I. Tax Reform still too stingy though the introduction of capital gains taxation is correct. 50% bracket for people making 100k per year is too high. Any successful person will still want to jump ship and work in the US and anyway they will cheat and use all loopholes, of which too many still exist. The top bracket should be 35%. Charge a fair amount and people will cheat less. There is empirical evidence to back that last statement up, by the way.

II. Assad just might agree to a deal over the next month or two. Lebanon is already happening; the Israelis have essentially pulled out and have left a shell which they can bring out in 2 weeks when they are given the go-ahead; they are working now on the electrical border fence which is the last major item on the to-do list. The deal will be that Assad agrees to the compromise on the Galilee that is essentially what Israel last offered and which I outlined in March (syria gets rights to access but not control the water; some sort of benign "tourist village" is built on the shore and syria stays a few meters back quietly but gets to claim sovereignty for public consumption). Assad cannot get any better than he hoped to get and if his walkout in Geneva was a strategic ploy then it failed. If the walkout was due to cold nerves or misunderstanding, then the situation has since been clarified. Maybe he can get more in the future but not now. It is not worth it for him to gamble and wait a year to see if he can hold out for Israel to come around to agreeing to giving him everything because then Israel would have to give Arafat everything too and it's just not going to happen. Assad must know he has reached the point where holding out could lose him more than he might gain. If he makes the deal, then this is so. If he doesn't, then he has calculated that making the deal is more dangerous than not doing so. This is an internal decision that the Israelis cannot control and in any event it doesn't matter because the deal terms are known. If Assad wants the deal, he can come and take it. The terms of the deal are fair and I would advise him to take it. As a matter of principle, he is getting the international border and a bit more. He should not get the fruits of his post-1948 aggression, meaning the pre-1967 war border which he demands, because if he does get it, then the Israelis are also entitled to make claims for this kind of nonsense and it will be a bad precedent all around.

Bashar made a good impression with Financial Times editors last month; he gave them the impression he does want the job and that he is becoming capable. His biggest problem long term is that he still doesn't give the impression he understands the idea of economic reform and this makes the merchant classes of Syria nervous; they know that post-Assad there had better be economic reform if Syria is to become anything but an economic basket case. Rifaat Assad is better on economics and this is his greatest threat to Bashar's future unless Bashar gets with the program. Perhaps Abdullah, who gets along with Bashar, can get him on line. Abdullah understands economic reform. Problem is that Hafez Assad hoped Abdullah would be more of a puppet and hasn't been, so the honeymoon between Syria and Jordan hath come to an abrupt end.

III. When you read in the press that the Israelis are now offering 90% of the West Bank to the Palestinians, you know that the negotiations can't be going on too much longer. A few weeks ago it was 60% and then 80%. You can't go much above 100% and the final figure will be about 92%. We know that Abu Dis is being given over and we are now reading about the autonomy and bouroughization of Jerusalem and the treatment of the holy sites. Exactly as I have been saying all along. So this is going to happen as well. I still am not reading how the refugee problem is going to be solved and this has to be dealt with; the refugees are not returning to 1948 Israel and of course Arafat can't say so publicly because to do so would be killing a dream and writing his own death warrant. It is a symbolic problem and, as I have said before, the Lebanese want the people on their soil to go away -- they don't just want to have money thrown at the central government (what central government?) to absorb them into Lebanon. 

The riots in the territories are the mideast version of World Federation Wrestling at work; they represent Arafat's attempt to control the anger that exists because Fatah and the Israelis are cooperating against Hamas. Israel just let Arafat bring in 2,500 fighters from his camps in Lebanon and Arafat recently arrested the Number 1 terrorist on Israel's list, Mr. Dief. The riots also provided Israel with a smokescreen to pull out lots of troops from Lebanon without anyone making a fuss. It has been rather clear throughout the week that Barak and Arafat have been in close contact with each other and that Arafat and his top brass have been orchestrating the whole thing and that this was planned in advance and staged for the media. Review the BBC feeds carefully and you'll see what I mean. It may be that Arafat is not totally in control of the situation at a given moment but he does have the power to stop it if he puts his foot down.

IV. Peres will be the next president unless his really dirty laundry hits the papers. Weizman and Barak don't want this but they are resigned to it. Perhaps Peres will remember what Weizman was like when he was prime minister and will mind his manners and not work to undercut the government once he is elected. Peres is a founder and builder of the State worthy of the post who ensured the creation and oversaw the preservation of Israel's nuclear deterrent capability, wants the presidency and will receive the pivotal support of Rabbi Ovadiah Yosef of Shas. I would rather see an apolitical person assume the role of president but Peres is too talented to be put to pasture and humiliated as he has been the last several years. He deserves this valedictory to his career.

A very revealing portrait of Barak based on recent interviews with him was published this past Friday in Haaretz. I strongly recommend reading it. You can access it at www.haaretzdaily.com, going to their archive of past issues and looking up May 19, 2000 in the Friday Magazine section "Deconstructing Ehud".

The article shows the extent of his sophistication and, in my opinion, proves that the man is more so a statesman than a normal politician. It is easy to criticize among the shifting sands of political turmoil, but the man is navigating a difficult course with a full sense of the destiny that is at stake and needs to be supported.