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from The Great Debate:
Learning the wrong lessons from Israel’s intervention in Syria
Israel’s recent attacks on military targets in Syria have made clear the widening regional dimensions of Syria’s civil war. They have also fueled debate about whether the United States should intervene. Look, some say, Israel acts when it sets red lines, and Syria’s air defenses are easy to breach. Israel’s involvement has energized those, like Senator John McCain (R-Ariz.), who argue for U.S. military intervention in Syria. Unfortunately, the interventionists are drawing the wrong lessons from the Israeli actions.
The first misconception is that the Israeli strikes showed how Israel stands by its red lines in ways that bolster its credibility – a sharp contrast to the perceived equivocation of President Barack Obama’s stated red line that the use of chemical weapons in Syria would be a “game changer.”
Israel has stated that it views any transfer of chemical weapons by Bashar al-Assad’s regime to Hezbollah as unacceptable. So its targeting of missile arsenals believed to be capable of delivering such weapons appears to be making good on the threat. But while such Israeli action against Hezbollah within Syria is an escalation, it is not new. Israel targeted such missiles earlier in the year and has been targeting Hezbollah arsenals in Lebanon for years. It also fought a costly war with Hezbollah in the summer of 2006 largely to degrade (unsuccessfully, it turns out) the group’s missile capabilities. Israel was thus not acting in Syria to maintain the credibility of its red lines, but acting on specific perceived threats to its national security.
If Israel always acted on the basis of maintaining its credibility — a murkier concept than many in Washington like to believe — it would likely already have launched an attack on Iran’s nuclear program. Iran has crossed countless “red lines” with no Israeli response. Some former Israeli military officials believe Iran has already crossed Prime Minister Benjamin Netanyahu’s most publicly declared nuclear red line — the one he famously drew at the United Nations last September. Israel has not acted because of concerns and debates among its security establishment about the ability of Israeli action to effectively neutralize Iran’s program. The lesson here is not that countries should act for the sake of maintaining credibility but that they should act when they believe it serves their interests and might make a difference.
from MacroScope:
Central bank independence is a bit like marriage: Israel’s Fischer
For Bank of Israel governor Stanley Fischer, this week’s high-powered macroeconomics conference at the International Monetary Fund was a homecoming of sorts. After all, he was the IMF’s first deputy managing director from 1994 to 2001. The familiar nature of his surroundings may have helped inspire Fischer to use a household analogy to describe the vaunted but often ethereal principle of central bank independence.
Fischer, a vice chairman at Citigroup between 2002 and 2005, sought to answer a question posed by conference organizers: If central banks are in charge of monetary policy, financial supervision and macroprudential policy, should we rethink central bank independence? His take: “The answer is yes.”
from The Great Debate:
Helping Iran safeguard its nuclear stockpile
Diplomats from six world powers are due back in Kazakhstan on Friday for talks with Iran about its controversial nuclear program. From the hawkish “bomb-bomb-bomb-Iran” crowd to the “jaw-jaw-not-war-war” folks, there is no shortage of ideas about how to resolve the Iranian nuclear issue.
Lost in the din is the prospect that the United Nations agency charged with monitoring Iran’s nuclear activities could settle the most pressing issue – by helping Iran convert its enriched uranium gas stockpile to safer metal form. If only the world powers will encourage it to do its job.
from The Great Debate:
Can Obama inspire youth vote in Israel?
President Barack Obama's message to Israel last week was both powerful and urgent: You can't go on like this. The status quo is not a viable option.
That is a direct challenge to Israeli Prime Minister Benjamin Netanyahu, who acts like Israel can go on like this for the foreseeable future. Many Israelis are strongly tempted to believe, with Netanyahu, that the threat of terrorism and the occupation of the West Bank are manageable problems.
from Global Investing:
Emerging Policy-More cuts and a change of governors in Hungary
All eyes on the Hungarian central bank this week. Not so much on tomorrow's policy meeting (a 25 bps rate cut is almost a foregone conclusion) but on Friday's nomination of a new governor by Prime Minister Viktor Orban. Expectations are for Economy Minister Gyorgy Matolcsy to get the job, paving the way for an extended easing cycle. Swaps markets are currently pricing some 100 basis points of rate cuts over the coming six months in Hungary -- the question is, could this go further? With tomorrow's meeting to be the last by incumbent Andras Simor, clues over future policy are unlikely, but analysts canvassed by Reuters reckon interest rates could fall to 4.5 percent by the third quarter, compared to their prediction for a 5 percent trough in last month's poll.
A rate cut is also possible in Israel later today, taking the interest rate to 1.5 percent. Recent data showed growth at a weaker-than-expected 2.5 percent in the last quarter of 2012 while inflation was 1.5 percent in January, at the bottom of the central bank's target range. But most importantly, according to Goldman Sachs, the shekel has been strengthening, having risen 7 percent against the dollar since November and 6.8 percent on a trade-weighted basis in this period. That could prompt a rate cut, though analysts polled by Reuters still think on balance that the BOI will keep rates unchanged while retaining a dovish bias. A possible reason could be that house prices -- a sensitive issue in Israel -- are still on the rise despite tougher regulations on mortgage lending.
from The Great Debate:
How close is Iran to nuclear weapons?
Israeli Prime Minister Benjamin Netanyahu claimed last week that new second-generation centrifuges, which Iran plans to start up at its Natanz uranium enrichment facility, could cut by a third the time needed to create a nuclear bomb – underlining his deadline of this summer to take military action against Iran.
Netanyahu’s prediction, however, appears to be based on some unsubstantiated assumptions regarding Iranian intentions and capabilities. Yet it can provide ammunition to the hawks in Washington and Jerusalem, who could rush us into another needless and counterproductive war in the Middle East. Netanyahu’s assertions do not stand up to technical scrutiny.
from John Lloyd:
Searching for serenity in Israel and Palestine
After Asher Susser, an Israeli scholar and one of his country’s foremost experts on Middle Eastern affairs, gave a talk in Oslo a few years ago, an audience member asked him a question: How soon, once a Palestinian state is created, will Israel and Palestine unite to form one country? “Twenty-four hours!” Susser said he replied. “Twenty-four hours after Norway and Sweden unite into one Scandinavian state!”
Susser, with whom I spoke recently in London, told the story to illustrate the fact that, as he said, “people value their ethnic and national identities much more than many wish to believe. Norway and Sweden are similar and friendly societies, but a merger would be unthinkable. Why assume it would be different with us?” (Norway, once united with Sweden under a Swedish king, achieved full independence in 1905.)
from David Rohde:
Make allies, not kill lists
Viewers of Thursday’s confirmation hearing of Defense Secretary nominee Chuck Hagel can be forgiven for thinking they were watching a years-old C-SPAN rerun. The importance of America’s intercontinental ballistic missiles dominated initial questioning. Then the war in Iraq was debated. In the end, the issue that most concerned senators from both parties was Hagel’s loyalty to Israel.
During an eight-hour hearing, the difficult decisions that the U.S. military now faces received scant attention. Vast budget cuts loom. Suicide and post-traumatic stress disorder rates are appallingly high. Diverse security threats ranging from Iran to cyber-attacks to al Qaeda in North Africa must be countered.
from Global Investing:
Emerging Policy-Doves reign
Rate cuts are still coming thick and fast in emerging markets -- in some cases because of falling inflation and in others to deter the gush of speculative international capital.
Arguably the biggest event in emerging markets is tomorrow's Reserve Bank of India (RBI) meeting which is expected to yield an interest rate cut for the first time in nine months.
from The Great Debate:
The limits of U.S. influence in Israel
A victory in Tuesday’s Israeli elections by Prime Minister Benjamin Netanyahu’s right-wing Likud Yisrael Beiteinu alliance and the ascent of even more extreme parties are indications of Israelis’ continued move to the right.
It is also an indication of the limits and the challenges faced by the Obama administration in its relationship with Israel. Despite Netanyahu’s obvious preference for President Barack Obama’s Republican opponent, Mitt Romney, in the U.S. presidential elections — and a sense that he was intervening through proxies — Obama’s ability to influence the outcome of the Israeli elections has been negligible.
