Israel Matzav

It's the economy, stupid!

DUE TO the economic policies implemented by Prime Minister Binyamin Netanyahu since his first tenure as prime minister in 1996, in the face of this economic disaster, Israel is likely to find itself in the unlikely position of standing along China and India as among the only stable, growing economies in the world. Israel's banking sector is largely unexposed to European debt. Israel's gross external debt is 44 percent of GDP. This compares well not only to European debt levels of well over 100 percent of GDP but to the US debt level which stands at 98 percent of GDP.

Assuming the government does not bend to populist pressure and take economically hazardous steps like reducing the work week to four days, Israel's economy is likely to remain one of the country's most valuable strategic assets. Just as economic prosperity allowed Israel to absorb the cost of the Second Lebanon War with barely a hiccup, so Israel's continued economic growth will play a key role in protecting it from the economically induced political upheavals likely to ensue throughout much of the Arab world and Europe.

Aside from remaining economically responsible, as Israel approaches the coming storms it is important for it to act with utmost caution politically. It must adopt policies that provide it with the most maneuver room and the greatest deterrent force.

First and foremost, this means that it is imperative that Israel not commit itself to any agreements with any Arab regime. In 1977 the Camp David Agreement with then Egyptian president Anwar Sadat in which Israel surrendered the strategically invaluable Sinai for a peace treaty seemed like a reasonable gamble. In 2011, a similar agreement with Assad or with the Palestinian Authority, (whose budget is largely financed from international aid), would be the height of strategic insanity.

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So too, with the US's weak economy, Obama's Muslim Brotherhood friendly foreign policy, and Europe's history of responding to economic hardship with xenophobia, Israel's need to develop the means of militarily defending itself from a cascade of emerging threats becomes all the more apparent.

The economic storms may pass by Israel. But the political tempests they unleash will reach us. To emerge safely from what is coming, Israel needs to hunker down and prepare for the worst.

Labels: Arab spring, Barack Hussein Obama, economy, Egypt, Greece, Italy, Tunisia

posted by Carl in Jerusalem @ 8:32 AM