On Thursday, an Israeli warplane fired a missile into a Beirut apartment building and an era of three weeks' truce that all in the region knew would never persist was over. According to a security source cited by Israeli media outlets, the target was the head of the missile arm of the Imam Hossein Division, which is an Iranian militia that is fighting alongside Hezbollah. For the first time in three weeks, Israel had attacked the Lebanese capital, which says it all about the plight of the region.

For weeks, the Israeli air force had been instructed to stay away from Beirut. The teaching was not from within the cabinet. The directive was issued by the White House, which didn't want buildings to be flattened in the Lebanese capital, for fear that it would ignite a whole other explosion: the fragile, on-again-off-again negotiations designed to end the war with Iran. Hebrew media has been reporting multiple times that Washington wanted Lebanon to remain silent as it urged Tehran to enter into a deal about the Strait of Hormuz and the stocks of uranium it had. That restraint was broken Thursday.

The difference was that one was on the Israeli side. A 20-year-old sergeant, Rotem Yanai, an NCO in the Givati Brigade's Rotem Battalion, was killed running for a shelter during a twin drone attack in a military zone on the Israeli side of the frontier. 2 reservists were injured. By some estimates, she is the 10th Israeli soldier to be killed since the latest ceasefire with Lebanon went into effect in mid-April. The drones are cheap, they are available in vast numbers and, as one Israeli official told Channel 12 days ago, Israel was almost “defenseless” when its hands were diplomatically tied. That sentence is all the frustration: the most technologically advanced military in the region, improvising against quadcopters as a phone call from Washington has decreed: no escalation.

So Israel escalated. The military claims it has targeted over 135 Hezbollah targets in southern Lebanon within 24 hours, after giving a blanket evacuation order, and attacked sites near the southern city of Tyre. The images of Sidon and Tyre featured the familiar syntax of this war: a destroyed apartment, a man standing in front of rubble, a fireball rising out of a building. The Lebanese health ministry, which does not distinguish between fighters and civilians in its death counts, reported deaths. The prime minister ordered troops earlier in the week to “press the pedal even harder”, and the far-right side of his government is demanding more: one minister has stated that for every explosive drone, 10 buildings in Beirut should be destroyed.

The never-doing deal

Let's take a step back from the smoke, and the real story is an economic one, as this whole confrontation is held hostage to a negotiation for a stretch of water.

The Strait of Hormuz typically transports about 20% of the world's oil and liquefied natural gas. Traffic through Iran has essentially come to a standstill since the US and Israel launched attacks on Iran at the end of February, and the crude price has bounced around all spring on each and every rumour from the ongoing talks. When prices are optimistic that a deal is imminent, prices drop, and when Tehran and Washington engage in threats, prices rise. Brent bounced from its highest level in years of $113 a barrel in late March to a few dollars short of the $90s as of late May, and it did it on the basis of first a leaked draft, then a presidential denial.The sticking points have moved hardly at all in three months. Iran is demanding to control the strait, the ability to charge tolls on transiting vessels, lifting the sanctions, and the preservation of the tattered nuclear program. Washington would like to see the waterway reopened, and would like to see the enriched uranium either turned over to or destroyed under international supervision, and no permanent Iranian chokehold on global energy. Last week, the US Secretary of State said there are “good signs,” but in the same breath said that if Tehran attempted to permanently dominate the shipping lane, “a deal would be impossible.” An unofficial draft of an interim deal put forward by Iranian state TV was a clear fabrication, said the White House. This is the beat of everything a step towards the table, then a slammed door.

What is more sobering and perhaps more important to ponder is that the "peace deal imminent" frame itself could be an obstacle. Markets continue to discount a resolution that is not in line with the real positions of the two governments. With oil supply disruption so severe, energy officials cited in a recent bank note said a full normalization of Middle East supply could be as far away as 2027. BlackRock's president has warned crude could spike to $150 even if a ceasefire were announced tomorrow. By some estimates, U.S. officials have been quietly simulating the impact of a $200 migration on the overall economy. That is to say, the optimism does a lot that the diplomacy hasn't deserved.

The victim no one is counting

The city that should have been the main focus of the reconstruction of the region has quietly slipped from the limelight: Beirut. Gaza is the "forgotten file of the war.

The grand plan announced in February a 20,000-strong International Stabilization Force, a “Board of Peace” personally led by the US president and a $5 billion pledge for reconstruction has brought little material result on the ground. Three months ago an American general was appointed to lead the force and promised "future prosperity and enduring peace" but there is no force to lead. None of the five countries which pledged troops has made meaningful contribution.The why's are telling. Hamas has rejected a disarmament. Israel has continued to occupy more land and has been conducting regular strikes on what it deems to be “militant targets,” which often result in civilian deaths. Then the Iran war has turned the politics of cooperation poisonous throughout the Arab and Muslim world: from Indonesia to Kazakhstan, it is not easy to see any government working openly with the U.S. and Israel, both considered the aggressors against Tehran. Since four of its peacekeepers were killed in action while serving with the UN mission in Lebanon during the Israel-Hezbollah conflict, public opinion in Indonesia has turned strongly against any such involvement by the military. The energy crisis the war has created has left these states with less resources they could devote. The director of the Board of Peace has de facto acknowledged that the force cannot start functioning until the situation on the ground settles down which, after all, is the whole point of it. A body to break the deadlock cannot function till the deadlock is broken.

Sadly, human numbers illustrate the price. In the first two weeks of March, aid groups reported, the number of trucks entering Gaza fell by 80 percent and the price of basic goods jumped. Medical evacuations stalled. To Gazans, ceasefire and war are just two words.

The Maximalists are missing is what

There is a strong case, put in (forcefully!) in the Israeli coalition, that only overwhelming force works with Hezbollah and its backers that Hezbollah has been able to rearm and bleed Israel with cheap drones only because it has been held back by Washington, and that the remedy is to strike harder and deeper. It's not a frivolous argument; the trickle of military casualties along the border are genuine, and the public pressure that they create is also real.

There's a quieter and less comfortable opinion that's worth listening to and it's counter to the louder voices. The dynamics of this battle seem to be that escalation wins tactical but loses strategic. Each round of strikes on Beirut firms the conviction in the region that the status quo in Gaza is not sustainable, that the stabilisation force in Gaza is unattainable, that the Iran talks that could actually open up the Hormuz and lower the oil price will be complicated, and that the isolation of Beirut will make armed groups seem the only remaining defenders. The maximalist instinct sees every issue, from drones to Hamas to Iran to markets, as a stand-alone battle to be fought on its own terms. They are not distinct. They are one interlocking system and force applied to any one node ricochets through all the others. There is a war for a settlement that holds and a government that doesn't see the big picture will continue to win the battles and lose it.

For its part, Russia used Thursday to urge Washington and Tehran not to revert to an open conflict but to continue negotiations. It's a testament to how much things have changed that Moscow is now the voice of restraint. Lebanese and Israeli military delegations will meet at the Pentagon on Friday, and a new round of direct negotiations will take place next week, when the Lebanese side is likely to demand a state monopoly on arms and a government presence in the south. The only question that matters is whether anything will remain after coming into contact with the next drone or the next missile into Beirut.

Thursday's strike was targeting one militia commander. What it actually hit was the notion that this is something that can be held at a low simmer while the diplomats work and the markets wait. That assumption was lost somewhere over the southern suburbs and no one in Beirut, Jerusalem or Washington should be surprised.