The Magazine

The Second Lebanon War

It probably won't be the last.

Sep 4, 2006, Vol. 11, No. 47 • By MAX BOOT
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A NUMBER OF SCANDALS have erupted in Israeli politics lately. The president and the justice minister have both made headlines for their involvement in separate sex-related controversies, while Prime Minister Olmert himself has been under investigation for possibly receiving an above-market price for the sale of his house. But the scandal that best captures the concerns of ordinary Israelis about the future of their country is the one engulfing Lt. Gen. Dan Halutz, chief of staff of the Israeli Defense Forces. At noon on July 12, three hours after a Hezbollah raid that resulted in the deaths of eight Israeli soldiers and the capture of two others and just before the IDF began bombing Lebanon in retaliation, Halutz called his broker and sold off a $28,000 stock portfolio. The story broke a month later, unleashing an ongoing storm of criticism that Halutz was more worried about his personal wealth than the health of the state.

Fair or not, that criticism reflects a broader worry that Israelis are getting so fat and happy that they no longer have what it takes to defeat their numerous enemies. The case that Israel is "slouching toward Gomorrah" is not hard to make.

To begin, one only has to point to Israel's growing prosperity. A nation that began life with a poor, agricultural economy has become the Silicon Valley of the Middle East. The primary topic of discussion prior to the recent war was Warren Buffett's decision to spend $4 billion to acquire a majority stake in Iscar Metalworking, an Israeli precision tools company. This--the legendary investor's first purchase of a non-American company--was taken as a ringing endorsement of the robust Israeli economy.

And why not? Helped by the liberalizing reforms enacted by Benjamin Netanyahu when he was minister of finance from 2003 to 2005, the Tel Aviv stock market is up 87 percent over the past five years and the economy as a whole has been growing at over 5 percent annually. Per capita GDP has soared to over $18,000 a year. That may not seem like much (American per capita GDP is $42,101), but it places Israel solidly in the ranks of the world's wealthiest countries, substantially ahead of Saudi Arabia ($13,316), to say nothing of its poorer neighbors Lebanon ($6,033), Jordan ($2,219), Syria ($1,418), and Egypt ($1,316). In absolute terms, Israelis are 155 percent richer than they were in 1967, when they won one of the most lopsided victories in military history, and 50 percent richer than in 1982, when they last invaded Lebanon.

Tel Aviv and its prosperous suburbs seem little different from metropolitan areas in Europe and North America. Even in wartime. The closing of Israel's principal port, Haifa, and the evacuation of over a million citizens from the north were substantial inconveniences. So too was the partial call-up of army reserves, which affected all of Israeli society. But to a visitor, even in mid-August, there was little outward sign that anything was amiss on the crowded beaches or in the fashionable cafés of Tel Aviv. Hippies with funky hairdos and pierced eyebrows were a more common sight than soldiers with assault rifles.

Eran Lerman, a former colonel in military intelligence, noted the striking differences between northerners living under the rain of terrorist rockets and southerners living in the "Tel Aviv bubble." There is a widespread, if possibly unfair, perception that Israeli governments in recent years have been so preoccupied with stoking the economy that they have been reluctant to take the steps necessary to ensure long-term security for fear of spooking the markets.

In 2000, then-Prime Minister Ehud Barak withdrew troops from southern Lebanon. The border area was occupied by Hezbollah, which claimed a great victory over Israel, and which proceeded to import over 13,000 rockets and to erect formidable, Maginot Line-style fortifications. Ariel Sharon's government did little about this situation because it was preoccupied with fighting Palestinian suicide bombers. Israel's victory over the Palestinians culminated in the erection of a security barrier along much of the West Bank and the withdrawal of settlers from the Gaza Strip. These were the physical manifestations of most Israelis' intense psychological desire to separate themselves from the sordid reality of the Middle East. They prefer to live in the wealthy, peaceful First World rather than the impoverished, violent Third World. Who wouldn't?