What Comes Next for the Middle East

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Alex Ossola (0:18)

What's in store for the Middle East after Israel and Hamas swap prisoners and hostages? Plus, three economists win the Nobel Prize for work on how innovation drives economic growth. And is all that investment in artificial intelligence paying off?

Justin Lahart (0:34)

What AI is really doing is through this massive amount of investment, that investment itself is boosting gross domestic product, but that's not the promise. Ultimately, you want to see AI boost growth by boosting productivity, by making workers get more done.

Alex Ossola (0:52)

It's Monday, October 13th. I'm Alex Ossola for The Wall Street Journal. This is the PM Edition of What's News, the top headlines and business stories that move the world today.

It was a momentous day in the Middle East as the first stage of the peace plan between Israel and Hamas went into effect. The 20 remaining living hostages from Gaza had emotional reunions with their loved ones in Israel. And Israel released the nearly 2,000 Palestinians it had agreed to free under the terms of the deal. Large crowds greeted them as their buses arrived in the West Bank and the Gaza Strip. In an address to Israel's legislature, President Trump vowed to extend his peacemaking to the wider Middle East.

SPEAKER_2 (1:45)

This is the historic dawn of a new Middle East.

Alex Ossola (1:50)

Trump then flew to Sharm el-Sheikh, Egypt, to meet with leaders from the Middle East and Europe involved in efforts to end the war and plans to rebuild the Gaza Strip. There, President Trump and the leaders of Egypt, Turkey and Qatar signed a document recognizing the ceasefire and hostage release deal between Israel and Hamas. Israel and Hamas are expected to begin negotiating a peace deal that would see the US designated terrorist group disarm and give up power in Gaza. For more on what comes next, I'm joined now by WSJ National Security reporter Robbie Gramer. Robbie, today was phase one. The hostages have been returned, the prisoners have been returned. How did all that go?

Robbie Gramer (2:28)

Well, fortunately for everyone, there were no surprises. So all 20 living hostages have been released and returned to Israel. They were freed in two groups. And as part of the agreement, Hamas agreed to release the 28 bodies of hostages. So far, they've released only four. There's some open questions on whether they know where all the remains are. The group warned during negotiations it might be unable to find all the bodies by the 72-hour deadline that Israel set. Israel has said it's a red line, but based on the officials I've talked to, everyone sees this as not a major hurdle toward moving toward the next phase of the peace plan.

Alex Ossola (3:06)

Right. President Trump said in Egypt today that that second stage has already begun. Where do negotiations now stand?

Robbie Gramer (3:13)

We're not quite clear on all the aspects of phase two. Trump and other world leaders signed a document that connected this initial ceasefire deal to the next phase of the peace agreement. But what's left unsaid and what's yet unclear is the future governance of Gaza. Hamas hasn't agreed to Israel's demand that it gives up any role in governance in the future of Gaza. What about rebuilding? Who's going to pay for the rebuilding of Gaza? How is that going to be structured? And how will the phase withdrawal of Israeli forces from Gaza be implemented in the future, especially if it looks like both sides on the peace agreement might falter or sort of renege on some aspects of this? It's still very fragile.

Alex Ossola (3:56)

You were mentioning President Trump and his visits to Egypt and Israel today. This has been quite a victory lap for him for the peace deal that he helped to broker. And he spoke today to the Israeli legislature to big applause. What does this show us about his reputation as a statesman?

Robbie Gramer (4:15)

I mean, it really proves all of his naysayers wrong. Trump obviously has this very unorthodox approach to diplomacy, shall we say. You know, he's very finicky, he can be very unpredictable. But at the same time, he's really bucked the traditions of American statesmanship that past presidents has had. And all of his advocates, all of his supporters in Washington and elsewhere say, you know, the proof is in the pudding. He's proven here that his approach has paid off.