The Palestinian Emirates?

Tyler Cowen has evidently been traveling in the Middle East. E.g., My favorite things Israel. Two days later Tyler posted a provocative piece on the UAE-style multi-city-state solution proposed by Dr. Mordechai Kedar of Bar-Ilan University:

From Barry Shaw:, this is also known as the ‘eight-state solution’:

(…) He visualizes eight emirate-type city states with designated borders that will incorporate the Arabs within them. The rest of the land can be populated by the inhabitants, whether they be Jews or Arabs, living and behaving with respect and deference to the inhabitants of the various city-states. The states shall be granted sovereignty. They shall be granted surrounding land for expansion and development. Road systems in vacant lands shall be developed for transport of people and commerce, both Jewish and Arab.

If Palestinians could ‘vote with their feet’ across these various Emirates, it would be interesting to see what kind of policies would evolve, relative to what is produced by currently existing forms of political participation.

Here is a web site devoted to the concept, with one more detailed account here.  I should add that there are versions of this idea which do not add all of the ‘baggage’ found on this web site.

In presenting this material, I am not seeking to have MR commentators reprise all of the usual debates on the broader topic of Middle East peace or lack thereof.  Nonetheless I had never heard this idea before, and so I am passing it along.

I’m intrigued with the Emirates concept. The multi-part Barry Shaw series is a good place to start

(…)  Clearly, the decades-old search for an impossible two-state solution has eluded us. Seemingly intelligent and influence people still beat on about it being the only game in town. I have advise for them. Start to think out of the box. Open your minds and horizons to other solutions. Give alternatives the opportunity to succeed or fail, even as you stubbornly cling to your impossible dream.Israel has accepted that large parts of Judea and Samaria are occupied by large numbers of Arabs with an antipathy to Israel. Neither does Israel, the democratic Jewish state, desire to integrate millions of antagonistic Arabs into an Israeli society, thereby potentially tipping the demographic scales against a Jewish majority.This was the reasoning behind the two-state notion which, despite decades of the best efforts of the international community, has failed.All that has been achieved is a Palestinian split between two sections of their society, neither of which recognizes the Jewish State of Israel, and a fading minority-backed leader defying logic with a contentious move at the UN that is bound to kill the only apparent solution on the horizon.Why would political and social scientists and other “experts” want to pour money into a situation that their basic instincts tell them is doomed to failure? But they do.Why do politicians and think-tank experts vacuously point the finger at Israel, rather than examine the pathetic and dysfunctional artificially created “Palestinian” society that is torn asunder by internal bickering and back-stabbing (literally). Their violent political divide is teetering on collapse and chaos, propped up by massive financial injections, mainly provided by the West and even Israel, with Arab regimes promising assistance but defaulting on their commitments.So who says the two-state solution need be the only solution that prevents a one-state no starter? More and more people believe the two-state collapse will not be a disaster and that the dark vacuum may enable alternatives to emerge into the light of day for consideration and application.Gradually, opinion-makers are coming to the conclusion that the two-state solution is dead.

And I recommend Dr. Kedar’s

The economic incentives to the locals who would be residents of each emirate – those are compelling. The Hamas and Fatah politicians who feed off the conflict will of course try everything to prevent any progress. But eventually the interests of ordinary families might prevail.

What is not yet clear to me is why the Arab regimes (who profit politically from keeping the conflict on the front pages) would want to back the Emirates proposal? It might bring peace and left the hated Israel still standing. Where is the incentive for Egypt or Syria?

Scott Adams: imagine scenarios in which Israeli cities are still habitable in ten years

Scott Adams asks readers for scenarios that allow Israelis to live above ground. If you see a way out of the drone war, please visit Scott's comments section

In my book The Religion War, written ten years ago, I predicted a future in which terrorists could destroy anything above ground whenever they wanted. They simply used inexpensive drones with electronics no more sophisticated than an Android app.

Fast-forward to today, Iran is sending drones to Hezbollah, and Hezbollah has training camps right next to Syrian chemical weapons stockpiles. Meanwhile, Hamas has its own drone production facility, or did, until Israel found it. One presumes Hamas will build more. How long will it be before Israel is facing suicide drones that only cost its enemies $100 apiece, fit in the trunk of a car, and can guide themselves to within 20 feet of any target? I'd say five years.

So what happens when the drone attacks start happening in volume? Let's game this out. My assumption is that the coming inevitable wave of hobby-sized suicide drones will be unstoppable because they will fly low to their target and be so numerous that no defense will be effective. I predict it will be too dangerous to live above ground in Israel within ten years unless the trend is reversed. But what could stop the trend?


Greg Sheridan: Arab Spring makes Israeli-Palestinian settlement hopeless

Greg has been in Israel for a week, under the auspices of the Australia Israel United Kingdom Leadership Dialogue. His dispatch is among the best Middle East analysis we’ve seen recently: Territorial compromise loses ground in Arab Spring [subscription required]. To over-simplify Greg’s report: the power vacuums created by the Arab Spring have been largely filled by Islamist parties, especially the Muslim Brotherhood. Meanwhile, Hamas and the Palestinian Authority are in such conflict that they cannot even travel safely onto each other’s territory. This toxic brew is very unlikely to lead to a permanent settlement. Here’s an excerpt to give you the flavor:

(…) What makes me especially pessimistic about a peace deal at the moment is the interaction of two related dynamics — the unfolding of the Arab Spring and the confused mess of Palestinian politics. The Arab Spring so far has yielded bitter fruit. Across much of North Africa, elections have been held and they have shown us again that elections alone do not make democracy.

Nonetheless, elections have results and these ones have greatly strengthened Islamists and Islamist extremists. In Egypt the biggest vote went to the Muslim Brotherhood, which was backed by some of the small but rich Persian Gulf oil states. Not very far behind the Brotherhood in Egypt was the even more extreme Salafists, who were strongly backed by Saudi Arabia. The Salafists’ electoral success was extraordinary. Five minutes ago it didn’t exist as a political movement, yet it won near enough to a quarter of the votes.

But overall, all across the Middle East, the big winner is the Muslim Brotherhood. Partly as a result, the Brotherhood is in great flux internally. But on one thing the Brotherhood is absolutely clear, its constant and comprehensive demonising and delegitimising of Israel. These newly empowered forces would denounce and fatally undermine any serious Palestinian compromise with Israel.

(…) This all plays into the exceedingly dysfunctional state of Palestinian politics. The Palestinian Authority, dominated by Fatah, rules in the West Bank. Hamas, which is the Palestinian branch of the Muslim Brotherhood, rules Gaza. Naturally Hamas is fantastically empowered by the way the Arab Spring is unfolding. Islamism has shown itself to be the most powerful ideological and political force in the Middle East.

Read the whole thing »

Bruce Schneier on Stuxnet

Security guru Bruce Schneier has been offering careful observations on the Windows worm Stuxnet since 7 October. Bruce linked the recent NYT article today. Since Bruce did not make note of any glaring glitches in the article, I recommend reading Bruce’s 7 October article, then the NYT article:

This long New York Times article includes some interesting revelations. The article claims that Stuxnet was a joint Israeli-American project, and that its effectiveness was tested on live equipment: “Behind Dimona’s barbed wire, the experts say, Israel has spun nuclear centrifuges virtually identical to Iran’s at Natanz, where Iranian scientists are struggling to enrich uranium.”


My two previous Stuxnet posts. And an alternate theory: The Chinese did it.

Obama's anti-Israeli hysteria dangerous and destructive

The Australian’s Foreign editor Greg Sheridan

BARACK Obama’s anti-Israel jihad is one of the most irresponsible policy lurches by any modern American president. It rightly earns Obama the epithet of the US president least sympathetic to Israel in Israel’s history. Jimmy Carter became a great hater of Israel, but only after he left office.

(…) Perhaps Obama’s most distinctive contribution to the foreign policy debate in the lead-up to the US presidential election was his avowed determination to talk to and engage the US’s enemies if he became president. He was happy in principle to talk to Iran’s Mahmoud Ahmadinejad, but did not know for sure that the Iranian president wielded real power. But he sent all manner of felicitations and greetings to Iran and its government. When that government stole an election on Ahmadinejad’s behalf and viciously brutalised its citizens, Obama refrained from speaking too much or too forcefully, as, he said, he didn’t want to be seen to be interfering in Iranian internal affairs.

When Obama met the king of Saudi Arabia, a nation in which no one votes, women are subject to severe and demeaning restrictions and it is against the law to have a Christian church, Obama bowed in deep respect.

When Obama ran into Venezuela’s murderous despot, Hugo Chavez, at a summit, there was a friendly greeting observed by all.

But there is one leader whom Obama draws the line at. He will not be seen in public with Israel’s Prime Minister, Benjamin Netanyahu. Astonishingly, when Netanyahu saw Obama at the White House this week, all photographers and all TV cameras were banned, a level of humiliation almost completely unique in modern White House practice.

You might even conclude that Obama is trying to interfere in internal Israeli politics and bring down a government. This is something post-colonial, post-multicultural Obama would never do with Iran, but with Israel, the US’s longstanding ally, it’s fine.

And what was Netanyahu’s crime, this act of infamy that Obama’s senior staff described as an “affront” to America? It was that the relevant housing authority passed another stage of approval for 1600 Israeli housing units to be built in East Jerusalem in about three years’ time. It was very foolish that the Israelis allowed this announcement to take place while US Vice-President Joe Biden was in Israel. But they apologised to Biden at the time, Biden kissed and made up with the Israelis and was back to delivering fulsome pro-Israel speeches before he left.

(…) And Obama is showing that his personal popularity, not America’s standing, still less matters of substance such as Iran’s nuclear program, is what motivates him.

This leads to the second explanation of his behaviour, and that is to make himself personally popular in the Muslim world. Beating up on Israel is the cheapest trick in the book on that score and it can earn him easy, worthless and no doubt temporary plaudits in some parts of the Muslim world.

And thirdly, Obama is the first post-multicultural president of America. In his autobiography he talks of seeking out the most radical political theorists he could at university. For these people Israel is an exercise in Western neo-imperialism. Obama makes their hearts sing with this anti-Israel jihad.

See also Relations sour as Benjamin Netanyahu rebuffs the US.

Better Place opens EV center in Israel

Zowwee Batman, Shai Agassi’s EV infrastructure company is spreading their marketing wings with this PR palace opening. I wish we were in Israel to check it out.

Meanwhile in America, the Nissan Leaf 5-passenger EV coming out in 2010 is getting a boost from a five state EV charging facility initiative. Check out the EV Project.

Question: does EV Project compete with Better Place? It sure looks to me that they do, so is this another case of BIG GOVT picks a winner and hurts the free-market competition.

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

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.

Dore Gold on Iran’s nuclear umbrella for terrorists

David Goldman writing as Spengler in Asia Times:

This should be obvious, but it needs to be restated. Israel’s former ambassador to the United Nations did so yesterday:

Dore Gold: Nuclear Iran Would Create Terrorist Umbrella

Former Israeli Ambassador to the United Nations Dore Gold warns that a nuclear-armed Iran would shift “the entire balance in the war on terror” by providing terrorists with a nuclear umbrella.

Speaking at a briefing at the British House of Commons on Oct. 12, Dore — also a former adviser to Israeli prime ministers — said Iran’s nuclear program endangers “the security not just of Israel but of the entire Middle East, and I would say the world.”

Gold said that as of this past August, Iran had enough nuclear fuel to produce two atomic bombs, and a missile with the capability of striking Israel and Saudi Arabia.

“So if you take the fact that Iran is one of the largest supporters of international terrorism today, and you team that up with the nuclear capabilities that I’ve been describing, you have a security situation which the West has not yet seen,” Gold said.

“The whole point of George W. Bush’s decision to remove the Taliban after 9/11 was to send a very clear message: ‘You attack the American homeland and we will take down your regime.’

“But fast forward to 2012. Iran has operational nuclear weapons that can strike deep into Europe, and eventually towards the eastern seaboard of the U.S. Will the U.S., U.K., and NATO as a whole have the same freedom of maneuver to say to states that support terrorism, ‘We will take you down if you attack us?’

“Will the U.S. Congress authorize sending forces abroad against a state armed with nuclear weapons? In other words, the entire balance in the war on terror shifts, because the state that is the largest global sponsor of terrorism today now has nuclear capabilities . . .

“This nuclear umbrella of Iran will unfurl and will be able to provide protection, not just to Shiite Hezbollah, but to Sunni organizations such as al-Qaida and Hamas.”

Gold, now president of the Jerusalem Center for Public Affairs, raised the possibility that Israel could strike Iran’s nuclear facilities if the international community does not take action.

“I will say that Israel has been thinking about this problem for a very long time,” he said in remarks published on the Web site of The Henry Jackson Society, a London-based organization that promotes the foreign policies of former U.S. Sen. Henry “Scoop” Jackson.

“The Israeli air force has been training for action and all options are on the table. But I would say the official position is that there is hope, even at this late date, that the key players in the international community will take action.”

He added: “You might think that Iran’s behavior at present is brazen and risky. It looks much less brazen and risky if you recall how often Iran has already defied the West and got away with it.”

[From Dore Gold on Iran’s nuclear umbrella for terrorists]

Silicon Israel: how it happened

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…

Palestine: Hopeless, but Not Serious

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.