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Israel’s Surprising Economic and Strategic Position

Perhaps if Western states studied its policies rather than endlessly criticized them they might gain from the experience.
Imported cars waiting at the Eilat Harbor.

Imported cars waiting at the Eilat Harbor.
Photo Credit: Matanya Tausig /FLASH90

Originally published at Rubin Reports.

Israel’s economic and strategic situation is surprisingly bright right now. That’s partly due to the government’s own economic restraint and strategic balancing act, partly due to a shift in Obama Administration policy and partly due to the conflicts among Israel’s adversaries.

Let’s start with the economy. During 2012, Israel’s economy grew by 3.1 percent. While some years ago this would not be all that impressive it is amazing given the international economic recession. The debt burden actually fell from 79.4 percent of Gross Domestic Product to only 73.8 percent. As the debt of the United States and other countries zooms upwards, that’s impressive, too.

Israel’s credit rating also rose at a time when America’s was declining. Standard and Poor lifted the rating from A to A+. Two other rating systems, Moody’s and Fitch, also increased Israel’s rating.Now not only is gas from Israel’s offshore fields starting to flow but a new estimate is that the fields are bigger than expected previously.

And that’s not all. Unemployment fell from 8.5 percent in 2009 to either 6.8 to 6.9 percent (according to Israel’s bureau of statistics) or 6.3 percent (according to the CIA).

In terms of U.S.-Israel relations, the visit of President Barack Obama and Israel’s cooperation on Iran and on an attempted conciliation with Turkey brought quick rewards. For the first time, Israel will be allowed to purchase KC-135 aerial refueling planes, a type of equipment that could be most useful for attacking Iranian nuclear facilities among other things.

The same deal—which includes sales to Saudi Arabia and other Arab countries to make U.S. allies feel more secure vis-à-vis Iran—includes V-22 Osprey planes that can switch between helicopter and plane mode. Israel is the first foreign country to be allowed to purchase this system. It could be used for border patrols—a bigger problem given the decline in the stability along the Egyptian and Syrian borders—and troop transport.

Finally, there would be more advanced radars for Israeli planes and a new type of missile useful for knocking out enemy anti-aircraft sites, potentially useful against Iran among other targets. In addition, an Israeli company is now going to be making the wings for the advanced U.S. F-35 fighter planes.

The completion of the border fence with Egypt increases security in places where Palestinian and Egyptian Islamist groups are trying to attack. It also has reduced illegal civilian crossings to zero. Ironically, Israel has gotten control of its border while the U.S. government proclaims that task to be impossible for itself.

And of course there is the usual and widely varied progress on medical, agricultural, and hi-tech innovations. Here is a summary of those inventions.That doesn’t mean problems don’t exist, including a budget deficit caused by some boosts in social spending (responding to protests in 2012) and unexpected defense spending to protect the border with Egypt or to handle the Iranian threat. But that deficit will be addressed, unlike in other countries. (Here is a discussion of the problems and likely policies of the new government).

The picture is even bright regarding U.S.-Israel relations, certainly compared to the previous four years. This point is highlighted by Wikileaks publication of a U.S. embassy dispatch of January 4, 2010, describing my article that day in the Jerusalem Post:

“[As far as Israel is concerned] what is important is that Obama and his entourage has learned two things. One of them is that bashing Israel is politically costly. American public opinion is very strongly pro-Israel. Congress is as friendly to Israel as ever. For an administration that is more conscious of its future reelection campaign than any previous one, holding onto Jewish voters and ensuring Jewish donations is very important….

“The other point is that the administration has seen that bashing Israel doesn’t get it anywhere. For one thing, the current Israeli government won’t give in easily and is very adept at protecting its country’s interests. This administration has a great deal of trouble being tough with anyone. If in fact the Palestinians and Arabs were eager to make a deal and energetic about supporting other U.S. policies, the administration might well be tempted to press for an arrangement that largely ignored Israeli interests.

“But this is not the case. It is the Palestinians who refuse even to come to the negotiating table — and that is unlikely to change quickly or easily. Arab states won’t lift a finger to help the U.S. on Iran, Iraq, or Arab-Israeli issues. So why bother?”

I think this analysis really fits the events that came to fruition in March 2013 with Obama’s coming to Israel, signaling a change in U.S. policy.

Face it. The obsession with the “peace process” is misplaced and misleading. The big issue in the region is the struggle for power in the Arabic-speaking world, Turkey, and Iran between Islamists and non-Islamists. And, no, the Arab-Israeli conflict has very little to do with these issues. Those who don’t understand those points cannot possibly comprehend the region. Secretary of State John Kerry may run around the region and talk about big plans for summit conferences. But nobody really expects anything to happen.

This is not, of course, to say that there aren’t problems. Yet what often seems to be the world’s most slandered and reviled country is doing quite well. Perhaps if Western states studied its policies rather than endlessly criticized them they might gain from the experience.

Originally published at Rubin Reports, under the title, “Israel is Doing Remarkable Well, Economically and Strategically.”

About the Author: Professor Barry Rubin is director of the Global Research in International Affairs (GLORIA) Center and editor of the Middle East Review of International Affairs (MERIA) Journal. See the GLORIA/MERIA site at www.gloria-center.org.


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