MARKETS

If you read my travelogue lately you noticed a strong recommendation on the Euro against the Dollar. If you followed it, you’ve been making more money than on any other markets. The American market is not healthy, the country is moving back into deficit politics and the dollar will fall further. I also have decided not to even look at real estate purchases for the time being, given that the future of New York City could be significantly affected by just one dirty bomb with enough radiation to make entire neighborhoods uninhabitable or simply spooky.

The Americans are on the learning curve and, given another year or two, we will be running a better show security-wise. The more important lesson of 9/11 – that America needs to be a better Global Citizen and actually promote the ideas for which it stands across the board rather than selectively – is being missed and polls show that the 9/11 experience has yet to change fundamental attitudes in areas not directly connected to issues of personal security. The next election will be won or lost on economic issues and so far there is no constituency for incurring expenditures to truly reform anything, even with regard to Enron. But even if the government has failed to act, the marketplace has much more severely punished those that have created the lack of confidence felt by investors. People looked at the 1980's as the Decade of Greed; no lessons were learned in the 90's. It’s not that people don’t remember – the people involved were often youngsters who were not of age during the 80's and their elders were torn between business plans that made no sense and their fear that they were missing the next great train. 

Now that we are being told that profits in the 90's were phoney and that we did exactly what we were telling the Japanese to stop doing, the uncertainty felt in the marketplace is sure to be worldwide; the Fairmont Dubai is offering rooms at $75 a night which means they must be losing hand over foot. If intrepid travelers like myself are avoiding the region, it can’t be good, although I hope by First Quarter 2003 that things might simmer down enough to make a visit possible if the Americans hit Iraq this fall rather than next spring (the latter date is more likely). However, there are bright spots where you don’t expect them. Investment in technologically innovative fields such as genomics, neurosilicates, nanotechnology and, above all, bio-informatics (the biotech area) are the areas of growth. The pharmaceutical industry is expanding at a 7.5% rate, but biotech is expanding at twice that rate. For a good read on what’s going on here, look at the Economist’s Technology Quarterly inserted to the June 22-28 Economist.

IRAN, IRAQ & SAUDI ARABIA

Tom Friedman has been writing fascinating stories about his recent visit to Iran and calls Khatami a bust-out. The Europeans are throwing their money away trying to make nice-nice with Iran; the conservatives keep throwing spit at anyone who tries to cozy up to Iran and Khatami either doesn’t have the authority or the will to take a clear position as President. In any event, it’s just a matter of time here before Iran changes because its people want change. In Saudi Arabia, their per capita income is now about $7,000 a year; 20 years ago it was 4x that amount. Here too it’s just a matter of time before Saudi changes, only that country will go through its generation of fundamentalism before it changes. To us that just means trading one set of oil fields for another. Iran and Saudi both will take their hits when the price of oil goes down again in the next cycle.

Discussing Iraq with Europeans there is a central sticking point: The Europeans don’t see Saddam as a threat the same way we do. If you think he’s a nuisance and not a threat, then it’s really hard to get you to see why we think that getting rid of him is Priority One. With regard to Israel, Europeans are convinced it’s Israel as Goliath against Palestinian David. To them it just doesn’t make sense that Big Israel can’t find a way to make peace with Little Palestine without beating up on it; they don’t see Israel under threat. America also had a hard time relating to all this until Moslems blew up the World Trade Center. I figure the Europeans will come around once the appeasement they have tried till now exhausts itself and the Eiffel Tower gets knocked down.

ISRAEL / PALESTINIAN AFFAIRS

Since the last writing, we have learned much about things we didn’t know at the time. GlobalThoughts was careful in April not to rush to conclusions regarding the Israel/Palestinian situation before facts were known. Others have had to eat their words. We now know what did and didn’t happen in Jenin and why it was a good idea to keep civilians out of town till the Israelis cleaned up the place – with booby-trapped refrigerators and couches all over the place, there would have been hundreds more casualties had people walked into their homes beforehand, many more than actually got hurt in the first place.

I’ve been waiting for Bush to make his offend-nobody and say-nothing speech (it’s an election year, stupid) but let’s face it – who cares? You can’t take visionary positions in this region without offending everybody. We know what’s coming up: Sharon is going in to reoccupy the territories and has succeeded in getting the world to see Arafat as part of the problem (not the solution) and to accept his incremental stepping-up of the Israeli response to the point where nobody lifts a finger anymore to things that a few months ago would have produced quick condemnation . The Israelis have learned not to make Arafat the center of attention so as not to have 1,000 foreign correspondents monitoring his daily intake of hummus inside his compound. Strangely enough, they haven’t really touched the Hamas and Islamic Jihad operatives inside Gaza and when they do it’s mainly because Peres complains that they don’t. So the Israelis will sit in the Palestinian areas for 1-2 years while they build the Fence and then either turn over the area to someone they feel they can trust or just close the Fence and leave the Palestinians inside to stew in their own juices.

Will the Fence work? I don’t know what it will do for Israel but it is clear the Fence means economic death and isolation for the Palestinians. I recall a few years ago Ted Koppel had a Town Meeting in Jerusalem and the Palestinians would only appear if a fence separated them from the Israelis. They are now getting their wish in real life.

Even the left-wing (ie: Haaretz) is backing the fence. It will cost about $300 million to construct and then, assuming they evacuate 5,000 people in 40 isolated settlements at $150,000 per family, another $750 million. That sounds like a lot. But the April operation cost $600 million, there’s another $130 million for extra reservists this year, $50 million to protect Gaza settlements this year and $75 million for bypass roads in the 2002 and 2003 budgets. This past year, 5 billion dollars and 75,000 jobs were lost in the overall economy. So the economics works in its favor. Besides, it’s a great public works project.

Personally, I have the sense that even if the Fence makes Israel safer, the Palestinians will then expand the circle of terror to lash out at Jews abroad. It’s only a matter of time before someone dresses up like an Orthodox Jew and blows himself up after sabbath prayers at a US synagogue. But consider the ramifications: the root of the settler problem in the Territories is American Jews with attitudes who came to Israel during the 1970's and 1980's; we have real loonies here and if Arabs come after our Brooklyn synagogues, you can bet our vigilantes will be blowing up their mosques in Queens and overall Arabs in the US will increase their isolation within the country. The American melting pot works as long as everyone does their own thing without trying to disrupt other people. People who break the rule and intrude on others will find themselves expected to leave. It’s a game nobody should play on American soil because nobody can win.

Israelis in a certain sense are used to terror and they tolerate it surprisingly well. This week there was a picture circulating on the internet of an Israeli soldier giving water from his canteen to a would-be suicide bomber who was apprehended while trying to carry out his attack. Imagine that happening in Harlem. If another 9/11 happens in the US, sure, people will be scared. But more than that, they will be pissed off. And I wouldn’t want to be an Arab or a Moslem in the US if it happens again. As it is, immigration is tightening and applications that would have sailed through a year ago are being routinely kicked back now. Europe, which can’t agree on anything, has agreed to tighten immigration. I think the average Moslem has found that life in the Global Village has become more difficult now than it was a year ago and I imagine that at the grass roots people hope that Al-Qaeda doesn’t go for a repeat performance.

I don’t know how much credence to give to public opinion surveys in the Palestinian territories given that there is no press freedom and people there are ruled under the barrel of a gun by a mafia, but these surveys say that 80% of the public supports the suicide bombings as an effective tactic that will hopefully convince the Israelis that it is in their interests to give the Palestinians what they want. Even the letter published this week by 55 Palestinian intellectuals didn’t condemn these bombings as terrorism but rather referred to them as military operations. Maybe there is a silent majority within the Palestinian community that is against it; but they aren’t exactly being courageous enough to take a public stand about it, either because they are scared or because deep down they think it just might work. 

I think they are making a mistake and that Israelis will just go through the learning curve of ratcheting up responses to these terrorist attacks until they find something that works. Sharon is just now beginning to get tough. They are not going to get a state and the right of return into Israel by cramming it down the Israelis’ throats. All they are going to get is a generation of hate-filled people without education and economic despair; it’s awfully hard to spend years creating a society of terror and hate and then suddenly turn off the spigot and say we’re all going to be good neighbors. 

This cuts both ways. I have several Arab friends who made visits to Israel over the past couple of years. One of them is an American citizen. These trips were not positive influences on them. The stories they come out with of the humiliations, delays and inquisitions they endured are unfortunate, even though we all understand why it happens. If you’ve ever found yourself in these types of situations, you are not likely to be very understanding of the global situation – you just come out of there with a very angry feeling and you don’t forget it for a long time. Just listen to the people being searched at American airports these days.

The wounds on both sides will take a generation to heal, even with an official peace. It’s unfortunate, but this political war has become personal to the people involved. Half a year ago we watched Palestinian mothers glorify their dead children and we figured they were just talking for the cameras and the martyrs payments. Now we see them in videos shot before the suicide acts wishing their kids success in their missions and we believe them, figuring they have become caught up in this society that has sanctified this type of activity. Needless to say, Israelis and Americans increasingly feel that it wouldn’t be a bad idea to just pre-emptively kill these mothers and their 10 kids who anyway wish to join their brothers and sisters in paradise. However, this is the subject of a great debate in living rooms and in scholarly journals because it involves crossing the line to pre-emptively punish people who have not yet committed an evil act and thereby cheapens their dignity as individuals. Should the Israelis reduce themselves to that standard just because the enemy chooses to attack random innocent targets?

Fueling the debate and the celebrity jurists such as Nat Lewin taking the hawkish position, there is an overall feeling that Israeli and Palestinian parents don’t view their children the same way and that Palestinians are not as protective. Remember that 12 year old kid behind the rock in Gaza last year with his father caught in the firefight between Israelis and Palestinian militants? Did you notice that the father left his kid exposed to the gunfire while he was against the rock? This week, a picture of the bus attack in Jerusalem showed a dead mom hunched over a baby carriage trying to shield her kid from the attack. Maybe the Gaza kid was trying to protect the father – I don’t know, but the Western mentality is to assume that kids don’t have the right to make such decisions and must be protected. I do know that some Arab parents are succumbing to the peer pressure their children are exposed to; some adults I know in the region would be afraid to have me visit them in the current environment for what their children might think of it. For my two cents, I blame the parents more so than the kids; kids are affected by their environment but parents can override this with strong parenting and by telling their kids what’s important to them.

Nevertheless, this past weekend’s Haaretz Magazine (haaretzdaily.com --21 June) features details of a visit between the Defense Minister and would-be suicide bombers and essentially says that the militants prey on weak-minded people and get them caught up in a pressure cooker to the point that they don’t have a chance to think about the full consequences of their actions. What this means is that on the Israeli side there is still a willingness to see the humanity of even the bombers and to believe that, above all, many of them are being manipulated.

Let’s look at some numbers in Israeli public-opinion-land and what you see might surprise you. While Sharon himself is popular, his ideas aren’t and it is Labor’s misfortune that they have the public behind their ideas but not their current leadership. Ronald Reagan was popular and strong but the voters continued to support the Democratic agenda. Current polling shows that 65% of Israelis want to evacuate some settlements, 54% feel that settlements weaken Israel, a majority back the Saudi initiative and 52% favor unilateral withdrawal from the territories. This leads me to maintain my position that 6 months after Arafat goes, Sharon will be replaced as well assuming Labor or another liberal party puts up a viable candidate.

It’s probable that more terrorism will create even more hostility and that poll numbers may change, but it is striking that these numbers hold steady after almost 2 years of Intifadah. A high-level conference on aviation security held after 9/11 failed to persuade Americans that racial profiling was necessary. A followup conference held this past month found the American team much more willing to implement such procedures. Meaning that the full effect on attitudes of today’s terrorism may not be seen for 6-12 months down the line. The emerging shift in American and British nuclear strategic doctrine from mutually assured destruction to pre-emptive strikes reflects such a fundamental shift. India has likewise gone this course to let Pakistan know that Pakistan may not have the luxury of deciding when nuclear weapons will be introduced into the theater and therefore the Pakistanis cannot blackmail India with threats that they might use their weapons. Arab regimes such as Saddam Hussein also have to worry about such problems. The Israeli attack on Osirak in Iraq in the early 80's is no longer condemned by anyone in the US or the UK because it is now the model for the future. (At the end of this article I'll return to this seismic shift in foreign policy rethink.)

Meanwhile, now is now. Sharon has proven to be quite clever and has eaten everyone around him for lunch; the fact that Arafat is still around says less about Arafat’s survival than the calculation by Israel that as long as there is a Palestinian around who can write out receipts for international aid to the Palestinians, the Israelis can occupy the area without having to be responsible for the costs of administering it. Bashar Assad may think he is having a good time playing with Hizbullah in Lebanon but I have no doubt that he will pay a price down the line for his infatuation with Nasrallah whom his father was smart enough to avoid.

I know of foreigners in Jerusalem who have received calls during the past few weeks by Jordanian military officers asking them in high-pitched voices “Why don’t the Israelis kill him already?” I personally have spoken with several Palestinians who have said to me this past week that they wouldn’t lose any sleep if Arafat were gone tomorrow. 

I don’t know what Arafat thinks in his mind. I don’t know if he thinks that scheduling terrorist attacks around every one of Bush’s initiatives is his way of sticking it to Bush or if the Hamas just does it to stick it to Arafat, but it is amazing that the Palestinians can’t stop terrorism long enough to allow Bush to make his declaration calling for Palestinian statehood. This week I read in Al-Watan, a Kuwaiti newspaper, that Arafat siphoned off another $5 million of EEC aid to pay for his wife and daughter back in Paris. If I were a Palestinian patriot and wanted to vent my frustrations with suicide bombs, I’d throw myself at blowing up Arafat so my people could cross the road to a better tomorrow. Israel as the target is a diversion from the real stumbling block to Palestinian aspirations. I know that sounds wacky, but I believe that if Arafat weren’t around the Palestinians would have had a state by now, many fewer dead, more infrastructure and happier more productive people of all ages.

I still don’t believe there is a military solution to the problem of Palestinian violence. Humans are very smart animals; the Israelis knew there was a suicide bomber loose in Jerusalem and couldn’t stop it. If it becomes impossible to board a bus, they get in a car and detonate a bomb next to the bus with even deadlier consequences. They built a border fence on the Lebanese border, the Hizbullah quickly figured out how to climb over it.

This whole thing is very wasteful and the net effect of this past year is that security guard expenditures are diverting lots of cash on the Israeli side. The Israeli government is mandating 24/7 security for all kinds of institutions without providing funding for it. So I am writing checks for day care centers and orphanages that now have to provide this kind of protection. I assume that my Palestinian counterparts are writing checks for welfare to families. Think of what that $100 million raised in the Saudi telethon could have been used for in more normal times. None of our money is capitalizing schools,  businesses and infrastructural development programs that will bring people of the region a brighter future. I just found out I am receiving enough money from an Israel Bond left to me by my late grandmother to finance a trip to Israel, but who wants to go there in the current environment?

Still, people shouldn’t think that the Israeli economy has gone kaput. Jews are also clever and know how to deal with their guilt feelings for not visiting Israel these days. The New York Jewish community sent over plane tickets and subsidies to bring over any merchant from the central Jerusalem area that wanted to come and sell their goods at several Buy-Israel fairs held in local synagogues. The merchants said they did the equivalent of 3 months worth of business in the 3 days they were here. Other communities are gearing up to do the same thing. Overall, as a percentage of GDP, Israel’s debt is much lower than America’s, their credit rating is very high, exports are up and last year were close to $40 billion, and its foreign reserves are some of the highest in the world. Meanwhile, Egypt is roughly where they and South Korea were at in 1953 and you know where Korea is today.

At the end of the day, a little context: Sitting here in the US, the fascination with Israel is akin to a guy watching stock-car racing. You know how people slow down on a highway to glance at the accident on the other side of the road? But when push to come to shove, our priorities in 2002 show themselves by the click of our mouse. I got up one morning this week and, scanning the Wall Street Journal online, saw two links: 15 Dead in Jerusalem Bus Bombing, and Jet Blue Announces New Frequent Flyer Program. I’ll tell you that I first clicked on the Jet Blue article.  A suicide bomb in Israel is yet another day at the races, but the Jet Blue frequent flyer program is more likely to affect my life here especially since I tend to fly Jet Blue and its frequent flyer program has been eagerly awaited.

RELIGION: CHILD SACRIFICE AND BIBLICAL PERSPECTIVE

Before wrapping up, I’d like to return to the subject of suicide in Islamic culture. It is a Moslem phenomenon – all the bombers have been Moslems. Even more so than it opposes Christianity or Judaism, Islam despises hedonism and atheism. The 5 Books of Moses are seen as sacred books in Islam. I’m no Bible scholar but I know what’s in it and can read plain English. This past Saturday in synagogue I brought up the following passage in Deuteronomy 12:29-31 with 3 rabbis (one of several such passages), and Moslems should take note of this and consider whether or not this practice of parents glorifying their children’s suicides in the trappings of martyrdom is a hedonistic perversion:

...When the Lord thy God will cut down the nations where you come to drive them away before you, and you drive them away and settle in their land, beware for yourself lest you be attracted after them after they have been destroyed before you, and lest you seek out their gods, saying, “How did these nations worship their gods, and even I will do the same.” You shall not do so to God, your God, for everything that is an abomination of God, that He hates, have they done to their gods; for even their sons and their daughters have they burned in the fire for their gods.

I’ve mentioned that suicide is a major taboo in Judaism; such a person cannot be buried in a Jewish cemetery. According to the Zohar (a book of Jewish mysticism written almost seven hundred years ago), the Hebrew word Hell (Gehenem) comes from the Biblical Valley of Gei-Henom (translated “doorway to hell”) located in Jerusalem just outside the southwest old city walls near the Western Wall (in Arabic Wadi El-Raba). It is said to have gotten its name based on the child sacrifices by the heathen nation of Molech who lived there. The Palestinians think they are creating a hell for Israelis through the martyrdom of their kids. More likely, if the Biblical narrative holds up, they are creating their own hell. No matter how righteous some may feel, it is long said that the road to hell is paved with the best of intentions.
 

In September 1998, I posted an article called “An Essay Reflecting on Long Term American Foreign Policy Rethink.” It is a bit of a tedious read and the article drew lots of criticism at the time it was written. But read it again now. You might still disagree with it, but the article foresaw the faults that 9/11 exposed and its recommendations are becoming America’s foreign policy as fundamental truisms of the last half century are being rethought at the highest levels, not only in the US. Let me know what you think.

Click here to go to Foreign Policy Rethink Article