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Federal Trade Commission accuses three drug middlemen of inflating insulin prices

The Federal Trade Commission said Friday that it is suing three drug middlemen, accusing them of inflating insulin prices.

The FTC accused the ‘Big Three’ pharmacy benefit managers (PBMs) — UnitedHealth Group’s Optum Rx, CVS Health’s Caremark and Cigna’s Express Scripts — of ‘engaging in anticompetitive and unfair rebating practices that have artificially inflated the list price of insulin drugs, impaired patients’ access to lower list price products, and shifted the cost of high insulin list prices to vulnerable patients.’ Around 8 million Americans rely on insulin in the U.S., per the FTC.

PBMs work with insurance companies to negotiate discounted prices from drug companies in exchange for including the drugs in their coverage. In theory, they are supposed to save patients money.

Also included in the lawsuit are the PBMs’ group purchasing organizations, which include Zinc Health Services, Ascent Health Services and Emisar Pharma Services.

The ‘Big Three’ oversee around 80% of all prescription drug plans in the U.S., according to the complaint, which alleges that they created a rebate system prioritizing high rebates from drug manufacturers, which led to the inflated insulin prices.

‘This perverse system results in billions of dollars in rebates and fees for the PBMs and their health plan sponsor clients — but does so at the expense of certain vulnerable diabetic patients who must pay significantly more out-of-pocket for their critical medications,’ the FTC said in a news release.

In a statement, CVS Caremark said the FTC’s allegations are ‘simply wrong’ and blamed drug manufacturers for hiking up the price of the drugs.

‘CVS Caremark has led the way in driving down the cost of insulin for all patients: insured, uninsured, and underinsured,’ the company said. ‘Our members on average pay less than $25, far below list prices and far below the Biden Administration’s $35 cap. Further, we also provide access to $25 insulin to every American, whether insured or uninsured, through our ReducedRx program at every one of our 67,000 network pharmacies and more than 9,000 CVS pharmacies.’

Cigna’s Chief Legal Officer, Andrea Nelson, said the FTC’s lawsuit continues its ‘troubling pattern’ of ‘unsubstantiated and ideologically driven attacks on pharmacy benefit managers,’ including a report the commission released in July accusing the PBMs of hiking up the drug prices. Cigna filed a lawsuit against the FTC on Tuesday requesting that they withdraw the report.

‘Once again, the FTC — a government agency funded by taxpayer dollars — is proving that the FTC does not understand drug pricing and instead is choosing to ignore the facts and score political points, rather than focus on its duty to protect consumers,’ Nelson said in a statement. ‘The fact is that in the unlikely event the FTC succeeds in its suit and forces PBMs to include drugs on formulary even if they have higher net costs for plan sponsors — and regardless of whether they are clinically necessary — the FTC will drive drug prices higher in this country. This will hurt consumers and those who provide their prescription drug benefits — including employers, labor unions, and the federal government itself.’

UnitedHealth Group did not immediately respond to requests for comment.

The FTC said that insulin medication was previously more affordable, using the example of Humalog, a medication manufactured by Eli Lilly, that cost about $21 in 1999. The drug was priced at $274 in 2017, as a result of the PBMs rebate system strategy, the FTC said.

‘Millions of Americans with diabetes need insulin to survive, yet for many of these vulnerable patients, their insulin drug costs have skyrocketed over the past decade thanks in part to powerful PBMs and their greed,’ said Rahul Rao, the deputy director of the FTC’s Bureau of Competition.

It’s not only the PBMs that are responsible for the skyrocketing prices, the FTC said, but also drug manufacturers like Eli Lilly and Novo Nordisk, which the commission says “should be on notice” because they may be sued in the future.

In a statement, White House Press Secretary Karine Jean-Pierre said they do not have any comment on the lawsuit, but ‘have made clear that no one should pay higher prices because of corporate greed.’

‘The President and Vice President have been taking on profiteering by Big Pharma and pharmaceutical middle-men to lower the costs of healthcare and prescription drugs—from giving Medicare the power to negotiate lower drug prices, to lowering prices for insulin, inhalers, EpiPens and hearing aids by increasing competition,’ Jean-Pierre said. 

National Community Pharmacists Association supported the FTC’s lawsuit against the PBMs in a statement released Friday.

‘One of the many ways that PBMs manipulate the system against patients, taxpayers, and small pharmacies is the rebate game,’ said B. Douglas Hoey, the association’s chief executive officer. ‘The PBMs determine which drugs are covered by health insurance plans. They get bigger rebates for the most expensive drugs. Naturally, the most expensive drugs end up on the formularies even when there are cheaper alternatives. Patients end up paying more. Employers end up paying more. Taxpayers end up paying more. And more small business pharmacies are driven out of business. The rebates create a powerful incentive for higher drug prices, which is completely upside-down.’

In July, Democratic and Republican lawmakers blamed executives from Caremark, Express Scripts and Optum Rx for sky-high prescription drug prices in the U.S. during an oversight committee hearing.

“On one hand we have PBMs claiming to reduce prescription drug prices, and on the other hand we have the Federal Trade Commission, we have major media outlets like The New York Times and we have at least eight different attorneys generals, Democrats and Republicans, who all say PBMs are inflating drug costs,” Rep. Raja Krishnamoorthi, D-Ill., said. 

The committee launched an investigation in March 2023 into PBMs’ role in the rise in health care costs. The lawsuit also comes as states — most recently Vermont — have sued PBMs, alleging they drive up drug costs.

This post appeared first on NBC NEWS

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How Foot Locker is waging a comeback after its breakup with Nike

During a recent event celebrating Foot Locker’s 50th anniversary in New York City, it was hard to imagine that the legacy sneaker chain was appearing on bankruptcy watch lists as recently as March.

Grammy-nominated rapper Coi Leray was there to celebrate the company with a special performance of her hit song “Players” as influencers, journalists and handpicked members of the company’s revamped loyalty program sipped on lavender margaritas and champagne cocktails.

Employees — and not just those in the glare of the company’s PR team — gushed about CEO Mary Dillon as Adidas staffers celebrated the company’s new store design, which showcases individual brands instead of mixing them on nondescript shoe walls. 

Foot Locker turns 50 while on a bit of an upswing two years into Dillon’s tenure as CEO. Last month, it released fiscal second-quarter results and full-year guidance that beat expectations, as comparable sales grew for the first time in six quarters.

As Foot Locker revamps its sprawling store footprint, and perhaps benefits from some good timing, it’s making strides in winning back its critical brand partners like Nike and Adidas, the latter of which co-hosted the Monday night party and helped secure Leray’s performance. 

“Our last quarter was a really good indication that the hard work that we’ve been putting into the Lace Up plan is working, and that makes me feel really, really great, because I really see the next 50 years of growth for Foot Locker and our future,” Dillon told CNBC in an interview, referencing the company’s turnaround plan. “I really think that there’s layers of category growth that we can drive by just making sneakers that much more inclusive, that much more fun, that much more easy to access.”

But as Foot Locker stares down the next 50 years, the company is still at a crossroads and must answer some fundamental questions: can it once again be the market leader in sneakers, and can it not just survive, but thrive, as brands rely less and less on wholesalers?

“With the combination of more direct to consumer from the brands, the deepening of specialists like [Dick’s Sporting Goods], the incursion of JD Sports, Foot Locker still looks risky,” said Neil Saunders, a retail analyst and managing director of GlobalData. “In some ways, they’re just a sort of distributor of everyone else’s products.”

Dick’s has a big private-label business and sells other categories like sporting goods, while JD Sports has strong loyalty programs and a robust fashion business, he said.

“Whereas Foot Locker looks vulnerable because it just doesn’t have all these other strings to its bows,” said Saunders. “The truth is that although they’re getting better, there is still this question: Do we need this specialist sneaker retailer?” 

Foot Locker can be traced back to the legendary retailer Frank Winfield Woolworth, whose namesake company branched into footwear in the 1960s and later opened the first Foot Locker in City of Industry, California, in September 1974. 

From the beginning, Foot Locker was a mall retailer. Over the next two decades, it opened thousands of stores in malls across the U.S. and abroad. 

By the turn of the century, it was the world’s largest retailer of athletic footwear and apparel, with a 20% market share in the U.S., according to a 2002 Forbes report. It was the primary place to buy Nike sneakers and was responsible for 26% to 28% of Nike’s total domestic revenue. Nike accounted for more than half of Foot Locker’s total sales at the time.

“It was a simpler retail world. I think in the years that they were initially really experiencing strong growth, it was as simple as being in the mall, having a large mall footprint and having the right brands and they had that footprint,” said Janine Stichter, a retail analyst and managing director at BTIG, who has been covering the retail industry since 2008. “They were the No. 1 partner of Nike. Nike, at the time, was strong and growing, and I think they were really viewed as like the destination in an environment that was a lot less competitive.” 

When Foot Locker’s chief commercial officer, Frank Bracken, joined the company in 2010, the retailer’s relationship with Nike was poised to get even stronger. By the end of the decade, 75% of the products Foot Locker sold were from Nike.

“This was [pre-direct-to-consumer], Foot Locker was definitely ‘most favored nations’ with most of our brand partners at that time, Nike was about to go on a pretty epic run alongside Jordan, and so I actually joined at a really good time,” Bracken said in an interview.

Bracken recalled how from 2012 to about 2018, Foot Locker’s stock rose to record highs as revenue grew at a mid-to-high single-digit compound annual growth rate. But as the 2020s neared, the company got “complacent” and began taking its position as the market leader in sneakers “for granted,” said Bracken. 

″[We] got some weak signals about where the industry was headed, from our partners and from competition, and then Covid, you know, paralyzed everybody momentarily and I think we lost some time, candidly, during Covid,” he said. “Competition used it as an opportunity to invest in technology and capability and the business, and maybe we probably stood a little bit too still at that point in time.” 

As consumers moved online and away from malls, Foot Locker did too little to update its e-commerce capabilities and its real estate footprint, said Bracken. At the same time, competitors were getting bigger and savvier, adjusting their real estate strategies as malls across America sputtered and died. 

In North America, the company let its banners — Foot Locker, Footaction and Champs Sports — overlap too heavily with each other in terms of assortment, location and marketing, and brands “started to take note of that,” said Bracken.

At the end of 2021, Foot Locker was winding down its Footaction business and had acquired WSS — an off-mall athletic apparel retailer that caters to the Hispanic community — to help differentiate itself from competitors.

But by then, it was too late.

Nike, carrying out a new strategy to cut off wholesalers and sell directly to consumers through its own websites and stores, had started reducing the number of sneakers it was selling to Foot Locker, the company said on an earnings call in February 2022. It chose instead to reserve its best products for Foot Locker’s primary competitors: Dick’s and JD Sports. 

For a company that relied almost exclusively on Nike, the change was devastating and posed an existential threat. By the end of fiscal 2022, comparable sales had fallen 7.2% in North America. The declines would only mount in the quarters to come. 

When Dillon, the former CEO of Ulta Beauty, took the helm of Foot Locker in September 2022, Wall Street breathed a collective sigh of relief. Highly regarded among peers, Dillon was known for her ability to win over brands, and appeared to have the necessary chops to turn Foot Locker around. 

“In a way, she soothed investors … they know that she can deliver and they know that she understands retail and the sector and she’s got good operation control and all the rest of it,” said Saunders from GlobalData. “That’s obviously starting to come through a little bit more now.”

In her first major public event as CEO, Dillon hosted an investor day last March where she touted a revitalized relationship with Nike. She pledged the “fruits of our renewed commitment to one another” would begin to show up in results by the end of the year. 

She outlined her Lace Up turnaround strategy, which focused on four key pillars: better marketing, a new real estate plan, a revamped loyalty program and an emphasis on online sales. 

But as the year wore on, the macroeconomic picture worsened, which hit Foot Locker hard because about half of its customers are considered low income. The company went on to cut its guidance twice, suspend its dividend and delay a key financial target that it outlined at its investor day. 

“As a CEO, it’s hard to go out and make a commitment and have to change it, but because I believe so much in the plan and where we’re heading, I felt confident that it was the right thing to do,” said Dillon. “Now I believe we’ve kind of worked past that.”

Beyond the macro situation, the company likely underestimated the challenges it was facing, and how much the Nike breakup would hurt its business, Saunders and Stichter said. 

“You don’t really know until you do it how impactful that’s going to be and I think that they thought they’d be able to offset more of that loss more quickly,” said Stichter. 

While Foot Locker’s fiscal 2023 turned out worse than it originally anticipated, the company is seeing some of its turnaround efforts start to take hold. While Nike is still its biggest partner, it’s focusing more on other brands, such as upstarts like Hoka and On and legacy incumbents like Birkenstock and Ugg.  

Online sales are growing. Foot Locker plans to relaunch its mobile app at the end of the year, and it recently unveiled its revamped loyalty program FLX, which allows customers to earn discounts, access to product launches and perks like free returns. 

“We know that we only capture a fraction of this annual sneaker spend that our existing customers spend on sneakers,” said Kim Waldmann, Foot Locker’s chief customer officer. ”[FLX] isn’t necessarily about getting you to buy 10 more sneakers per year, it’s an opportunity for us to drive share of wallet consolidation by the fact that you’re getting value back in shopping with us.” 

When Waldmann started in the role last year, she learned from consumer research that customers loved having access to a wide variety of brands at Foot Locker’s stores and enjoyed the product knowledge that its employees, known as “Stripers,” had. 

“The thing that they wanted to see more from us is like we’re just not top of mind. A lot of consumers just hadn’t seen us in a while,” said Waldmann. “And I think that was really the opportunity to take what is an iconic brand and make it influential and top of mind again, and that’s really the work that we’ve been doing.” 

The company is marketing more toward women and has partnered with stars such as Leray, who was part of Foot Locker’s spring style and trend campaign. 

Perhaps most critically, Foot Locker is finally doing the work necessary to overhaul its aging store fleet, which is responsible for about 80% of its sales. Since Dillon took over, she’s closed around 500 stores, opened about 200 new shops and remodeled or relocated another 200 or so doors. Earlier this year, Foot Locker unveiled its “reimagined” store concept and its plans to move away from its traditional format, which tends to be two walls of shoes with a middle section used for trying on sneakers. 

As more and more brands move away from wholesalers in favor of their own stores and website, the strategy change was critical to Foot Locker’s survival. Its business does not work if it doesn’t have the support of its brand partners, which want to ensure that their assortments are showcased individually — not mixed together with competitors. 

“When you talk to a company like On they’re like, yeah, we’re selective about who we sell to, we don’t want to be just another shoe on the wall,” said Stichter. “They’re really investing behind putting more signage and just investing in the displays … that’s what makes the brands want to work with them.” 

Since May, Foot Locker has brought the new design concept to at least 80 of its stores, which it says have better comparable sales and margins compared with the balance of the chain. The company is working to refresh two-thirds of its global Foot Locker and Kids Foot Locker doors by the end of 2025, and said 40% of its North American footprint is now off-mall. 

The new store approach couldn’t come at a better time for Foot Locker. Over the last year, Nike has begun to walk back its direct selling strategy after acknowledging that it went too far in cutting out wholesalers. 

“Nike is our largest partner and they’re the largest in the industry so for us, it’s also about, how do we make sure that we have a really terrific long-term growth relationship with Nike? And I’m proud about the fact that we’re going back to growth [with Nike] starting in the fourth quarter of this year,” said Dillon. “Also … at the same time, Nike has been very public about the role of retailers and the importance of that for them as well so maybe it was good timing, right?” 

As Foot Locker looks ahead to the next 50 years, its ability to survive is still up for debate. Nike is at a low point and is cozying back up to the wholesale partners, but when it rebounds, will it cut off those retailers once again? 

Absent a robust private-label business, Foot Locker’s success is also highly dependent on the performance of its brand partners, which leaves it with less control over its own destiny than other retailers that have recently made big comebacks, such as Abercrombie & Fitch. 

If Nike has a major product launch, it can be a boon for Foot Locker’s sales, but if innovation dries up, Foot Locker will suffer. It has found itself in a similar quandary facing other multi-brand retailers, such as Macy’s, which has also struggled to find itself in a post-mall world. 

When asked if Foot Locker can survive another 50 years, GlobalData’s Saunders said the company is the “most at risk of extinction” of its peers. Stichter disagreed. 

“One thing we’ve learned is that consumers really do want a multi-brand experience. There are people who go to Nike.com or Adidas.com but people really like having that selection, having the service,” said Stichter. “So there is a reason for a concept like Foot Locker to exist. I think it all just depends on, can they execute well and be one of the preferred places for consumers who are looking for choice.”

This post appeared first on NBC NEWS

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Boeing machinists on picket lines prepare for lengthy strike: ‘I can last as long as it takes’

RENTON, Wash. — Cash-strapped Boeing is facing mounting costs from an ongoing machinist strike as workers push for higher pay. A failure to get a deal done could be even more expensive.

In the shadow of a factory outside Seattle where Boeing makes its best-selling planes, picketing Boeing machinists told CNBC they have saved up money and have taken or are considering taking side jobs in landscaping, furniture moving or warehouse work to make ends meet if the strike is goes on much longer.

The work stoppage by Boeing’s factory workers in the Pacific Northwest just entered its second week. The financial cost of the strike on Boeing depends on how long it lasts, though ratings agencies have warned that the company could face a downgrade if it drags on too long.

That would add to the borrowing costs of the company, already $60 billion in debt. Boeing has burned through about $8 billion so far this year in the wake of a near-catastrophic door plug blowout from one of its 737 Max planes in January.

Boeing hasn’t turned an annual profit since 2018, and its new CEO Kelly Ortberg is trying to restore the company’s reputation after months of manufacturing crises that have slowed deliveries to customers, depriving it of cash.

At the local union office in Renton, machinists were preparing for what may become a lengthy strike: Union members carried in large pallets of bottled water, while someone mixed a giant tuna salad in the kitchen to make sandwiches for workers. Union vans visited demonstration sites around Renton offering transportation to bathroom breaks for workers on picket duty. Burn barrels provided heat for chilly overnight pickets.

Many workers spoke of their love for their jobs but fretted about the high cost of living in the Seattle area, where the majority of Boeing’s aircraft are made.

The median home price in Washington state increased about 142% to $613,000 as of 2023, from $253,800 a decade earlier, according to the state’s Office of Financial Management. That outpaces the roughly 55% increase nationally over that period, according to data from the Federal Reserve Bank of St. Louis.

“We can’t afford [to own] a home,” said Jake Meyer, a Boeing mechanic who said he will start driving for a food delivery service during the strike and is looking at picking up odd jobs such as moving furniture. Meyer said although he’s striking for higher pay from Boeing, he enjoys the job of building airplanes.

“I take pride in my work,” he said.

Another Boeing machinist said he has been saving for months, forgoing things such as restaurants and paying three months of mortgage payments early.

“I can last as long as it takes,” said the worker, who spoke on the condition of anonymity.

More than 30,000 Boeing machinists walked off the job at midnight Sept. 13 after turning down a tentative labor deal in a nearly 95% vote — 96% voted in favor of a strike. They received their last paychecks Thursday, and health benefits are set to end on Sept. 30. A strike fund from the union will soon give them $250 a week.

The strike is costing Boeing some $50 million a day, according to estimates by Bank of America aerospace analyst Ron Epstein. The strike halted production of most of Boeing’s aircraft, and that is rippling out to the aerospace giant’s vast network of suppliers, some of which have already been told to halt shipments. Boeing is still making 787 Dreamliners at its non-union factory in South Carolina.

The battle pits a struggling Boeing against a workforce seeking wage increases and other improvements. Boeing’s most recent offer included 25% general wage increases over a four-year deal and was endorsed by the machinists union, the International Association of Machinists and Aerospace Workers District 751.

Workers said they were looking for wage increases closer to the 40% that the union had proposed as well as annual bonuses and a restoration of pensions lost more than a decade ago.

Boeing and the union were at the negotiation table this week, but both Boeing and union negotiators have said they were disappointed with the lack of progress.

“We continue to prioritize the issues you defined in the most recent survey,” union negotiators wrote to members Wednesday, “yet we are deeply concerned that the company has not addressed your top concerns. No meaningful progress was made during today’s talks.”

Ortberg, who is just six weeks on the job, announced temporary furloughs this week of tens of thousands of Boeing staff, including managers and executives, on the heels of a hiring freeze and other cost-cutting measures announced this week.

“During mediation with the union this week, we continued our good faith efforts to engage the union’s bargaining committee in meaningful negotiations to address the feedback we’ve heard from our team,” Ortberg said in a note to staff Friday.

“While we are disappointed the discussions didn’t lead to more progress, we remain very committed to reaching an agreement as soon as possible that recognizes the hard work of our employees and ends the work stoppage in the Pacific Northwest,” Ortberg wrote. 

The strike, which includes Boeing machinists in the Seattle area, Oregon and a few other locations, is just the latest in a series of labor battles in recent years that has included actors, autoworkers, port workers and airline employees, all of which have won raises after strikes or strike threats.

The Biden administration has encouraged Boeing and the union to reach a deal.

“I do believe that both parties want to get to a resolution here, and hoping to see one that makes sense for the workers and it works for a company that really needs to find its way forward on so many fronts,” Transportation Secretary Pete Buttigieg told CNBC’s “Squawk Box” on Thursday.

Boeing is facing a tight labor market. During the last strike, in 2008, which lasted less than two months, the company was in better financial shape, and there was less job competition in the area.

One Boeing supplier told CNBC that furloughing or laying off workers would cause problems for months down the road because it takes so long to train staff on such technical and detailed work.

During the pandemic, Boeing and its suppliers shed thousands of workers. They’ve since struggled to hire and train workers in time for the resurgence in air travel and aircraft demand.

“You’re in an environment where skilled, technical labor is hard to get right now, particularly in aerospace and defense,” said Bank of America’s Epstein. “So what do you do to not only retain them but attract them? If they really want a pension, maybe that gives you a competitive advantage over people who are trying to attract talent.”

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At least 51 dead in Iran coal mine blast

A gas explosion in a coal mine in Iran’s South Khorasan Province killed at least 51 people and injured 20, Iran’s state media said on Sunday.

The accident was caused by a methane gas explosion in two blocks, B and C, of the mine run by the Madanjoo company, state media said.

“76% of the country’s coal is provided from this region and around 8 to 10 big companies are working in the region including Madanjoo company,” the governor of South Khorasan Province Ali Akbar Rahimi told state TV on Sunday.

The rescue operation in block B has been completed. Of the 47 workers who were in the block 30 died and 17 were injured, Rahimi said earlier.

Rescue operations in block C have started. Methane density in the block is high and the operation will take around 3-4 hours, he added.

There were 69 workers in the blocks at the time of the explosion, state TV reported.

“Seventeen injured people were transported to the hospital and 24 people are still missing,” it said earlier on Sunday citing the head of Iran’s Red Crescent.

The explosion occurred at 9 p.m. (1730 GMT) on Saturday, state media said.

President Masoud Pezeshkian expressed condolences to the victims’ families. “I spoke with ministers and we will do our best to follow up,” Pezeshkian said in televised comments.

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Israeli soldiers raid and order closure of Al Jazeera’s Ramallah offices

Israel’s military has raided and ordered the closure of Al Jazeera’s office in Ramallah, in the occupied West Bank, the network said.

Al Jazeera broadcast live footage early on Sunday of Israeli soldiers entering its offices in Ramallah, capturing the reactions of bureau chief Walid Omary and staff members live on air.

Video broadcast by Al Jazeera showed one soldier informing Omary of a military order to close Al Jazeera’s office for 45 days.

Reading the military order given to him on air, Omary said staff members had only ten minutes to take their personal belongings and cameras and vacate the office.

When Omary asked the Israeli soliders why the office was being closed, he was told the reason had been provided in the written military order.

Al Jazeera’s office in Ramallah has been operational for decades. It became even more essential for the network after Israel shut down its Jerusalem office and seized some of its communication equipment in May, prompting condemnation from the United Nations and rights groups over what they said were Israeli Prime Minister Benjamin Netanyahu’s moves to restrict press freedoms.

After Al Jazeera staff left the Ramallah office, live footage showed Omary and others in the street outside, as the journalist said soldiers had taken over the office and were confiscating materials.

Shortly after, as Israeli soldiers approached Omary, the live video feed was cut, and Omary could be heard saying that soldiers had taken the camera and broadcast equipment the team had been using.

The Foreign Press Association (FPA), which represents foreign press in Israel and the Palestinian territories, said it was “deeply troubled” by what it described as an “escalation which threatens press freedom.” The FPA called on the Israeli government to reconsider the decision.

The Israeli government has long complained about Al Jazeera’s operations, alleging anti-Israeli bias and accusing the network of being a “mouthpiece for Hamas.”

The Qatari-based news network, which has produced on the ground reporting of Israel’s war against Hamas in Gaza, denies this. Several of its journalists have been killed or injured since the Gaza offensive began after the October 7 attacks.

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Netanyahu considering plan to force all Palestinian civilians out of northern Gaza to besiege Hamas

Israeli Prime Minister Benjamin Netanyahu is considering a plan to force all Palestinian civilians out of northern Gaza, including Gaza City, in order to lay siege to Hamas and force the release of hostages.

It is unclear how many Palestinians remain north of the so-called Netzarim Corridor, which splits Gaza in two, but estimates run into the hundreds of thousands. The plan does not mention whether, when, or how civilians would be allowed to return to northern Gaza. After nearly a year of war, with no part of Gaza immune from Israeli airstrikes, Palestinians have been increasingly unwilling to heed Israeli demands to relocate.

The idea comes from a group of retired Israeli military generals, who have formally presented it to the Israeli cabinet and a powerful parliamentary committee. The goal, they say, is to use siege tactics to starve Hamas fighters and force them to release 101 hostages still held in the territory.

“Those who leave will receive food and water,” Giora Eiland, a retired Israeli military general who is spearheading the proposal, says in a slickly produced video posted online earlier this month. “But in a week the entire territory of the northern Gaza Strip will become military territory, and this military territory as far as we are concerned, no supplies will enter it.”

“It is one of the plans being considered, but there are several others,” he said, according to Kan. “We are committed to dismantling the civilian control of Hamas.”

It is unclear when the meeting took place.

An Israeli official confirmed the veracity of that quote, but said, “seeing it positively does not mean adopting it.”

The official said that the head of the Israel Defense Forces’ strategic division will in the coming days present to Netanyahu “several alternatives” for how to “deprive Hamas of civilian control capabilities in Gaza.”

Calls to adopt plan

The public face of the proposal is Eiland, who had an illustrious career rising to the rank of major general and serving as head of the prime minister’s National Security Council from 2004 to 2006.

“The reality today in Gaza is that Sinwar is really not stressed,” he says in the video. “The right thing to do is to inform the approximately 300,000 residents who remained in the northern Gaza Strip, citizen residents, of the following: Not that we are suggesting you leave the northern Gaza Strip, we are ordering you to leave the northern Gaza Strip.”

“In a week, the entire territory of the northern Gaza Strip will become military territory. And this military territory, as far as we are concerned, no supplies will enter it. That is why 5,000 terrorists who are in this situation, they can either surrender or starve.”

“Dictators like Sinwar are not afraid of military pressure. They are afraid of two other things: a governmental alternative and the existence of an angry mob that can overthrow them.”

The Commanders and Reserve Fighters Forum, a group of retired and reservist commanders, has championed the plan “to bring about a de facto change in the war situation.”

“It will all depend on what will happen in the future,” Retired Major-General Gershon Hacohen said in a text message. “But there is no indication in the plan that they will never be able to go back.”

The plan has been presented to the Knesset’s Foreign Affairs and Defense Committee. Meirav Cohen, a member of Knesset from the centrist Yesh Atid party, lambasted the government for allowing aid trucks into Gaza.

“The only threat that they are facing is obesity,” she said during a meeting with the pressure group, including Giora Eiland. “Is this how we will bring our hostages back home? So I think that the plan that Giora and other commanders presented here is very smart. It sets clear rules. We have to implement it.”

In the letter addressed to Netanyahu and his fellow ministers, 27 of the 120 members of Knesset lament that “we have not yet reached the finish line in any of the goals defined by the War Cabinet.”

They call on the government to implement Eiland’s plan in northern Gaza. “After carrying out the program in this area, it is possible to carry it out in other parts of the strip,” they say.

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Hezbollah fires rockets deep into northern Israel as tensions flare. Here’s what we know

The last 48 hours has seen the most intense exchanges of fire between Israel and Hezbollah in almost a year of war in Gaza, as the Lebanese militant group fired projectiles deeper into Israeli territory than has previously been seen.

On Saturday Israel pounded Hezbollah targets with nearly 300 strikes it what they described as preemptive action to thwart a planned attack. Hezbollah meanwhile has been launching a barrage of rockets and other projectiles at Israel in what it says is retaliation for Israeli attacks in Lebanon.

Hezbollah – the Lebanon-based, Iran-backed militant group – has been left reeling after two days of blasts targeting pagers and walkie-talkies used by its members was followed by an Israeli strike on southern Beirut, which killed at least 45 people including a top commander and other senior operatives.

Here’s what we know about the escalation of tensions.

What’s happened, when and where?

On Tuesday and Wednesday, Lebanon was rocked by two similar, surprise attacks. On Tuesday afternoon, pagers exploded at the same time across several parts of Lebanon, including capital Beirut, and in several towns in the central Beqaa valley, strongholds for the Iran-backed militant group Hezbollah.

Almost exactly 24 hours later, Lebanon was rocked by a second attack Wednesday, when walkie-talkies detonated in the suburbs of Beirut and in the south of the country.

Lebanese health minister Firass Abiad put the death toll from both attacks at 39; 12 on Tuesday and 27 on Wednesday.

The exploding devices attacks were followed by an Israeli strike on the Lebanese capital of Beirut on Friday, which killed at least 45 including senior Hezbollah commander Ibrahim Aqil, and levelled a multistory building in a densely populated neighborhood.

The developments put the region on a knife edge, with Hezbollah targeting northern Israel with a series of rockets and missiles overnight on Saturday into Sunday, striking deeper into Israeli territory than they have done in other recent attacks. The attacks, Hezbollah said, were in response to repeated Israeli strikes in Lebanon that have led to the deaths of “many civilians.” Among the targets, Hezbollah said it hit an air base with Fadi 1 and Fadi 2 missiles, a longer-range weapon seemingly not used so far.

Most were intercepted but some fell, causing damage. The Israeli military reported impacts in Kiryat Bialik, Tsur Shalom and Moreshet near the port city of Haifa, around 40 km (25 miles) south of the border, marking one of the deepest direct hits by the Iran-backed group since the 2006 Israel-Lebanon war.

Schools have closed in many northern areas of Israel, and gatherings have been restricted.

Israel meanwhile fired nearly 300 projectiles into southern Lebanon on Saturday in what the military said was pre-emptive action against a planned Hezbollah attack. Israel continued its strikes into Sunday, with Lebanon’s official National News Agency (NNA) reporting two people were killed Sunday morning in southern Lebanon.

Will the conflict escalate?

Exchanges of fire between Israel and Hezbollah have occurred consistently since the outbreak of war in Gaza on October 8, the day after Hamas’ attack on Israel, in skirmishes which have long sparked fears of the fighting spilling over into a wider regional conflict.

Key players have at times appeared to walk right up to the brink, but tensions have de-escalated given the grave consequences of an all-out war in the Middle East.

However, the intensity of attacks between Israel and Hezbollah seen over the past few days has been unprecedented, renewing fears of a wider war that could drag in the entire region, as well as Israel’s chief ally the United States.

While Hezbollah’s leader has previously stated he does not want a fully-fledged regional war, experts have said he may now be under more pressure to act following the spate of explosions, and with Israel set on moving its military objectives to its northern border.

Israeli President Israel Herzog told Sky News on Sunday said that Israel “is not interested to be at war with Lebanon.” He instead blamed Hezbollah for the military escalation between the two nations.

Hezbollah has admitted the attacks have left them weakened but also show little sign of pulling back. Naim Qassim – the group’s second most important figure after leader Hassan Nasrallah – said a “a battle without limits” was now underway.

Why did Israel target Lebanon now?

Hezbollah and Israel have been in conflict for decades – but the two have ramped up their cross-border attacks on each other since last October when the war in Gaza began, following Palestinian militant group Hamas’ deadly attack on Israel.

Hezbollah is part of a larger Iran-led axis across the Middle East spanning Yemen, Syria, Gaza and Iraq that has engaged in a simmering conflict with Israel and its allies over the past 11 months.

The axis has said they will continue striking Israeli targets as long as the war in Gaza goes on, rebranding themselves as a “supportive front” for Palestinians in the strip, as described by a senior Hezbollah leader.

Israel may have chosen this timing for the attacks because it believed Hezbollah had discovered the pagers’ capability – making it a “use it or lose it” moment, said an Israeli source familiar with national security.

Israeli Prime Minister Benjamin Netanyahu may also have wanted to shore up domestic support. Officials and residents from the northern region have become increasingly vocal about the need to return to their homes after being evacuated due to attacks, piling pressure on the government to act against the threat of Hezbollah’s rockets from southern Lebanon.

On Tuesday, Israel made it a new war objective to return Israel’s northern residents to their homes near the border – which has long been understood to be a political necessity.

Speaking on Sunday, Netanyahu again put the focus on ensuring the return of Israel citizens to their homes in northern Israel and to restore security in that region.

Speaking ahead of a government meeting, he said: “If Hezbollah didn’t get the message – I assure you – they will get the message. We are determined to return our citizens in the north to their homes safely.”

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A limited confrontation with Israel is extracting a seemingly unlimited price from Hezbollah

An Israeli airstrike reduces a nine-story apartment building in Beirut’s southern suburb to a large mound of rubble. A man covered in dust flails lifelessly in the arms of a rescuer. A corpse in a body bag is whizzed past parked ambulances on the back of a quad bike.

Suspicion pierces through the catastrophic aftermath of the attack. Plainclothes Hezbollah members snatch the phones of people snapping photos, demanding they be deleted. “Get the cell phones out of here!” screams one woman.

It was Iran-backed Hezbollah’s darkest hour. A meeting that gathered commanders of the group’s elite Radwan force in the basement of a residential building had been struck down by Israeli warplanes.

At least 45 people, including women and children, were killed, along with 16 Hezbollah militants, including the Radwan force leader Ibrahim Aqil and senior commander Ahmad Wehbe.

Just two days earlier, hundreds of walkie-talkies belonging to the Lebanese militant group’s members detonated in a single minute. A day before that, thousands of exploding Hezbollah pagers maimed hundreds of people. Overall, at least 80 people have been killed in attacks since Tuesday. Most were Hezbollah operatives, but the casualties also include women and children.

Now, the Middle East’s most formidable non-state fighting force is reeling from the biggest-ever hit to its military structure, as well as the most visible Israeli infiltration of its ranks and communications infrastructureinits more than 40-year history. The internal breach enabled the successive blows this week and sowed panic within Hezbollah, according to Lebanese security sources.

In a Saturday news conference, Interior Minister Bassam Mawlawi gave an impassioned speech, declaring that the country was in the throes of an Israeli “breach” and vowing to ramp up the monitoring of “foreigners, hotels and Syrian camps.”

The enemy’s firepower had pursued Hezbollah to its lair, attacking rank-and-file and military leadership alike.

Weakened militarily and stripped of its cloak of secrecy, Hezbollah has arrived at the most delicate phase of its decades-long fight against Israel. It hoped that a low-level fight on the border on behalf of the Palestinians would prop up Hamas’ position in the negotiations, but a ceasefire in Gaza seems more elusive than ever before. Now its limited confrontation with Israel has exacted a seemingly unlimited price from the militant group.

Yet the compulsion to lash out has rarely been greater, bringing the region even closer to the brink of a catastrophic war.

In its most high-level statement since the Israeli airstrike on Friday, Hezbollah’s second in command Naim Qassem declared “a new chapter” in the confrontations which he called “a battle without limits.”

Hezbollah’s retaliation in the early hours of Sunday appears to be its most forceful attack since confrontations at the Israel-Lebanon border began last October. The group said it targeted the Ramat David airbase in southeast Haifa, and the Rafael military industries site, north of Haifa. The Israeli military did not respond to questions about whether the site was impacted but officials confirmed direct hits nearby.

This was one of the deepest hits by Hezbollah since the last all-out war between Lebanon and Israel in 2006. The group also said it used new missiles it calls Fadi-1 and Fadi-2, believed to be medium-range rockets. If confirmed, this would mark one of the first time Hezbollah has fired weapons outside of its short-range arsenal.

The group will hope to have restored some of its deterrence power, and to force an end to Israel’s “new chapter” in its fight against Hezbollah.

What is certain is that there are new unwritten rules of engagement between Hezbollah and Israel. Until a few months ago, an Israeli strike in Beirut was believed to provoke a Hezbollah retaliation in a major Israeli city. After Israel killed a Hamas leader in southern Beirut in January, that turned out not to be true. Since then, Israel has attacked the Lebanese capital five times.

Hours before the Israeli airstrike on Friday, Hezbollah leader Hassan Nasrallah called the strikes on the wireless devices “unprecedented and severe.” The group had lost this battle, he seemed to say, but not the war.

Hezbollah’s supporters are trying to put on a brave face. “War is a boxing match. One day you win, another day you lose,” said Hussein, attending the funeral of three Hezbollah fighters slain in Friday’s strike.

“We are strong in our faith … We are all ready to spill blood for Nasrallah.”

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Exit polls suggest reprieve for Germany’s Scholz, as his party looks set to fend off far right in state vote

German Chancellor Olaf Scholz’s Social Democrats (SPD) looked set to fend off the far right in a state election in Brandenburg on Sunday after trailing behind the Alternative for Germany (AfD) throughout the campaign, exit polls indicated.

The SPD, which has governed the state surrounding the capital Berlin since reunification in 1990, scored 31.8% of the vote, ahead of the far-right Alternative for Germany on 29.2%, in a last-minute comeback, according to the exit poll by broadcaster ZDF.

The success for the SPD could give Scholz a slight reprieve from party discussions about his suitability to be once more be its chancellor candidate for the federal election scheduled for next September given his unpopularity with voters.

It is unlikely, however, to give him or his party a major boost given the popular, incumbent SPD premier Dietmar Woidke had distanced himself from Scholz during the campaign and criticized the federal government’s policies.

“Dietmar Woidke and his Brandenburg SPD have made a furious comeback in recent weeks,” said SPD party general secretary Kevin Kuehnert.

“For us in the federal SPD, this evening, if things go well, the problems that lie ahead of us will not have gotten any bigger. But they have not gotten any smaller either,” he said.

Three-quarters of those who voted for the SPD did not do so out of conviction but rather to fend off the AfD, according to the exit poll published by broadcaster ARD. Turnout rose to 73% from 61% five years ago, according to ZDF.

The SPD is polling just 15% at national level, down from the 25.7% it scored in the 2021 federal election. That is behind the AfD on around 20% and opposition conservatives on 32%.

All three parties in Scholz’s ideologically heterogeneous coalition combined are currently polling at around 30%, less than the conservatives alone.

The coalition has come under fire for its constant bickering and for its handling of immigration. In the formerly Communist-run East, many voters are also critical of its delivery of weapons to Ukraine to help it fend off Russia’s full-scale invasion.

No time for complacency

The vote in Brandenburg comes three weeks after the Russia-friendly AfD became the first far-right party to top a state election in Germany since World War Two, in Thuringia. It also performed strongly in neighboring Saxony, coming hot on the heels of the conservatives in second place.

Woidke warned against complacency, noting the AfD was still gaining momentum. The ZDF poll suggested it had gained 5.7 percentage points since the last Brandenburg election in 2019.

AfD co-leader Tino Chrupalla noted the AfD had made strong gains among young voters – a trend that was reflected for far-right parties across Europe in the EU elections in June.

The new leftist Alliance Sahra Wagenknecht was on track to come in third place, on 12% according to the poll, ahead of the conservatives on 11.6%, underscoring the ongoing upheavals in Germany’s political landscape making predictions tricky.

The Greens, one of the junior partners in Scholz’s coalition at a federal level, came in on 4.7%, just below the 5% threshold to automatically make it into state parliament.

The result achieved by the other junior coalition partner, the Free Democrats (FDP), was too insignificant to be reflected in the poll.

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Sri Lankans elect Marxist-leaning Dissanayake as president to fix economy

Sri Lankans elected Marxist-leaning Anura Kumara Dissanayake as their new president on Sunday, putting faith in his pledge to fight corruption and bolster a fragile economic recovery following the South Asian nation’s worst financial crisis in decades.

Dissanayake, 55, who does not possess political lineage like some of his rivals in the presidential election, led from start to finish during the counting of votes, knocking out incumbent President Ranil Wickremesinghe and opposition leader Sajith Premadasa.

“We believe that we can turn this country around, we can build a stable government … and move forward. For me this is not a position, it is a responsibility,” Dissanayake told reporters after his victory which was confirmed after a second tally of votes.

The election was a referendum on Wickremesinghe, who led the heavily indebted nation’s fragile economic recovery from an economic meltdown but the austerity measures that were key to this recovery angered voters. He finished third with 17% of the votes.

“Mr. President, here I handover to you with much love, the dear child called Sri Lanka, whom we both love very dearly,” Wickremesinghe, 75, said in a statement conceding defeat.

Dissanayake polled 5.6 million or 42.3% of the votes, a massive boost to the 3% he managed in the last presidential election in 2019. Premadasa was second at 32.8%.

It was the first time in the Indian Ocean island’s history that the presidential race was decided by a second tally of votes after the top two candidates failed to win the mandatory 50% of votes to be declared winner.

Under the electoral system, voters cast three preferential votes for their chosen candidates. If no candidate wins 50% in the first count, a second tally determines the winner between the top two candidates, using the preferential votes cast.

About 75% of the 17 million eligible voters cast their ballots, according to the election commission.

This was the country’s first election since its economy buckled in 2022 under a severe foreign exchange shortage, leaving it unable to pay for imports of essentials including fuel, medicine and cooking gas. Protests forced then-President Gotabaya Rajapaksa to flee and later resign.

Dissanayake presented himself as the candidate of change for those reeling under austerity measures linked to a $2.9 billion International Monetary Fund bailout, promising to dissolve parliament within 45 days of taking office for a fresh mandate for his policies in general elections.

“The election result clearly shows the uprising that we witnessed in 2022 is not over,” said Pradeep Peiris, a political scientist at the University of Colombo.

“People have voted in line with those aspirations to have different political practices and political institutions. AKD (as Dissanayake is popularly known) reflects these aspirations and people have rallied around him.”

Dissanayake has worried investors with a manifesto pledging to slash taxes, which could impact IMF fiscal targets, and a $25 billion debt rework. But during campaigning, he took a more conciliatory approach, saying all changes would be undertaken in consultation with the IMF and that he was committed to ensuring repayment of debt.

Grinding poverty for millions

Buttressed by the IMF deal, Sri Lanka’s economy has managed a tentative recovery. It is expected to grow this year for the first time in three years and inflation has moderated to 0.5% from a crisis peak of 70%.

But the continued high cost of living was a critical issue for many voters as millions remain mired in poverty and many pinned hopes of a better future on the next leader.

Dissanayake ran as a candidate for the National People’s Power alliance, which includes his Marxist-leaning Janatha Vimukthi Peremuna party.

Although JVP has just three seats in parliament, Dissanayake’s promises of tough anti-corruption measures and more policies to support the poor boosted his popularity.

He will have to ensure Sri Lanka sticks with the IMF program until 2027 to get its economy on a stable growth path, reassure markets, repay debt, attract investors and help a quarter of its people out of poverty.

“Root cause for the downfall of this country is bad management. We have a strong feeling if we have a good manager to rule this country… we can be successful in future,” said Janak Dias, 55, a real estate businessmen.

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