Archive for the 'Israel' Category

To Hamas: Will you ever get Shalit off your hands?

Published on 12/12/2009 in Israel . 0 Comments

Risk managment expert Rick Bookstaber tackles a non-finance, game theory problem.

To: Ismail Haniyeh, Hamas Prime Minister Cc: Khaled Mashal, Chairman of the Hamas Political Bureau

Subject: Will you ever get Shalit off your hands?

I know you are frustrated with how slowly things are going with the Shalit prisoner swap negotiations. You must feel relieved that it is finally just around the corner. Well, it isn’t. You are going to be waiting for a long time yet to come. Do you really think Israel will trade hundreds of convicted murderers for one soldier? Have you ever thought there might be something more going on?

(…)

But it won’t be that easy. You aren’t going to be able to get rid of Shalit unless you are willing to give them something big in return.

There was a general expectation you would have figured all of this out about two years ago. By this point everyone is tired of waiting. Any gag can only go on for so long. Of course, Israel cannot be the one to let you in on it, so I am the guy who has ended up with that job.

Now that I’ve let the cat out of the bag, I am going back to writing about finance.

You’ll definitely need to read the whole thing.

Silicon Israel: how it happened

Published on 10/9/2009 in Israel and Technology . 1 Comment

Venture capitalist George Gilder wrote this essay for City Journal. I’ve had first-hand experience with Israeli innovation. Gilder is spot on. Excerpt:

(…) My interest in Israeli innovation began in 1998, when I invited an Israeli physicist named David Medved to speak at the Gilder/Forbes Telecosm conference. Medved described the promise of “free-space optics”—what most of us call “light”—for high-end communications among corporate buildings and campuses. He also spoke of air force experiments in Israel that used the still-higher frequencies and shorter waves of ultraviolet light for battlefield communications. Some of the most important explorations of electromagnetic technology, I realized, were happening in Israel.

Nearly a decade later, Medved introduced me to his son Jonathan, a pioneering Israeli venture capitalist. In his offices high over Jerusalem, the younger Medved told me the startling tale of Israel’s rapid rise to worldwide preeminence in high technology. I had long known that Israel held laboratories and design centers for American microchip companies. I knew that, in a real sense, much American technology could reasonably bear the label ISRAEL INSIDE. I was familiar with a few prominent Israeli start-ups, such as the electric-car company launched by Wired cover boy Shai Agassi, which boldly bypassed the entire auto industry in redesigning the automobile from scratch, and Gavriel Iddan’s company Given Imaging, with its digestible camera in a capsule for endoscopies and colonoscopies.

But what I learned in Jerusalem was that Israel was not only a site for research and outsourcing and the occasional conceptual coup, but the emerging world leader, outside the United States, in launching new companies and technologies. This tiny embattled country, smaller than most American states, is outperforming European and Asian Goliaths ten to 100 times larger. In a watershed moment for the country, Israel in 2007 passed Canada as the home of the most foreign companies on the technology-heavy NASDAQ index; it is now launching far more high-tech companies per year than any country in Europe.

To take one example among many, Israel is a prime source not only of free-space optics but also of another form of hidden light: ultra-wideband technology. This technology features wireless transmissions that are not, like cell-phone signals, millions of hertz wide at relatively high power, but billions of hertz wide—gigahertz—at power too low to be detected by ordinary antennas. The technology is typically used for mundane purposes, such as connecting personal computers and televisions wirelessly. But a firm called Camero, in Netanya, Israel, has invented an ingenious ultra-wideband device that enables counterterrorist fighters and police to see through walls and identify armed men and other threats within. An easily portable box about the size and weight of a laptop computer, Camero’s Xaver 400 could suffuse an urban battlefield with hidden light that would penetrate walls and bunkers and be detectable only by its users. Such inventions are changing the balance of power in urban guerrilla warfare, to the advantage of the civilized and the dismay of the barbarians.

But what changed in Israel that made this possible? Certainly Israel was not reckoned a force for innovation as late as the mid 1980s. Gilder argues that the new Israel gave up its welfare-state mentality:

How to explain this lassitude? For much of Israel’s short history, the country has been a reactionary force, upholding a philosophy of victimization and socialist redistribution that could only impede its progress. In 1957, a team of American economic consultants found that Israel’s “high labor costs . . . reflected the high degree of job security . . . [and] the absence of adequate incentive to or rewards for superior efficiency or performance.” This was partly a result, they added, of “virtually complete protection from foreign competition.” Two years later, A. J. Meyer of the Harvard Center for Middle Eastern Studies noted “uncertainty in the minds of many [Israeli] industrial producers that theirs is the ‘good’ occupation or that society really gives them credit—financially and in status—for their efforts.” He also cited “welfare state concepts [that] often dictate that incompetent workers stay on payrolls.”

Many of Israel’s Jews, as the writer Midge Decter described them, “were coming into the country armed with their socialism and their ideologies of labor and a Jewish return to the soil.” Imagine it: urban socialists trying to reclaim their past glory and save themselves in a hostile world by returning to the soil in a desert! They created communal experiments—kibbutzim—and put intellectuals to work with hoes and shovels, for all the world like a voluntary version of Chairman Mao’s Cultural Revolution. In a truly menacing démarche of ideological madness, they attempted to abolish the family and private property.

Panicked, moreover, by the Jewish caricatures and stereotypes wielded by their enemies, they resolved to become mendicant nebbishes—touring the centers of Western money and industry with tin cups in hand—rather than bankers and financiers. They assigned close to a third of the economy to the ownership of Histadrut, a socialist workers’ organization prone to threatening nationwide strikes. Under Histadrut pressure, they instituted minimum wages that stifled employment and propelled inflation. Then they imposed more controls on wages, prices, and rents, making everything scarce.

In a general enthusiasm for public ownership of the means of production and finance, the government through the 1990s owned four major banks, 200 corporations, and much of the land. Israel’s taxes rose to a confiscatory 56 percent of total earnings, close to the highest in the world, stifling even those private initiatives that managed to pass through the country’s sieves of socialism. Erecting barriers of bureaucracy, sentiment, and culture, Israeli leaders balked the entrepreneurs and inventors who gathered there, creating a country inhospitable to Jewish genius.

Gilder says the game changer was the influx of Russians:

The influx of Soviet Jews into Israel represented a 25 percent population increase in ten years, a tsunami of new arrivals that would be equivalent to the entire population of France being accepted into the United States. Largely barred in the USSR from owning land or businesses, many of these Jews had honed their minds into keen instruments of algorithmic science, engineering, and mathematics. Most had wanted to come to America but were diverted to Israel by an agreement between Israel and the United States. Few knew Hebrew or saw a need for it. At best, they were ambivalent Zionists. But many were ferociously smart, fervently anti-Communist, and disdainful of their new country’s bizarre commitment to a socialist ethos that punished achievement.

But finance was still mired in the socialist past

(…)As the millennium dawned, Israel had failed to create a financial-services industry or to wrest control of much of Israel’s capital from the hands of Histadrut.

The force driving the Israelis decisively out of their socialist slough into the modern world of finance was once again the ingenuity of Netanyahu. (…)

An Israeli supply-sider, Netanyahu faced the adamant opposition of Histadrut and its allies in the Knesset. To overcome the hostility to finance capitalism that had long hobbled the Israeli economy, Netanyahu enlisted vital help from President George W. Bush and his treasury secretary, John Snow. Netanyahu sought a sovereign loan guarantee that would give Israeli bonds the full faith and credit of the United States Treasury, so that despite intifadas and other perils, Israel could issue bonds on the same terms as the world’s leading economy. Not wanting the U.S. to appear a patsy, Snow refused to do the deal without a significant quid pro quo, stipulating that Netanyahu secure from the Knesset a series of major financial reforms.

First, Histadrut, which dominates the pension system in Israel, had to give up its direct line to the Israeli treasury, which had guaranteed it an inflation-adjusted 6 percent annual yield. This special arrangement would be phased out over a period of 20 years. Starting immediately with the first 5 percent of its holdings, Histadrut would need to begin finding other ways to invest its $300 million per month of cash flow. Somehow a financial industry would have to arise in Israel to handle this huge trove of funds. A second briar-patch reform demanded by Snow was the immediate privatization of Israel’s state-owned industries, reducing the government’s stake in these companies from an average of 60 percent ownership to minority ownerships of about 20 percent. Among the privatized ventures were oil refineries, nearly all the banks, the Bezeq telephone monopoly, and the national airline, El Al. The third key reform was the emancipation of the financial-services industry, complete with legalization of investment banks, international private equity funds, and performance fees for hedge funds. Eliminated were double taxes not merely on investments in Israel but also on international investment activities by Israelis. The Netanyahu-Snow agenda went into effect on January 1, 2005.

In under 25 years—starting from those first modest tax reforms of the mid-1980s—Israel has accomplished the most overwhelming transformation in the history of economics, from a nondescript laggard in the industrial world to a luminous first. Today, on a per-capita basis, Israel far leads the world in research and technological creativity. Between 1991 and 2000, even before the big reform of 2005, Israel’s annual venture-capital outlays, nearly all private, rose nearly 60-fold, from $58 million to $3.3 billion; companies launched by Israeli venture funds rose from 100 to 800; and Israel’s information-technology revenues rose from $1.6 billion to $12.5 billion. By 1999, Israel ranked second only to the United States in invested private-equity capital as a share of GDP. And it led the world in the share of its growth attributable to high-tech ventures: 70 percent.

(…) By 1999, Israel ranked second only to the United States in invested private-equity capital as a share of GDP. And it led the world in the share of its growth attributable to high-tech ventures: 70 percent.

(…) Venture capital is the most catalytic force in the world economy. In the United States, venture-backed companies produced nearly one-fifth of GDP in 2007.

Please continue reading Silicon Israel…

Hopeless, but Not Serious: Pipes on Victory

Published on 10/1/2009 in Israel . 0 Comments Tags: .

David Goldman illuminates the conflict from a perspective not seen in the NYT. Excerpt:

In a recent “Spengler” essay for Asia Times, I characterized the Palestine problem as “hopeless, but not serious.” Subsidies give the Palestinians a living standard double that of Egypt and much higher than Jordan or Syria, paying perhaps a quarter of young Palestinian men to carry guns. Persuading them to give up the guns and take a pay cut is not an easy task, particularly if it involves the destruction of cherished illusions about throwing the Jews into the sea. The United Nations relief agencies have created a new sort of people with whom it is extremely difficult, and probably impossible, to have a peace.

To paraphrase Bertolt Brecht, the right thing to do is for the government to dismiss the people and elect another — except he meant it ironically, and I mean it in dead seriousness. This can occur through 1) immigration, 2) attrition in war, or 3) aging. One has to find a Palestinian people that is content to find employment in a Holy Land theme park for Christian tourists, for example.

Because Palestinian gunmen hide amongst civilians, unlike the Confederate Army of 1861-1865, attrition is too messy a prospect. Immigration is proceeding apace but it creates adverse selection, for those who can leave, do, depleting the skills of the population and leaving in place those who have no other profession but the gun. The best thing to do would be to ignore the situation. That’s right: simply announce that it is not a priority for diplomacy. Drastically reduce funding for the Palestine Authority (the easiest way is to insist on a fair census and adjust for the 1.1 million non-existent residents for whom the PA is receiving aid).

Annoying as it is, Hamas is not going to develop a nuclear bomb; the attentions of the US should be concentrated on countries that well might develop nuclear bombs.

Patience, patience. Israel is relatively safe behind its security barrier and booming economically (as well as demographically). Let the Palestinians sit there and wonder what will happen next. If other Arab countries complain about the position of the Palestinians, Washington should say: “If you don’t like it, you go talk to the Israelis.”

[From Hopeless, but Not Serious: Pipes on Victory]

And from the above-linked Spengler essay

The Palestinians cannot form a normal state. They cannot emigrate to Arab countries without accepting a catastrophic decline in living standards, and very few can emigrate to Western countries. The optimal solution for the Palestinians is to demand a state and blackmail Western and Arab donors with the threat of violence, but never actually get one.

The Palestinian Peace Process as Political Theater

Published on 5/21/2009 in Israel and Middle East . 0 Comments Tags: , .

For this reason, the entire peace process — including the two-state solution — is a chimera. Neither side can live with what the other can offer. But if it is a fiction, it is a fiction that serves U.S. purposes. The United States has interests that go well beyond Israeli interests and sometimes go in a different direction altogether. Like Israel, the United States understands that one of the major obstacles to any serious evolution toward a two-state solution is Arab hostility to such an outcome. – George Friedman

John Mauldin’s email newsletter came today incorporating a recent analysis by George Friedman of Stratfor. It is moderately long, so you’ll definitely want time to read the whole thing. I liked it because, in his usual style, George doesn’t pussyfoot around, clearly outlining the limited outcomes and the motives of the key players:

That Israel has a new prime minister and the United States a new president might appear to make this meeting significant. But this is Netanyahu’s second time as prime minister, and his government is as diverse and fractious as most recent Israeli governments. Israeli politics are in gridlock, with deep divisions along multiple fault lines and an electoral system designed to magnify disagreements.

Obama is much stronger politically, but he has consistently acted with caution, particularly in the foreign policy arena. Much of his foreign policy follows from the Bush administration. He has made no major breaks in foreign policy beyond rhetoric; his policies on Iraq, Afghanistan, Iran, Russia and Europe are essentially extensions of pre-existing policy. Obama faces major economic problems in the United States and clearly is not looking for major changes in foreign policy. He understands how quickly public sentiment can change, and he does not plan to take risks he does not have to take right now.

This, then, is the problem: Netanyahu is coming to Washington hoping to get Obama to agree to fundamental redefinitions of the regional dynamic. For example, he wants Obama to re-examine the commitment to a two-state solution in the Israeli-Palestinian dispute. (Netanyahu’s foreign minister, Avigdor Lieberman, has said Israel is no longer bound by prior commitments to that concept.) Netanyahu also wants the United States to commit itself to a finite time frame for talks with Iran, after which unspecified but ominous-sounding actions are to be taken.

Facing a major test in Afghanistan and Pakistan, Obama has more than enough to deal with at the moment. Moreover, U.S. presidents who get involved in Israeli-Palestinian negotiations frequently get sucked into a morass from which they do not return. For Netanyahu to even request that the White House devote attention to the Israeli-Palestinian problem at present is asking a lot. Asking for a complete review of the peace process is even less realistic.

<snip>

For this reason, the entire peace process — including the two-state solution — is a chimera. Neither side can live with what the other can offer. But if it is a fiction, it is a fiction that serves U.S. purposes. The United States has interests that go well beyond Israeli interests and sometimes go in a different direction altogether. Like Israel, the United States understands that one of the major obstacles to any serious evolution toward a two-state solution is Arab hostility to such an outcome.

The Jordanians have feared and loathed Fatah in the West Bank ever since the Black September uprisings of 1970. The ruling Hashemites are ethnically different from the Palestinians (who constitute an overwhelming majority of the Jordanian population), and they fear that a Palestinian state under Fatah would threaten the Jordanian monarchy. For their part, the Egyptians see Hamas as a descendent of the Muslim Brotherhood, which seeks the Mubarak government’s ouster — meaning Cairo would hate to see a Hamas-led state. Meanwhile, the Saudis and the other Arab states do not wish to see a radical altering of the status quo, which would likely come about with the rise of a Palestinian polity.

At the same time, whatever the basic strategic interests of the Arab regimes, all pay lip service to the principle of Palestinian statehood. This is hardly a unique situation. States frequently claim to favor various things they actually are either indifferent to or have no intention of doing anything about. Complicating matters for the Arab states is the fact that they have substantial populations that do care about the fate of the Palestinians. These states thus are caught between public passion on behalf of Palestinians and the regimes’ interests that are threatened by the Palestinian cause. The states’ challenge, accordingly, is to appear to be doing something on behalf of the Palestinians while in fact doing nothing.

The United States has a vested interest in the preservation of these states. The futures of Egypt, Saudi Arabia and the Gulf states are of vital importance to Washington. The United States must therefore simultaneously publicly demonstrate its sensitivity to pressures from these nations over the Palestinian question while being careful to achieve nothing — an easy enough goal to achieve.

The various Israeli-Palestinian peace processes have thus served U.S. and Arab interests quite well. They provide the illusion of activity, with high-level visits breathlessly reported in the media, succeeded by talks and concessions — all followed by stalemate and new rounds of violence, thus beginning the cycle all over again.

Continue reading…

Unstable trio endangers world

Published on 5/8/2009 in Israel . 0 Comments Tags: , , .

Greg Sheridan, Foreign editor of The Australian, highlights how dangerous the horrible-three have become, based in part on the Australian’s just released defense white paper. Note the absence of Iraq in the discussion.

Sheridan has been Seekerblog’s most reliable source on this topic, so do read the whole thing. He begins as follows:

IT is the perfect strategic storm. The deadly combination of irrational fervour, aggressive nationalism, the unimaginable destructive power of nuclear technology, growing Islamist extremism, continuing terrorist determination, an economically and militarily stretched US and a wide international milieu of festering anti-Americanism, which has not been solved by the election of Barack Obama, means the world is entering the most strategically dangerous period at least since the end of the Cold War, and perhaps for some decades before that.

Pakistan, Iran and North Korea are the three critical states, all likely to come to some sort of crisis in the next year or two.

During the past couple of weeks I have spoken to a great range of strategic analysts, policy-makers and opinion leaders, government and non-government, in Asia, the Middle East, North America and Australia.

There is considerable debate about how acute each looming crisis is.

But there is no serious debate that the trend lines on the key issues are generally negative and that seriously destructive dynamics are gaining momentum.

Taken altogether, the strategic environment is acutely dangerous and getting worse. The toxic mixture of irrational fervour, religious or ideological, and the destructive power of nuclear weapons and material makes the prospect of cataclysmic crisis much more immediate than it has been for a long, long time.

These trends are each disclosed, in relatively straightforward language, in the Rudd Government’s just published defence white paper, but no one has yet put them all together. Nonetheless, when aggregated, they form a remarkable official description of a gravely disturbing global situation.

On Pakistan, the most acute crisis of all just now, the white paper says: “Pakistan will remain a pivotally important state. Its prospects will continue to be of concern, given its possession of nuclear weapons, its centrality to success in Afghanistan and the havens for Islamist terrorist networks located in Pakistan and, however remote at present, the risk of a radical Islamist capture of the state.”

The risks of a radical Islamist capture of the state have risen greatly in recent weeks as the Pakistani Taliban poured into the Swat Valley, not very far from Islamabad.

The sight of the Pakistan Government virtually ceding the Swat Valley to the Taliban, and the Taliban marching ever closer to Islamabad and Pakistan’s arsenal of 75 to 100 nuclear weapons, galvanised the Obama administration into extraordinary urgency, evident in statements from Obama and Hillary Clinton that the situation in Pakistan constituted a mortal threat to US security.

Quite simply, the prospect of the Taliban in possession of nuclear weapons terrifies Washington and ought to terrify everybody else.

In response to Washington’s urging, the Pakistani military has hit back at the Taliban and driven them out of many newly occupied territories. But the Pakistani military has acted with much less sophistication and discrimination than the Americans have ever done. They have shelled and bombed whole villages. Perhaps a million people are displaced within Pakistan. The Pakistani military is designed for only one thing: fighting India. It is one of the most incompetent counter-insurgency forces in the world.

Most Western analysts do not believe Pakistan is in danger of imminent state collapse. But they all recognise that the extremists are getting stronger and the state is getting weaker. Obama, who this week met Pakistan’s President Asif Ali Zardari and Afghanistan’s President Hamid Karzai in Washington, has given the impression that Washington has a plan to secure Pakistan’s nuclear weapons in the event of an emergency. This is almost certainly a bluff. Such an operation would be insanely complex.

Some Indian analysts believe Pakistan is already effectively a failed state. There are really several Pakistans: a civilian government that has lost public confidence and does not control its nation’s institutions or its territory; a military that is autonomous, unaccountable, divided and ineffective, and that continues to co-operate with the Afghan Taliban and terrorist groups attacking India; a civilian merchant class that is frustrated and hemmed in; and an active civil society that is denied any power.

Continue reading…

And Spengler is …

Published on 4/23/2009 in Economics , Financial Crisis , Israel , Middle East and Politics . 0 Comments Tags: , .

Aha — the pseudonymous “Spengler” (originally writing columns for Asia Times print editions) fame turns out to be one of Seekerblog’s reliable sources: former banker, former hedgie David P Goldman, who today writes the indispensable Inner Workings.

Since 1999 “Spengler” has written some 300 essays for Asia Times — so we who valued his writings did not have too long a wait between essays. Now there is even less of a wait, what with several essays each week appearing at Inner Workings, the “by Spengler” at Asia Times and David’s First Things essays, such as Demographics and Depression.

I recommend this site search which will provide you a ready list of sharp and insightful “Spengler” essays. I also recommend The Complete Spengler at Asia Times — which know hosts Spengler’s Forum.

Here is a fragment of the revelatory essay at Asia Times:

And Spengler is …

By Spengler

During the too-brief run of the Asia Times print edition in the 1990s, the newspaper asked me to write a humor column, and I chose the name “Spengler” as a joke – a columnist for an Asian daily using the name of the author of The Decline of the West.

Barely a dozen “Spengler” items appeared before the print edition went down in the 1997 Asian financial crisis. A malicious thought crossed my mind in 1999, though, as the Internet euphoria engulfed world markets: was it really possible for a medium whose premise was the rise of a homogeneous global youth culture to drive world economic growth?

Youth culture, I argued, was an oxymoron, for culture itself was a bridge across generations, a means of cheating mortality. The old and angry cultures of the world, fighting for room to breath against the onset of globalization, would not go quietly into the homogenizer. Many of them would fight to survive, but fight in vain, for the tide of modernity could not be rolled back.

As in the great extinction of the tribes in late antiquity, individuals might save themselves from the incurable necrosis of their own ethnicity through adoption into the eternal people, that is, Israel. The great German-Jewish theologian and student of the existential angst of dying nations, Franz Rosenzweig, had commanded undivided attention during the 1990s, and I had a pair of essays about him for the Jewish-Christian Relations website. Rosenzweig’s theology, it occurred to me, had broader applications.

The end of the old ethnicities, I believed, would dominate the cultural and strategic agenda of the next several decades. Great countries were failing of their will to live, and it was easy to imagine a world in which Japanese, German, Italian and Russian would turn into dying languages only a century hence. Modernity taxed the Muslim world even more severely, although the results sometimes were less obvious.

The 300 or so essays that I have published in this space since 1999 all proceeded from the theme formulated by Rosenzweig: the mortality of nations and its causes, Western secularism, Asian anomie, and unadaptable Islam.

Why raise these issues under a pseudonym? There is a simple answer, and a less simple one. To inform a culture that it is going to die does not necessarily win friends, and what I needed to say would be hurtful to many readers. I needed to tell the Europeans that their post-national, secular dystopia was a death-trap whence no-one would get out alive.

I needed to tell the Muslims that nothing would alleviate the unbearable sense of humiliation and loss that globalization inflicted on a civilization that once had pretensions to world dominance. I needed to tell Asians that materialism leads only to despair. And I needed to tell the Americans that their smugness would be their undoing.

<snip>

As I wrote pseudonymously for Asia Times Online, new friends announced themselves – journalists, academics, clergy, and people of faith from many walks of life, not least the indefatigable group of good friends that manages the Spengler Forum. The editors of First Things asked me for an essay on Franz Rosenzweig and Islam, which I published in 2007, and later a piece entitled “Zionism for Christians”, which appeared in 2008 under the pseudonym “David Shushon”. That was a milestone for me.

I had subscribed to the journal not long after its inception in 1990, the year I finished my PhD coursework in music. To write for First Things was an unanticipated honor. I came to know the magazine’s editor Joseph Bottum, as well as such regular contributors as George Weigel, Russell Hittinger and R R Reno.

On January 8, 2009, the magazine’s founder Richard John Neuhaus died. A few weeks later Jody Bottum asked me to join the staff of First Things as an editor and writer. It seems only heartbeats ago that I was in dark seas, looking up at this beacon; now it is my turn to help keep the lighthouse.

As for Asia Times Online – this scrappy, virtual expat bar – I was there at the founding, and will contribute to it as long it continues to upload, if somewhat less frequently than before.

“Spengler” is channeled by David P Goldman, associate editor of First Things (www.firstthings.com).

Hamas 'Iranian Unit’ destroyed

Published on 1/17/2009 in Israel . 7 Comments Tags: .

Glenn Reynolds:

THIS SOUNDS LIKE A POSITIVE DEVELOPMENT: “The so-called ‘Iranian Unit’ of Hamas has been destroyed, according to Gaza sources cited Thursday by the Haaretz daily. The sources said most of the unit’s 100 members were killed in fighting in the Zeytun neighborhood of Gaza City.”

Plus, this from a captured terrorist: “Hamas took a gamble. We thought, at worst Israel will come and do something from the air – something superficial. They’ll come in and go out. We never thought that we would reach the point where fear will swallow the heart and the feet will want to flee. You [Israel] are fighting like you fought in ‘48. What got into you all of a sudden?”

How the U.N. Perpetuates the 'Refugee' Problem

Published on 1/6/2009 in Israel . 0 Comments

Nowhere on earth do terrorists get so much help from the Free World.

Israel’s assault on Hamas is just the latest in a long chain of military clashes, the scripts of which are always the same. On one side, there is the Israeli army. Technologically and militarily superior, its soldiers are motivated by a powerful commitment to their country’s security. On the other, there are Palestinian terrorists whose aim is to kill as many innocent Israelis as possible by unleashing missiles and suicide bombers on civilian centers. Then, when Israel retaliates, they appeal to the world with gruesome images of Palestinian suffering as part of a global campaign to prevent Israel from defending itself.

Sooner or later, the tactics of the Palestinian terrorists work. The voices of protest in response to Palestinian suffering grow louder until international pressure stays Israel’s hand.

More from Natan Sharansky…

Israel – Palestine thought experiement

Published on 1/4/2009 in Israel . 0 Comments

…I’m reminded of an old thought experiment a friend brought to my attention some years ago.

In the first scenario, Palestine dumps all its weapons into the ocean. What happens? Peace! The wall (which so many people love to complain about) comes down. There is no retaliation for acts of terrorism on Israel’s side, because there’s no more terrorism. No more women and children die because there are no more rockets to both hide and fire amongst the civilian population. The “humanitarian disaster” ends in Gaza.

In the second scenario, Israel dumps all its weapons into the ocean…………

More…

Seeking an Israel Palestine solution via rational-choice theory

Published on 9/27/2008 in Economics and Israel . 1 Comment Tags: .

Triggered by the desire to calibrate the value of the game theory research of Bruce Bueno De Mesquita (BDM) I found a useful review of his work by Michael Lerner. Following is a sample from the article — of BDM’s thoughts on more effective approaches to the Middle East conflict:

Recently, he’s applied his science to come up with some novel ideas on how to resolve the Israeli-Palestinian conflict. “In my view, it is a mistake to look for strategies that build mutual trust because it ain’t going to happen. Neither side has any reason to trust the other, for good reason,” he says. “Land for peace is an inherently flawed concept because it has a fundamental commitment problem. If I give you land on your promise of peace in the future, after you have the land, as the Israelis well know, it is very costly to take it back if you renege. You have an incentive to say, ‘You made a good step, it’s a gesture in the right direction, but I thought you were giving me more than this. I can’t give you peace just for this, it’s not enough.’ Conversely, if we have peace for land—you disarm, put down your weapons, and get rid of the threats to me and I will then give you the land—the reverse is true: I have no commitment to follow through. Once you’ve laid down your weapons, you have no threat.”

Bueno de Mesquita’s answer to this dilemma, which he discussed with the former Israeli prime minister and recently elected Labor leader Ehud Barak, is a formula that guarantees mutual incentives to cooperate. “In a peaceful world, what do the Palestinians anticipate will be their main source of economic viability? Tourism. This is what their own documents say. And, of course, the Israelis make a lot of money from tourism, and that revenue is very easy to track. As a starting point requiring no trust, no mutual cooperation, I would suggest that all tourist revenue be [divided by] a fixed formula based on the current population of the region, which is roughly 40 percent Palestinian, 60 percent Israeli. The money would go automatically to each side. Now, when there is violence, tourists don’t come. So the tourist revenue is automatically responsive to the level of violence on either side for both sides. You have an accounting firm that both sides agree to, you let the U.N. do it, whatever. It’s completely self-enforcing, it requires no cooperation except the initial agreement by the Israelis that they are going to turn this part of the revenue over, on a fixed formula based on population, to some international agency, and that’s that.”

As we have learned, “incentives matter”, in foreign policy just as in economics. Surely BDM’s proposal would at least improve the possibility of future cooperation. Will it take two generations of such policies to wash away enough of the Palestinian indoctrination of their young?

BDM founded Decision Insights Incorporated in 1981 and the New York consulting firm Mesquita & Roundell in 2003, but has been consulting independently for years for clients in the private sector and for a long list of governments:

…As one of the foremost scholars of game theory—or “rational choice,” as its political-science practitioners prefer to call it—Bueno de Mesquita is at the center of a raging hullabaloo that has taken over some of the most prestigious halls of learning in this country. Exclusive, highly complex mathematically, and messianic in its certainty of universal truths, rational-choice theory is not only changing the way political science is taught, but the way it’s defined.

To verify the accuracy of his model, the CIA set up a kind of forecasting face-off that pit predictions from his model against those of Langley’s more traditional in-house intelligence analysts and area specialists. “We tested Bueno de Mesquita’s model on scores of issues that were conducted in real time—that is, the forecasts were made before the events actually happened,” says Stanley Feder, a former high-level CIA analyst. “We found the model to be accurate 90 percent of the time,” he wrote. Another study evaluating Bueno de Mesquita’s real-time forecasts of 21 policy decisions in the European community concluded that “the probability that the predicted outcome was what indeed occurred was an astounding 97 percent.” What’s more, Bueno de Mesquita’s forecasts were much more detailed than those of the more traditional analysts. “The real issue is the specificity of the accuracy,” says Feder. “We found that DI (Directorate of National Intelligence) analyses, even when they were right, were vague compared to the model’s forecasts. To use an archery metaphor, if you hit the target, that’s great. But if you hit the bull’s eye—that’s amazing.”

Lerner closes with “A sample of Bruce Bueno de Mesquita’s wilder—and most accurate—predictions”

Forecasted the second Intifada and the death of the Mideast peace process, two years before it happened.

Defied Russia specialists by predicting who would succeed Brezhnev. “The model identified Andropov, who nobody at the time even considered a possibility,” he says.

Predicted that Daniel Ortega and the Sandanistas would be voted out of office in Nicaragua, two years before it happened.

Four months before Tiananmen Square, said China’s hardliners would crack down harshly on dissidents.

Predicted France’s hair’s-breadth passage of the European Union’s Maastricht Treaty.

Predicted the exact implementation of the 1998 Good Friday Agreement between Britain and the IRA.

Predicted China’s reclaiming of Hong Kong and the exact manner the handover would take place, 12 years before it happened.

For readers interested in a deeper assessment of Bueno de Mesquita’s work, see his 17-page CV at NYU [PDF].

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