The Buzz

For Israel: The Worst of Times...and the Best of Times

Israel faces an array of threats unknown since 1973.  

The Iranian nuclear program existentially threatens Israel because of its small size (8,000 square miles), concentration in three cities, nearness to Iran (700 miles from its missile bases) and limitations to anti-missile defense. Israel faces significant threats on its Lebanese border (Hezbollah) and Gazan border (Hamas) plus possible threats from its Syrian border (jihadists) and eastern border (in a possible Hamas-dominated West Bank).

But it is also the best of times. Israel has developed strong relationships with three of the four BRIC countries (India, Russia and China). The Indian electoral victory of Narendra Modi, who has visited Israel and worked with Israeli companies in Gujarat, will likely lead to a free-trade zone worth $15 billion per year. Israel is a leading military supplier to India and works with that country on rockets and counterintelligence. Last year an Israeli company and Swiss company agreed to build two semiconductor fabrication plants in India worth over $10 billion.

Russia is another partner. Israel is negotiating a free-trade agreement with Russia, which would triple trade to $6 billion by 2024. Israel commercializes products at the Skolkovo high-tech zone and sells UAVs to Russia. It refused to condemn Russia over Ukraine at the United Nations.

While Vladimir Putin has visited Israel twice, Bibi Netanyahu has visited Moscow five times. Putin allowed a Jewish museum in Moscow, condemned anti-Semitism in Ukraine and froze the sale of advanced S-300 antiaircraft missiles to Iran. Every week thousands of Israelis travel to Russia to do business.

As for China, Bibi Netanyahu and Shimon Peres recently visited Beijing while PLA Chief of Staff Chen Bingle (2011) and Foreign Minister Wang Yi (2013) visited Israel. Bilateral trade will shortly reach $10 billion. In Shantou, Technion will open its first foreign high-tech school.

While Israel has problems with these powers over Iran, it has built good relations with all of them.

Israel’s relationship with the United States remains strong in military and intelligence. Technion was chosen by Cornell to help run its new Manhattan high-tech zone. Israel, despite issues, has joined the €77 billion 2020 EU Horizon Project of Research and Development.

In the inner circle, Egypt and Jordan remain unthreatening and Syria, badly weakened by civil war, poses little threat.

Yet, Israel was built under difficult conditions. In 1948, 650,000 Israeli Jews were surrounded by twenty-seven million Arabs. Most of the three million immigrants after 1948 came from countries where their property had been expropriated and were treated as dhimmis (in the Middle East) or had grown up traumatized by the Holocaust (in Europe). Male military service from ages 18 to 40+ for as long as seven years added to their burdens.

Democratic Israel underwent a series of revolutions. The 650,000 Jews of 1948 have grown to over six million Jews today.  Israel’s Third World economy of $4,800 GDP per capita in 1950, has soared to $34,000 today.

While 1990 Israel had little high-tech, it now has $22 billion in high-tech exports. Israel receives thirty times as much venture capital per capita as Europe. Its 60 companies on the NASDAQ rank it third after the U.S. and China. Tel Aviv was recently voted the second best place in the world to bring out an IPO. Eric Schmidt, CEO of Google, said that the next Google may come out of Israel and that Israel was the most important high-tech center in the world after Silicon Valley.

Israel, which at birth in 1948 lacked tanks or planes, is now a top-ten arms exporter ($7 billion). Mossad is considered one of the world’s leading intelligence agencies. The seven hundred university students of 1948 now number over two hundred thousand. Foreign direct investment, which was $2 billion from 1948-1988, from 2011-2013 soared to a stunning $32 billion.

The 156,000 Israeli Arabs of 1948 now number 1.6 million. The Arabs, who in 1948 had two years of education, today have eleven years of education. Israeli Arab life expectancy of seventy-nine years is almost ten years higher than that of Middle Eastern Arabs. Fully 12 percent of university students are Arabs. Arab per capita income ($15,000) is 50 percent higher than for Arab states in the region.

Following Charles Dickens, it is the best of times and the worst of times for Israel. Only time will tell which will prevail.

Jonathan Adelman is a professor at the Josef Korbel School of International Studies at the University of Denver.

Image: Office of the Prime Minister: Israel.