just energy-intensive industries that are suffering: the slump in Germany’s construction sector is also being felt in Donnersbergkreis. “The situation is dramatic,” says Frank Dexheimer, head of Frambach, a building company in Kirchheimbolanden.

Construction firms across Germany have been hammered by high interest rates and a big increase in the cost of building materials. A survey by the Ifo Institute, a think-tank, found 21.4 per cent of residential builders were affected by project cancellations in September, the highest level since records began in 1991.

Dexheimer’s firm has been cushioned by the diversity of its services. It is involved in civil engineering projects and residential building renovations, where contracts are still to be had. But all companies focused solely on new construction are suffering, he says.


“Next year is going to be cruel for those guys,” he adds. “We’ll see lots of insolvencies.”

The real victims of the crisis are young families, Dexheimer says. The pricetag for a one-family house with a plot of land in Donnersbergkreis was €500,000 a couple of years ago, he says; now it is €750,000, the result of higher building costs. Meanwhile, mortgage rates have risen from about 1 to 4–5 per cent.

“Young families can’t get a home loan any more — they’re just too expensive,” he says.

Evidence of the slump is easy to find in Kirchheimbolanden. The town recently tried to market about 40 building plots for new houses, but only managed to sell three of them. “The site is lying idle,” says Dexheimer. “Demand has collapsed.”

Donnersbergkreis is also prey to one of Germany’s most abiding problems: a chronic shortage of skilled labour. The government has said that an ageing population means Germany could lack 7mn workers by 2035. It has passed laws to make it easier for foreigners to take up a job in the country. But business groups say much more needs to be done.

Hubert Hack, owner of a small iron foundry in Eisenberg that makes parts for the auto and mechanical engineering industries, says that finding workers has become his “biggest challenge” — even larger than high energy bills. He has been trying to fill three vacancies at his company for months.

“Young people seem more concerned about their work-life balance than with working hard,” he says.

Hack says he has resorted to hiring pensioners. “I have five of them that work here part-time, as needed,” the 64-year-old says. “They’re more reliable than the young.”

His story is typical. An Ifo survey in August found 43.1 per cent of German companies lack skilled workers. Habeck admitted earlier this month that the issue was one of the “biggest structural challenges we have to overcome.”

‘We need to get our mojo back’
But Habeck also sees reasons to be hopeful. Speaking to reporters earlier this month, he said the German economy should return to growth next year. Inflation is declining, the labour market is robust and real incomes are rising, he said, which could help to drag domestic demand out of its slump.

That optimism is shared by Joachim Nagel, head of Germany’s central bank. Speaking to business and political leaders in Berlin last week he dismissed claims Germany was the “sick man of Europe” or a country in the grip of “deindustrialisation.”

German companies had weathered the gas crisis well, he said, investing heavily in efficiency measures to cut their energy use. They had shown themselves to be “highly adaptable”, he said, praising the ingenuity of the country’s “hidden champions” and the strength of the Mittelstand, the small and medium-sized companies that form the backbone of the German economy.


Their resilience had left him “generally optimistic,” he said. “‘Made in Germany’ will, in my view, continue to be a coveted and successful trademark.”

Longer-term, Germany is also making great strides in building up new industries. Lured by massive subsidies, Intel and TSMC are constructing semiconductor plants in Magdeburg and Dresden, representing a shift in Germany’s industrial geography from the south to the east. Battery factories for electric vehicles are springing up everywhere and old-established companies such as Thyssenkrupp are investing billions to decarbonise their production.

Habeck says his ministry is overseeing an €80bn pipeline of planned investments by foreign firms. “Germany as a location for business is strong if it wants to be,” he said last month.

BorgWarner, the automotive turbine maker, is trying hard to reinvent itself. It has developed an “eBooster”, an electrically driven compressor that can be used in hybrids. Denne describes it as a “bridge to the future” for the Kirchheimbolanden site.

The company is also looking to use its turbocharger technology for decentralised power generation. Its Kirchheimbolanden tech centre has developed an “e-fan” — an electrically-driven fan for cooling the components of battery-driven cars. But that will be manufactured at BorgWarner’s factories in Portugal and the US, not in Donnersbergkreis.

Hans-Joachim Retzlaff, head of human resources at the tech centre, says business opportunities for the German auto industry are set to shrink.

“If you look at how Germany is turning into an importer of electric cars, and that we should reckon with lots of cheap Chinese EVs, it’s clear our share of the global market will dwindle,” he says. “And our business will become correspondingly smaller.”

Femeg is also trying to move with the times, away from the automotive sector and into arms manufacturing, an area that has boomed in Germany since the start of Russia’s war in Ukraine.

It owns a foundry in south-western Germany that makes components for Leopold tank engines and is also shifting to producing munition and parts for heavy military equipment.

“We’re not just sitting here moaning, you have to keep moving,” says Bernd Hofmann. But he thinks the downturn will deepen unless the government takes more decisive action, in particular on the question of energy costs.

“We have to make this country a more attractive place to invest in again,” he says. “We need a new spirit of optimism. We need to get our mojo back.”

WSJ : Sam Altman on the Future of AI—and How to Navigate the Tricky Path Forward

Sam Altman on the Future of AI—and How to Navigate the Tricky Path Forward
Open AI’s Altman and Mira Murati say artificial intelligence will be ‘the best tool humanity has yet created,’ but the key will be to manage the transition

In the fast-moving world of artificial intelligence, talk about the future tends to focus on something referred to as “artificial general intelligence”—the stage at which AI will be capable of doing any job a human can do, only better.

Perhaps no company is in a better position to talk about the potential benefits and risks of this so-called AGI than OpenAI (49%-owned by Microsoft MSFT 0.81%increase; green up pointing triangle), the creators of the popular chatbot ChatGPT. At The Wall Street Journal’s annual Tech Live conference last week, the Journal’s senior personal-technology columnist Joanna Stern spoke with OpenAI’s Chief Executive Sam Altman and Chief Technology Officer Mira Murati. Edited excerpts of their conversation follow.

SAM ALTMAN: The two things that will matter most over the next decade or few decades to improving the human condition are abundant and inexpensive intelligence: the more powerful, the more general, the smarter the better. I think that is AGI. And then, abundant and cheap energy. If we can get these two things done in the world, then it’s almost difficult to imagine how much else we could do. We’re big believers that you give people better tools, and they do things that astonish you. And I think AGI will be the best tool humanity has yet created.

With it, we will be able to solve all sorts of problems. We’ll be able to express ourselves in new, creative ways. We’ll make just incredible things for each other, for ourselves, for the world, for this unfolding human story. And it’s new, and anything new comes with change, and change is not always all easy.

WSJ: When will it be here, and how will we know it’s here?

MIRA MURATI: Probably in the next decade, but it’s a bit tricky. Often we talk about intelligence, and how intelligent this is, or whether it’s conscious, and sentient, and all of these terms—and they’re not quite right. Because they sort of define our own intelligence, and we’re building something slightly different.

WSJ: Some people have not been thrilled about some of the data you guys have used to train some of your models. Hollywood, publishers. As you work toward these next models, what are the conversations you’re having around the data?

ALTMAN: One, we obviously only want to use data that people are excited about us using.

But one of the challenges has been different kinds of data-owners have very different pictures. So we’re just experimenting with a lot of things. We’re doing partnerships of different shapes, and we think like with any new field, we’ll find something that sort of just becomes a new standard.

Also, as these models get smarter and more capable, we will need less training data. I think the conversation about data, and the shape of all of this, because of the technological progress we’re making, is about to shift.

WSJ: Well, publishers, like mine, they want money for that data. Is the future of this entire race about who can pay the most for the best data?

ALTMAN: No. That was sort of the point I was trying to make. The thing that people really like about a GPT model is not fundamentally that it knows particular knowledge. There are better ways to find that. It’s that it has this larval reasoning capacity, and that’s going to get better and better. That’s really what this is going to be about.

AI relations
WSJ: Is there a future where we have deep relationships with this type of bot?

MURATI: It’s going to be a significant relationship. Because we’re building the systems that are going to be everywhere: in your home, in your educational environment, in your work environment, and maybe when you’re having fun.

That’s why it’s actually so important to get it right. And we have to be so careful about how we design this interaction so that ultimately it’s elevating, fun, makes productivity better, and it enhances creativity.

We also want to make sure that, on the product side, we feel in control of these systems, in the sense that we can steer them to do the things that we want them to do and the output is reliable. As it has more information about your preferences, the things you like, the things you do, and as the capabilities of the models increase, it will become more personalized.

And it’s not just one system. You can have many such systems personalized for specific domains and tasks.

WSJ: That’s a big responsibility, though. And you will be sort of in control of people’s friends, maybe it gets to being people’s lovers. How do you think about that control?

ALTMAN: We’re not going to be the only player here. There’s going to be many people. So we get to put our “nudge” on the trajectory of this technological development. But: a) We really think that the decisions belong to humanity, society as a whole. And: b) We’ll be one of many actors building sophisticated systems here. There will be competing products that offer different things, there will be different kind of societal embraces and pushbacks, there will be regulatory stuff.

I personally have deep misgivings about this vision of the future where everyone is super close to AI friends, more so than human friends. I personally don’t want that. I accept that other people are going to want that, and some people are going to build that, and if that’s what the world wants, and what we decide makes sense, we’re going to get that.

The ‘fear’ issue
WSJ: We’ve got simple chatbots now. How do we go from that to this fear that is now pervading everywhere about AI?

ALTMAN: It doesn’t take much imagination to think about scenarios that deserve great caution. And, again, we all do this because we’re so excited about the tremendous upside and the incredibly positive impact. And it would be a moral failing not to pursue that for humanity. But we’ve got to address—and this happens with many other technologies—the downsides that come along with this.

It means that you are thoughtful about the risks. You try to measure what the capabilities are, and you try to build your own technology in a way that mitigates those risks. And then when you say like, “Hey, here’s a new safety technique,” you make that available to others.

WSJ: What are some of those?

MURATI: It’s not a single fix. You usually have to intervene everywhere, from the data to the model to the tools in the product, and, of course, policy. And then thinking about the entire regulatory and societal infrastructure that can keep up with these technologies that we’re building.

So, when you think about what are sort of the concrete safety measures along the way, No. 1 is actually rolling out the technology and slowly making contact with reality; understanding how it affects certain use-cases and industries; and actually dealing with the implications of that. Whether it’s regulatory, copyright, whatever the impact is, actually absorbing that, and dealing with that, and moving on to more and more capabilities. I don’t think that building the technology in a lab, in a vacuum—without contact with the real world and with the friction that you see with reality—is a good way to actually deploy it safely.

ALTMAN: The point Mira was making is really important. It’s very difficult to make a technology “safe” in the lab. Society uses things in different ways, and adapts in different ways. And I think the more we deploy AI, the more AI is used in the world, the safer AI gets, and the more we kind of collectively decide, “Hey, here’s a thing that is not an acceptable risk tolerance, and this other thing that people were worried about, that’s totally OK.”

Detection tools
WSJ: Right now there’s no tool, from OpenAI at least, that I can put in an image or some of the text, and ask, “Is this AI-generated?”, correct?

MURATI: For image, we have technology that’s almost 99% reliable. But we’re still testing it, it’s early.

WSJ: Is this something you plan to release?

MURATI: Yes.

WSJ: For both images and text?

MURATI: For text, we’re trying to figure out what makes sense. For images, it’s a bit more straightforward problem. Often we will experiment, we will put out something, we will get feedback. And sometimes we’ll take it back, make it better and roll it out again.

ALTMAN: This idea of “watermarking” content is not something everybody has the same opinion about what is good and what is bad. There are a lot of people who really don’t want their generated content watermarked. Also, it’s not going to be super-robust to everything. Like, maybe you could do it for images, and maybe for longer text, maybe not for short text.

This is why we want to engage in the conversation. We are willing to follow the collective wishes of society on this point. I don’t think it’s a black-and-white issue.

Work will change
AUDIENCE QUESTION: We’re about to change the nature of work. There’s a large portion of society that’s not even in this discussion. How do we come up with some of those frameworks and voluntarily bring things about that will actually result in a better world that doesn’t leave everybody else behind?

MURATI: I completely agree with you, that it’s the ultimate technology that could really increase inequality and make things so much worse for us as human beings and civilization. Or it could be amazing, and it could bring along a lot of creativity and productivity and enhance us. Maybe a lot of people don’t want to work eight hours, or 100 hours a week. Maybe they want to work four hours a day and do a bunch of other things.

It’s certainly going to lead to a lot of disruption in the workforce.

ALTMAN: It’s a super-important question. Every technological revolution affects the job market. I’m not afraid of that at all. In fact, I think that’s good, I think that’s the way of progress. And we’ll find new and better jobs.

The things that I think we do need to confront as a society is the speed at which this is going to happen. We are going to really have to do something about this transition. It is not enough to just give people a universal basic income. People need to have agency, the ability to influence this, we need to jointly be architects of the future.

As you said, not everybody’s in these discussions, but more are every year. And by putting this out in people’s hands, getting billions of people to use ChatGPT, not only do people have the opportunity to think about what’s coming and participate in that conversation, but people use the tool to push the future forward. And that’s really important to us.

>>> US After Hours Summary: AGYS +10.2%, CR +5.6%, MEDP +5% on earnings; TBI -12

After Hours Summary: AGYS +10.2%, CR +5.6%, MEDP +5% on earnings; TBI -12.3%, HXL -7.7%, AAN -6.9% down on earnings
After Hours Gainers:
Companies trading higher in after hours in reaction to earnings/guidance: AGYS +10.2%, ASPN +9.4% (guidance), AMRX +7.4% (guidance), CR +5.6%, MATX +5.5% (guidance), HRI +5.2%, MEDP +5%, IPAR +4% (guidance), CLF +2.9%, IBTX +2%, NUE +1.4%, ARE +1.3%, BRO +1%, HSTM +0.5%, RLI +0.2%,
Companies trading higher in after hours in reaction to news: ASTI +36.4% (U.S. Dept of Energy encourages Ascent to submit full application), RDFN +14.1% (APO agree to commit up to $250 mln of financing), IFF +1.9% (mulling $3.5 bln sale of Pharma Solutions business, according to Bloomberg), MREO +1.7% (reports on recent program developments), SEE +1.1% (CEO stepping down; reiterates guidance), MSFT +0.3% (AUD$5 bln investment expanding AI in Australia)
After Hours Losers:
Companies trading lower in after hours in reaction to earnings/guidance: TBI -12.3%, HXL -7.7%, AGNC -7.6% (prelim Q3 estimates), AAN -6.9%, CDNS -3.5%, CALX -2.8%, CCK -2.6%, PKG -1.1%, ASR -0.3%
Companies trading lower in after hours in reaction to news: REXR -1.4% (files mixed shelf), IONQ -1% (Co-Founder stepping down)

FT : Benjamin Netanyahu denies splits over Gaza war strategy

Benjamin Netanyahu denies splits over Gaza war strategy
Israeli premier claims ‘unity of purpose’ with defence chiefs as questions grow over ground offensive against Hamas

Israel’s prime minister, defence minister and army chief insisted on Monday that they were working “in close and full co-operation” as signs grew of discord over the course of the war with Hamas.

Israel has been bombarding Gaza since Hamas militants carried out the deadliest ever attack on the country on October 7. But despite repeated hints from ministers that a ground operation in the enclave was imminent, no such operation has begun 17 days after the start of the war.

In a bid to counteract reports of disputes over invasion plans between prime minister Benjamin Netanyahu, his defence minister Yoav Gallant and the chief of staff Herzi Halevi, the three men’s offices said there was “complete and mutual trust and a clear unity of purpose” between them.

But despite the declarations of unity, there have been indications of dissent within Netanyahu’s rightwing coalition over the conduct of the war. His far-right ally, national security minister Itamar Ben-Gvir, on Monday demanded the war cabinet be expanded, accusing Netanyahu and its other members of misreading Hamas in the run-up to the October 7 assault.

More than 1,400 people were killed in the attack by Hamas, and more than 5,400 were injured, according to Israeli officials. The Israeli bombardment of Gaza has killed 5,087 people, and injured 15,273, according to Palestinian officials, while Israel’s siege of the impoverished enclave has exacerbated the already dire humanitarian conditions there.

Senior Israeli military officials have publicly reiterated in recent days that their forces have completed all preparations for a ground operation and are simply awaiting the order from the government.

But diplomats and people familiar with Israeli thinking said a variety of factors were holding up the ground invasion, ranging from military preparedness, to concerns about what a ground operation would mean for the 200 plus hostages held by Hamas in Gaza, and whether it would prompt Hizbollah, the Iran-backed militia in southern Lebanon, to fully enter the war.

“After so many years dealing with routine security missions inside the West Bank, the [Israel Defense Forces] need time to shake off the dust, to train, [and] to complete their equipment provisions,” said one person familiar with Israeli thinking. The occupied West Bank has experienced a surge in violence over the past 18 months, with Israeli forces conducting near nightly raids in the territory following a series of attacks by Palestinians on Israelis last year.

Government officials have said that Israel’s goal is to destroy Hamas and remove it from Gaza, which the militant group controls. But diplomats say that such an operation would be intensely complicated and involve months of combat, and that the scale of this objective was also affecting the speed of Israeli planning. “If the war is long, they need to find a way to limit Israeli casualties,” said one diplomat.

In 2006, Israel launched a rapid ground operation in Lebanon amid talk of “destroying” Hizbollah. But the month-long conflict, waged by an Israeli military ill-equipped and ill-trained after several years fighting Palestinian militants in the West Bank, ended inconclusively.

“These are also the lessons of the Lebanon war,” the person familiar with Israeli thinking said. “The performance of the IDF has to be sustained in the face of public pressure after things inevitably get difficult. It’s better to take your time.”

Officials are also weighing the threat that Hizbollah itself, much better armed and dangerous than in 2006, would enter the conflict from Lebanon once an Israeli ground incursion into Gaza begins. Any such judgment is complicated by the way the Israeli state misread Hamas’s intentions before its attacks earlier this month.

There are also concerns about whether a ground invasion would choke off any further attempts to release the hostages still in Gaza. Hamas released two US hostages last week, the first such move since the crisis began.

On Monday evening, the Red Cross said it had transported two more hostages out of Gaza. Officials hope further releases could yet be possible.

“The view of the various countries involved in negotiations including the US is that if there’s a land invasion it will be near impossible to get the hostages out. The US has conveyed this to Israel. Any escalation that happens will slow it down. Both Israel and Hamas need to stop escalating,” said a person briefed on the negotiations.

Although the US continues to back Israel’s right to defend itself and respond to the Hamas attacks, including through a ground invasion in Gaza, President Joe Biden and top officials in Washington have also been increasingly urging Netanyahu’s government to be cautious about how it carries out any operation. 

The concern from the US is that if Israel moves too quickly and aggressively, it risks broadening the conflict, increasing civilian casualties, jeopardising humanitarian relief efforts, and halting the push to secure the release of US hostages and allow other US citizens to leave Gaza.  

“We talked to the Israelis about what they’re planning. We give them our best advice. It’s important, as we said, not only what they do, but how they do it, particularly when it comes to making sure that civilians are as protected as they possibly can be in this crossfire of Hamas’s making,” Antony Blinken, US secretary of state, told CBS on Sunday. 

>>> US Close Dow -0,58% S&P -0,17% Nasdaq +0,27% Russell -0,89%

Closing Stock Market Summary
The stock market started, and ended, this session on a softer note. There was a nice rally, however, that began around mid-morning as stocks climbed and Treasury yields, which had already been moving lower, declined further. Upside moves had the S&P 500 back above its 200-day moving average (4,235) after the index slipped below the 4,200 level right out of the gate, hitting 4,189 at its low.

The rally effort coincided with an X post from hedge fund manager Bill Ackman, who said he had covered his short in bonds because "There is too much risk in the world to remain short bonds at current long-term rates." The 10-yr note yield moved from 4.97% to as low as 4.84% following his remark and the S&P 500 hit an intraday high of 4,255.

The turnaround effort for stocks, however, faded in the afternoon session. The S&P 500 closed below its 200-day moving average, sporting a 0.2% decline.

Relative strength from the mega cap space limited downside moves for the S&P 500 and Dow Jones Industrial Average while the Nasdaq Composite (+0.3%) closed with a small gain. The Invesco S&P 500 Equal Weight ETF (RSP) fell 0.6%.
The Vanguard Mega Cap Growth ETF (MGK) climbed 0.4%. Even Apple (AAPL 173.00, +0.12, +0.1%), which was down as much as 1.7%, settled with a gain despite reports of discounted iPhone 15 sales in China and supplier Foxconn facing a tax probe by Chinese authorities.

Market breadth reflected a lack of conviction on the part of buyers that was related to rising tension in the Middle East, along with hesitation about where rates are headed and the pickup in earnings reports this week. Decliners led advancers by a greater than 2-to-1 margin at the NYSE and a 2-to-1 margin at the Nasdaq.
The earnings calendar this week features reports from Alphabet (GOOG 137.90, +1.16, +0.9%) and Microsoft (MSFT 329.32, +2.65, +0.8%) after Tuesday's close, Meta Platforms (META 314.01, +5.36, +1.7%) after Wednesday's close, and Amazon.com (AMZN 126.56, +1.39, +1.1%) after Thursday's close.

Outperforming mega cap stocks propelled their respective S&P 500 sectors to the top of the leaderboard. The energy sector (-1.6%) was the worst performer, weighed down by a loss in Chevron (CVX 160.68, -6.15, -3.7%), which announced a $53 billion, or $171.00 per share, all stock acquisition of Hess Corp. (HES 161.30, -1.72, -1.1%), and a drop in oil prices ($85.50/bbl, -2.55, -2.9%) that was spurred in part by global growth worries.

There was no U.S. economic data of note today, but key data later in the week includes Q3 GDP on Thursday and the September Personal Income and Spending report on Friday, which features the Fed's preferred inflation gauge (the PCE Price Indexes).

  • Nasdaq Composite: +24.4% YTD
  • S&P 500: +9.8% YTD
  • Dow Jones Industrial Average: -0.6% YTD
  • S&P Midcap 400: -2.5% YTD
  • Russell 2000: -5.4% YTD

Le Monde : Guerre Israël-Hamas : à Tel-Aviv, les mots de douleur et de rage d’un

Guerre Israël-Hamas : à Tel-Aviv, les mots de douleur et de rage d’une jeunesse traumatisée

ENQUÊTE : Les 18-30 ans constituent l’essentiel des victimes de l’attaque perpétrée par le Hamas le 7 octobre, alors qu’ils effectuaient leur service militaire près de Gaza ou qu’ils participaient à la rave-party. Toutes affaires cessantes, des milliers de jeunes ont également été appelés à rejoindre la réserve.

Ils s’appelaient Omri Belkin, Ilan Lipovetsky, Maya Poder, Bruna Valeanu, Avraham Giad Tiberg, Roee Negri, Uri Arad… Ces jeunes, hommes et femmes, auraient dû effectuer leur rentrée à l’université de Tel-Aviv en ces chaudes et belles journées d’automne pour étudier le droit, l’économie, la psychologie, le cinéma ou la communication. Mais ils sont morts, samedi 7 octobre, lors de l’attaque du Hamas. La jeunesse de Tel-Aviv, plus TikTok qu’orthodoxe, libérale, souvent à gauche – en tout cas loin de l’extrême droite –, parmi les plus tolérantes, les plus ouvertes aussi aux droits des Palestiniens, a été fauchée par les balles des terroristes lorsque ceux-ci ont attaqué les soldats de la frontière et les milliers de participants à une rave-party près de la bande de Gaza.

Une jeunesse festive que l’on voit, sur les vidéos récupérées dans les caméras GoPro des assaillants, être abattue à la kalachnikov. Poursuivie puis exécutée au milieu des champs ou à l’intérieur des voitures. Emmenée, avec des habitants des kibboutz, terrifiée, sur des motos ou à l’arrière de voitures, otage du Hamas.

La liste des morts de l’université ne cesse de s’allonger, au fil des découvertes de dépouilles dans la campagne, puis du long processus d’identification des corps mutilés. Jeudi 19 octobre, la professeure Drorit Neumann, doyenne chargée de la vie étudiante, lit un e-mail reçu quelques minutes plus tôt. « Chère Drorit, j’ai le regret de t’informer du décès d’une autre de nos étudiantes, Maayana, le 7 octobre, près de Gaza. » Les survivants et les enseignants enchaînent les enterrements. Une soixantaine au total, en comptant les enfants, les frères, sœurs ou parents d’étudiants – tous ceux qui constituent l’entourage immédiat des défunts, si importants dans la culture juive du deuil.

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« L’histoire se répète »
Une génération qui n’a pas fini de payer son tribut à la guerre : les jeunes hommes et femmes qui effectuent leur service militaire (60 % de chaque tranche d’âge) et tous ceux qui ont été rappelés par la réserve, dont l’âge n’a cessé de baisser ces dernières années, vont constituer l’essentiel des troupes engagées contre le Hamas pendant des mois, peut-être des années. Sur les 30 000 étudiants de l’université de Tel-Aviv, plus de 5 000, appelés toutes affaires cessantes à rallier leur unité, ont ainsi rejoint la réserve.

De la même façon que le pays s’est mis à l’arrêt, les universités sont fermées jusqu’au 5 novembre au moins. Danielle Zilber, 26 ans, étudiante en psychologie, est venue sur le campus pour installer les photos sur les sièges. Elle est en treillis, prête à rejoindre son bataillon de réserve, désolée de ne pas avoir emporté avec elle son arme de service. « On ne sait jamais. » Son mari, 26 ans, militaire de carrière, commande une unité positionnée près de Gaza. Quatre de ses amis sont morts lors de l’attaque terroriste. « C’est un moment de rupture pour notre génération », explique la jeune femme, présidente du syndicat étudiant, fer de lance des mobilisations contre le gouvernement de Benyamin Nétanyahou il y a quelques semaines encore, un autre siècle désormais. « L’idée du “plus jamais ça” a marqué la génération après l’Holocauste. L’histoire se répète : je vous promets que nous ne laisserons plus jamais arriver ce qui vient de se passer. »

Israël est un petit pays. Pour cette jeunesse, plus encore. Chacun connaît des victimes ou des militaires engagés, et le traumatisme est aussi intime, familial que communautaire ou identitaire. Eden Sanders, 25 ans, étudiante en économie, a grandi dans le nord du pays, près de la frontière libanaise. Son premier souvenir de guerre remonte à l’enfance. Elle avait 8 ans quand elle a dû fuir son village après un bombardement. Le 7 octobre, au soir de l’attaque, son compagnon a été appelé comme réserviste au sein de l’armée, en Cisjordanie. Elle connaît directement dix personnes mortes ou blessées ce jour tragique. « Les gens du Hamas veulent nous tuer, ils ne nous donnent pas le droit d’exister. Vous imaginez ce que cela signifie ? », interroge l’étudiante.

Cette génération, qui s’était mobilisée contre les réformes de M. Nétanyahou, s’est réveillée, le 7 octobre, avec cette angoisse terrible que les assaillants puissent vouloir la mort de chacun d’eux. Jusque dans les chambres des bébés, comme s’il fallait effacer aussi l’avenir des juifs, pas seulement le présent. « Dans certains kibboutz, les gens ont été brûlés vifs. C’est quand la dernière fois que le peuple juif a subi ça ? C’est la Shoah », questionne et répond Eyal, Franco-Israélien de 28 ans, passé par le service militaire de l’armée israélienne, aujourd’hui employé dans le high-tech, secteur florissant de l’Etat hébreu. Le jeune homme, qui n’a donné que son prénom, se prépare à être appelé par la réserve. Il exprime le sentiment de vulnérabilité des Israéliens : « Que vous soyez Ashkénaze ou Séfarade, petit ou grand, riche ou pauvre, de droite ou de gauche, vous savez qu’aux yeux de l’ennemi, vous êtes juif et qu’il veut vous tuer. »

« Pourquoi s’en prendre aux morts ? »
Les vies de cette génération sont en suspens, happées par la préparation de la guerre. Fanny Guthmann, étudiante en informatique, ne modifiera pourtant pas la date de son mariage, prévu le 25 octobre – sauf si elle devait être convoquée par la réserve d’ici là. La cérémonie se fera en petit comité, en l’absence probable de ses frères et sœurs. « Je ne veux pas céder au Hamas, je ne veux pas que des terroristes décident du jour où je me marie. » Le choc est pourtant dévastateur. Son arrière-grand-mère lui avait confié son étoile jaune pour qu’elle n’oublie pas. « Le peuple juif a subi des pogroms avant la Shoah. C’est cette histoire qui se répète. » Un silence. « Pourquoi s’en prendre aux corps morts ? Les balles ne suffisaient pas ? »

Aux yeux de cette jeunesse, le 7 octobre n’est pas seulement une guerre de plus dans l’histoire d’Israël. C’est un retour en arrière dans l’histoire des Juifs et des massacres commis au nom de l’antisémitisme depuis des siècles. Les larmes qui montent, Noam Shtockhammer, 26 ans, les réfrène difficilement. Une profonde détresse. Une immense colère. Ses mots, il les prononce en les détachant lentement pour dire combien ils sont pesés et ont vocation à parler pour beaucoup de jeunes Israéliens : « En 1942, quand Hitler décide de la solution finale, les Juifs n’ont pas d’armée pour se défendre en Europe. Aujourd’hui, nous en avons une et nous devons nous battre contre des terroristes qui veulent nous tuer, tous, tous les Israéliens, tous les Juifs. »

L’étudiant en sciences politiques, officier naval pendant son service militaire, attend de savoir s’il sera appelé dans la réserve. Il a suivi les chaînes Telegram de l’organisation terroriste, les vidéos reprises sur les réseaux israéliens, et il conjure de regarder les images insoutenables, les corps suppliciés et leur mise en scène. « Regardez ! Il faut regarder, sinon vous ne pouvez pas comprendre ce qui nous arrive, répète le jeune homme. Quand vous allez à l’école, vous apprenez l’histoire, comment les nazis sont devenus des nazis, comment des êtres humains en arrivent à vouloir l’extermination d’un autre peuple. Il ne faut pas fermer les yeux. »

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Rien n’est réglé
Au milieu des cartons de biens de première nécessité envoyés aux soldats, Yuval Katz, 26 ans, étudiant en commerce, l’un des piliers des opérations de solidarité à l’université Reichman, exprime une idée similaire : « Si l’objectif du Hamas avait été de libérer les Palestiniens, ils n’auraient pas fait cela. C’est autre chose qu’ils cherchent. Il faut regarder comment ils éduquent leurs militants depuis l’enfance : on leur apprend à nous haïr et à penser que nous n’avons pas le droit d’exister. » Lui aussi a besoin d’un instant de respiration pour continuer : « Pourquoi s’en prendre aux corps ? Que s’est-il passé dans le cerveau d’un être humain pour en arriver là ? »

Omir est un prénom d’emprunt. Il est interne en médecine et veut pouvoir s’exprimer sans demander l’autorisation de l’hôpital où il travaille et étudie. Son service militaire, il l’avait accompli comme officier dans une unité chargée du Dôme de fer, ce dispositif antiaérien qui protège le pays des roquettes lancées depuis la bande de Gaza. Depuis le 7 octobre, pas un jour ou presque sans que l’Iron Dome fonctionne au-dessus de Tel-Aviv. « Nous n’avons nulle part ailleurs dans le monde où aller. Le Hamas nous voit comme quelque chose qu’il faut éradiquer. Comment répondre ? Quel langage trouver face à cela ? Je me suis battu pour l’égalité des droits, mais Israël a le droit, premier, de se défendre », insiste Omir, tout en regrettant que des Palestiniens innocents en paient aussi le prix. « Le 11 septembre 2001, dix-neuf terroristes ont réussi à mettre l’Amérique à genoux. Ce que nous subissons est sans comparaison. »

Sur la place Dizengoff, dans le centre de Tel-Aviv, des mains anonymes sont venues placer des bougies en mémoire de chacune des victimes autour d’une immense fontaine. Un groupe de jeunes hommes et femmes écoute des musiciens. « J’en ai des larmes aux yeux quand je passe devant », témoigne un étudiant. La place est devenue un lieu de communion. Mais rien n’est réglé au sein de la société israélienne, tout le monde s’est juste accordé instinctivement à remiser les divisions.

La sécurité, d’abord. La guerre, ensuite. Jonas Moses, 32 ans, salarié dans la tech, avait prévu de rejoindre un café, à Jaffa, au sud de Tel-Aviv, une des rares villes mixtes où cohabitent Arabes et Israéliens, dans un pays qui n’a cessé d’ériger des murs mentaux et physiques pour éloigner les Palestiniens et les Arabes. Avec d’autres volontaires, ils devaient cuisiner pour les immigrés thaïlandais, employés dans les zones agricoles près de Gaza – à quelques kilomètres des centaines de milliers de Gazaouis sans travail. Mais le matin, ils ont appris que le corps du barman, qui figurait parmi les disparus de la rave-party, avait été identifié. Le rendez-vous a été annulé.

Une société accoutumée aux murs
« Ce moment va profondément modifier la société israélienne », dit le jeune homme, engagé à gauche, dans un pays qui avance sans boussole, sinon celle de la vengeance. « Si on transforme Gaza en Mogadiscio, on fait quoi après ? Des ruines, montera un mouvement plus dur encore. On n’élimine pas une idéologie à coups de bombes », ajoute-t-il, conscient d’avoir été minoritaire dans l’Israël d’avant, marginal dans l’Israël post-7 octobre.

Il faudra bien penser à l’après. Mais comment ? La société israélienne, y compris la jeunesse libérale, s’est accoutumée aux murs et aux grilles qui séparent, à ce grand effacement des Palestiniens, à une forme d’indifférence aussi pour leur sort. Les jeunes venus à la rave-party, fauchés par les balles du Hamas, dont beaucoup, probablement, étaient mobilisés contre les réformes de Nétanyahou, faisaient ainsi la fête à deux pas de l’immense prison à ciel ouvert qu’est devenue Gaza.

Rachel Gali Cinamon, la doyenne de la faculté de sciences sociales, ferme les yeux en comptant sur ses doigts le nombre d’enterrements auxquels elle a participé. Sept en douze jours. « Après l’Holocauste, nous avons été élevés dans la certitude que l’Etat d’Israël était là pour nous protéger. Et, soudain, nous découvrons que nous ne sommes pas en sécurité. Je suis extrêmement inquiète des conséquences à long terme de ce traumatisme. Cela va déterminer toutes nos visions sociales, politiques, identitaires. » Drorit Neumann, elle, continue de remplir les listes de victimes et d’aider les étudiants qui n’ont plus de travail ou qui s’enfoncent dans la dépression. Elle pense avec inquiétude à l’avenir. L’université accueille 16 % d’étudiants arabes. Reviendront-ils ? Dans quelles conditions ? Et comment se passera la cohabitation ? « Je ne sais pas, je ne sais vraiment pas. »