
Netanyahu heads to Washington with the region on a knife's edge and Israel's economy already paying the price
16 Jul 2026
Created by
The BV Team
For once, the destination, in this case Washington, is important, but not the time.The timing is more important than the destination, as Benjamin Netanyahu is expected to travel to Washington on Saturday night. The Israeli prime minister will arrive in a capital grappling with tears, stress and unaddressed trauma, all of which he will seek to exploit.
The official purpose of the trip is serious enough in itself. After two decades as one of Israel's most consistent supporters on Capitol Hill, South Carolina Republican Senator Lindsey Graham suddenly passed away last weekend due to an aortic dissection, according to the state's officials. He will be at his memorial service Tuesday in Washington, where Netanyahu, who described him as one of Israel's greatest friends, will be in attendance. However, diplomats in Jerusalem and Washington state that the vehicle is the funeral. The prime minister's true goal is to spend thirty minutes with Donald Trump without the presence of Lebanon's president.
That competition is not a side dish, it's close to the main course. Lebanon's President Joseph Aoun is also to be at the White House next week, and he has indicated that he will not be sitting with Netanyahu in a room while Israeli forces are still on Lebanese territory. Netanyahu, meanwhile, is believed to be keen to get to Washington first with his own view of Iran, which includes a statement of the conditions for any future nuclear deal in the Middle East. After two days of productive talks by Israeli and Lebanese negotiators, no date has been set for the promised Israeli pullback from two pilot zones in the south, according to a State Department spokesperson, who also said negotiations in Rome this week have ended. In still other words, whoever is the first to reach Trump, may be the first to decide what productive is going to mean.
If it were not for the previous five months of open fighting with Iran, none of this would be deemed to be of any importance. Washington and Tehran engaged in fresh round of strikes this week, with Washington's forces targeting Iranian sites linked to attacks on shipping in the Strait of Hormuz, while Tehran's Revolutionary Guard vowed in response to killing of its personnel to respond with "a decisive blow. Bahrain, Jordan and Kuwait have all said that they are caught in the middle. Markets have reacted as one would expect a chokepoint that handles about a-fifth of the world's seaborne crude to react: Brent crude surged more than nine percent in one session after Washington announced that it would reinstate a naval blockade and begin levying a twenty percent fee on cargo moving through the strait, pushing it to over eighty-three dollars a barrel, and a further push toward eighty-five dollars a barrel followed the latest round of strikes. In Washington, energy officials have privately been talking about possibilities of prices tripling beyond that if the strait remains effectively closed this way through the fall of the northern hemisphere.
All of this comes at a cost to the Israeli public and not only to oil traders. Moody's this week lowered projections of Israel's growth in 2026 to 3.7 percent from 5 percent, as recently as January, while increasing its estimate of the ratio of debt to GDP to around 70 percent. It maintained Israel's Baa1 rating along with a stable outlook, "noting the underlying strength of the economy, the technology sector and Israel's continued access to capital markets. The language of the report's warnings, however, was clear: defense spending is projected to stay at "around" 6 percent of GDP until 2027, and if things start to get "even worse," the report warned, the rating could turn the other way. The Bank of Israel's own forecast of 4 percent growth now seems near-optimistic, and the latest review by the International Monetary Fund was even more pessimistic, at 3.5 percent.
It is on that ledger that Netanyahu's Washington visit should be assessed. This week, an eager PM is dealing with a downwards revision of his domestic balance sheet, a coalition which just passed a measure that effectively freezes the status of ultra-Orthodox military service, and a relationship with Trump that has yet to fully bounce back from the president's crude and foul criticism of his competence in the Iran campaign. Netanyahu has made a concerted effort to mend that rift in public, stating last month that "no ally is closer to Israel than the United States; no ally is closer to America than Israel. Trump's office did not address the issue directly, but reports out of the region this week indicate that regional leaders have been telling him privately that the Israeli prime minister has become a stumbling block to any wider regional settlement.
There's a lighter news to this otherwise heavy week. Kan's broadcaster reports that Netanyahu could remain in Washington until the next Sunday when he is expected to be in New Jersey to be present for the World Cup final, where Argentina's Javier Milei is competing in the tournament. It would be a fast of Tisha B'Av, the day of the destruction of Jerusalem's ancient temples, spent in the U.S. instead of Israel. This could either turn out to be a footnote or a testament to how long the current chapter of diplomacy is likely to be played out will depend on when Netanyahu and Trump will be in the same room, which as of Wednesday the White House had not said it was scheduled for at all.








