Hard Questions, Tough Answers with Yossi Alpher (June 15, 2020) - Annexation: economic disaster


Yossi Alpher is an independent security analyst. He is the former director of the Jaffee Center for Strategic Studies at Tel Aviv University, a former senior official with the Mossad, and a former IDF intelligence officer. Views and positions expressed here are those of the writer, and do not necessarily represent APN's views and policy positions.

Q. Last week you dealt with the dangers to Israel’s security posed directly by annexation of West Bank lands. Perhaps this week you could tackle the threats to Israel’s economy potentially generated by annexation.

A. Those threats are becoming more clearly articulated as PM Netanyahu’s self-imposed July 1 deadline looms for moving ahead with annexation. The economic damage to Israel caused by annexation would be amplified several-fold by the current corona virus-generated crisis. Unemployment is already at record levels in both Israel and the West Bank. Two-thirds of Palestinian small and medium business have ceased functioning. Welfare and economic recovery budgets are already stressed in both Israel and the Palestinian Authority.

Economic and security ramifications are of course linked. Let’s assume, as we must and as the Israeli security community is obligated to do, that annexation in the West Bank generates unrest among the Palestinian population. Violence could be directed toward settlers. Intifada-style suicide attacks could conceivably be renewed against the Israeli population in general. Whether this is accompanied by the collapse of the Palestinian Authority or by a Palestinian declaration of independence, as PA Prime Minister Muhammed A-Shtayeh threatened last week, is another critical variable for Israeli security and economic planners to contemplate.

Israel will have to go on an Intifada footing. Reserves will be called up. That costs money (though it may be easier at a time of corona-induced mass unemployment). So do emergency measures to defend settlements, particularly those located deep inside Palestinian territory. Terrorist attacks inside Israel will delay renewal of the tourist industry after its corona-induced paralysis. The tensions would prevent 100,000 Palestinian day laborers from commuting to work in Israel, thereby further damaging the Palestinian economy and slowing the Israeli construction and service industries.

Security unrest in the West Bank, overflowing into Israel, would likely be paralleled by a decision by Gaza-based Hamas to demonstrate solidarity and renew rocket and tunnel attacks. This would require more expensive military mobilization by Israel. Hamas could also organize attacks from the West Bank, where it has a clandestine organizational presence, as part and parcel of a bid to take over there too. Were Lebanese Hezbollah, backed by Iran, to join the fray with its 100,000-strong rocket arsenal, annexation will have created a “perfect storm” of conflict—both internally in and around the West Bank, and on the borders with Gaza and Lebanon.

Such a chain-reaction of wars, on top of the virus crisis, would be expensive. Every Iron Dome missile fired to intercept a Hamas rocket costs around $50,000. In a worse-case scenario involving Hezbollah too, multiply this figure by many thousands. This would acutely exacerbate the recession Israel is already sinking into.

Disintegration of the PA, whether by deliberate Palestinian decision or due to annexation-induced anger and anarchy, would quickly oblige the IDF to renew military rule over 2.7 million West Bank Palestinians: another huge financial burden.

Wasn’t the Israeli security establishment supposed to be gearing up to deal with the real strategic threat, Iran? Instead, Israel will be stalemated both economically and militarily by Netanyahu’s drive to leave an anti-democratic, incendiary “legacy”.

Q. So much for the “internal” Israeli and Palestinian-generated economic issues. What about economic threats and pressures from abroad?

A. Economic, diplomatic and strategic-cooperation threats are being directed at Israel from nearly every direction. The only primary exception is the United States. But even in Washington the Trump administration, while not threatening, has seemingly adopted an ambivalent stance toward the extent and timing of annexation due to its own domestic political considerations.

At the economic level, the most serious threats emanate from the European Union, Israel’s primary trading partner and the heaviest investor in the hi-tech research and development which is the engine of the Israeli economy. Last week, German Foreign Minister Heiko Maas made a rare corona-era trip to Israel to make this point. Germany will hold the rotating presidency of the EU beginning July 1.

Maas threatened an angry economic response to any Israeli annexation whatsoever. Massive EU scientific programs like Horizon Europe could ban Israeli participation. Programs related to green energy, digitization, and student exchange could be frozen. While reactionary Netanyahu-boosting EU members like Hungary could veto some European punitive measures, there would be nothing to stop Germany and additional key actors in the European economy on a country-by-country basis from supporting BDS sanctions and punitive action by international judicial institutions. Prominent Israelis could find themselves banned from travel to Europe.

Q. Do threats from Arab countries carry the same weight?

A. More at the strategic-symbolic level than economically. Last week, Israelis were treated to a rare direct public appeal against annexation by a key Arab diplomat. Yusef al-Otaiba, UAE ambassador to Washington, wrote in Yediot Aharonot that “annexation will overturn, with certainty and immediately, all the Israeli aspirations for enhanced security, economic and cultural links with the Arab world. . . . We would like to believe that Israel is the opportunity, not the enemy.” Otaiba repeated the warning on Israeli TV. Leading Saudi and Bahraini spokesmen backed him up with their own televised warnings about the damage.

How serious are these admonitions? Very few Israelis have ever traveled to these wealthy Gulf countries. Economic ties are limited to quiet, under-the-table hi-tech and military hardware deals that leave no traces. Here and there, Otaiba’s rosy descriptions and aspirations raised bemused smiles. The UAE as an “open gate linking Israel to the region and the world”? “Emirate initiatives have opened opportunities for cultural exchanges and broader understanding of Israel”? Weren’t we already treated to these promises when the Oslo Accords and the 1991 Madrid Conference were supposed to generate a major breakthrough with the Arab world? And isn’t the Arab world in tumult and disorder, fragmented by revolution and tribal warfare since 2011?

All true, though Israel itself is as much to blame for Oslo’s abandoned promises as the Palestinians. Yet Otaiba was addressing and dismantling the very strategic and economic premise upon which Netanyahu, with Trump’s backing, has based his regional strategy: the Palestinian issue is secondary; the wealthy Gulf countries are just waiting for us to work with them. Despite the absence of UAE-Israel diplomatic ties, Otaiba personally attended Trump’s presentation of his ‘deal of the century’ last January in Washington. Now he is deliberately and demonstrably pouring cold water on Netanyahu’s interpretation of that deal.

Q. You mentioned growing Trump administration ambiguity regarding annexation. What affect is the growing tide of warning about security and economic damage having on key sectors of public opinion?

A. Fresh surveys by the Israel Democracy Institute, the Peace Index and Israel TV Channel 12 all point to a lack of strong public support for annexation. Even Likud voters are affected: only 37.5 percent want annexation even without American support as Netanyahu has promised, while an additional 34 percent insist on US backing. That means about one-quarter of Netanyahu’s own party members don’t back annexation at all. Only four percent of Israelis believe that annexation is the most important item on Israel’s agenda, compared with 69 percent who believe it is most important to deal with the economic crisis engendered by covid-19.

The Israel Democracy Institute findings are particularly relevant because as recently as April, it found that 52 percent of Israeli Jews backed annexation. In other words, Israeli opinion is affected by the public discussion of annexation that has emerged, along with admonitions from relatively friendly parties like Germany, Jordan and the UAE.

One additional relevant sector of public opinion is the pro-Israel lobby in the US. Both AIPAC and the Washington Institute for Near East Policy appear to be taking their distance from annexation. Unlike Americans for Peace Now and other organizations that have for decades consistently opposed Israeli occupation and settlement policies, AIPAC and WINEP long acquiesced in or openly supported those policies, thereby contributing to Israel’s slide toward apartheid. Their about-face, however partial and nuanced in AIPAC’s case and personalized in the WINEP case (its director, Rob Satloff, published a detailed analysis opposing annexation), is significant.

Q. Despite all this, are Israel’s annexation preparations continuing?

A. . The IDF has no choice but to continue with preparations as long as Netanyahu draws out Israel’s deliberations and keeps everyone in the dark regarding his annexation map. The Palestinian Authority’s decision to sever security ties, while not as sweeping as the PA would have us believe, has also impelled the IDF to expand its security reach in preparation for annexation.

One noticeable outcome is the opening of direct communication channels with the Palestinian public, in Arabic and on Facebook, by the Coordinator of Government Activities in the Territories (COGAT) and the IDF Spokesman. Pro-annexation Likud ministers like Transportation Minister Miri Regev are actively promoting infrastructure development schemes in the (soon to be annexed?) Jordan Valley.

Q. Bottom line?

A. All rational indicators--economic, security, diplomatic--point to the damage that annexation will do. The more territory and settlements are annexed, the worse the damage will be. Even the Trump administration team appears to be having second thoughts. The Israeli public is having second thoughts.

To fully clarify the annexation picture, three additional elements will still have to be accounted for in the course of the two weeks now separating us from Netanyahu’s July 1 deadline. One is the fog deliberately enveloping the preparations currently being undertaken by Netanyahu’s emissaries and their US counterparts. At some point the public, the IDF and Netanyahu’s Blue-White partners will have to be told what territories and what legal statuses and procedures are envisioned.

Second, while Jordan and the PA, the most central Arab actors affected, have made plain their opposition to any and all annexation, they have not yet given us their final word. What retaliatory steps are they threatening? Will Jordan cancel its peace treaty with Israel or merely suspend it? Will it also cancel all security cooperation? Will the PA declare itself a state? Dissolve itself? Pull out of the Oslo Accords in some demonstrative way beyond suspending security cooperation and rejecting Israeli money transfers?

Any and all of these measures could affect both Israeli public opinion and the attitude of additional Arab and European countries. The Jordanian stance and that of additional Arab countries, if tough enough, could affect Washington’s ultimate position.

Finally, we encounter Netanyahu himself. How resolved is he to do this, in the face of so many warnings of serious damage to Israel’s economy and strategic interests? How many creative gimmicks can this master politician, busy fighting a triple indictment, come up with to fudge the issue: to appear to be doing something by way of annexation while not really doing anything? That is, if he is even interested in fudging. What effect will Netanyahu’s schemes have on the bizarre coalition he has formed with Benny Gantz? Could it be the trigger for another round of elections sometime in the coming corona-infested winter, thereby actually postponing annexation?

For previous editions of Hard Questions, Tough Answers, go to the Index Page.