Sunday, March 31, 2013

 US president’s Jerusalem speech should have been addressed to young Palestinians--Obama still can’t be trusted
 Shoula Romano Horing, YNET NEWS 3-31-13

After his trip to Israel, it is clear that President Obama’s strategy in regard to Israel has changed but his goal remains the same. He is still trying to convince the Israelis to take suicidal risks and agree to the establishment of a Palestinian state in the pre-1967 borders, which includes dividing Jerusalem.
It is true that we are a nation that feels isolated, unaccepted, and hated in our neighborhood and are condemned and boycotted almost daily by the world. But are we so psychologically damaged and insecure as a people that after one speech and two days of flattery, adoration and reassurances by the president we are willing to give up all of Judea and Samaria and divide our capital for another Hamastan?
Are the Israelis so desperate for love and acceptance that they believe that Obama and his true intentions regarding Israel can change almost overnight?
For four years he strategically kept “daylight” between Israel and the US, but after he failed to achieve his goal of a Palestinian state, he decided to pay us a visit and show us a lot of love to lower our defenses. Obama still does not care for us, but it certainly seems that he has learned how to play us.
Can we trust the president’s newly found friendship and rapport with the Israeli prime minister he now calls Bibi after he has verbally and. publicly disrespected, humiliated, and confronted him for four years? Just last September he refused to meet Netanyahu to discuss the Iranian threat and met Beyoncé instead. Just two months ago he was reported to view the prime minister as a “political coward.”
Can we trust a president who just appointed a defense minister who supports talking to Hamas and Hezbollah and a CIA director who has referred to Jerusalem by its Arab name Al-Quds? In May 2011, Obama embraced the Palestinians’ demands by announcing his support for the establishment of a Palestinian state along the 1967 lines, including eastern Jerusalem, which houses the Western Wall and the Temple Mount.
Obama with Abbas in Bethlehem (Photo: MCT)
Can we trust a president who earlier in the same day of his Jerusalem speech, spoke at a joint news conference with Palestinian President Mahmoud Abbas, at the Muqata presidential compound in the West Bank city of Ramallah, with the father of terrorism Yasser Arafat’s huge picture in the background? Any true friend of Israel would have demanded the picture of the one responsible for so much Jewish suffering and bloodshed to be removed or covered or would have spoken in another room.
Obama in his Jerusalem speech to young Israelis talked about the benefits and miracle of peace. All Israeli Jews agree that a true peace is in their best interests. The young Israelis should not have been the audience of such a speech, which should have been delivered to young Palestinians. We, as Jews, have been praying in our daily prayers and every holiday for peace. Peace is being glorified at schools, in poems, in books, and at places of worship. In contrast, anti -Jewish and anti- Israeli incitement to hatred and violence and martyrdom is being taught daily in Palestinian schools, textbook, media, and mosques.
Barack Obama told the crowd that a peace agreement is the only path to true security. In an ideal world such a claim is true especially if your neighbors are Mexico and Canada. It is not true when your neighbors are Hezbollah, Hamas, Iran, Syria, Egypt, the Muslim Brotherhood, al-Qaeda and other jihadists, who repeatedly call for your destruction. In the Middle East the only true security is military strength that deters war.
Obama told us that Abbas is a true partner for peace negotiations. However, he is a weak leader who rejected Israeli Prime Minister Olmer’s 2008 offer for peace and has taken unilateral steps to establish a state without negotiations.
The president stated that Israel is not alone as long as it has the US. However, Jews learned from history that we can only trust ourselves. Obama’s refusal to stop the slaughter of the Syrian people does not help to reassure us.
Finally, Obama asked the young students to pressure their leaders to take risks for the “hope” of peace. But as he has done throughout his administration, he asked nothing from the Palestinians except to return to the negotiations without preconditions, which Abbas has done many times under President George W. Bush.
The first thing the Obama administration did just after his leaving Israel on Friday was to quietly announce that nearly $500 million in aid to the PA has been unblocked after Congress froze funding late last year as punishment for Abbas’ unilateral UN bid for statehood. Not coincidentally, it was followed on Monday by the Israeli government’s announcement that it is releasing frozen funds it collected to the PA.
The fact that Obama was willing to work so hard during his visit to convince the Israelis that he cares, should alarm them as to what he will be willing to do in the next four years to facilitate the establishment of a Palestinian state.
Shoula Romano Horing is an attorney. Her blog:

Tayyip Erdoğan  …Apology?… Extortion.

On Thursday, as President Obama was getting ready to deliver his vision of peace to Israeli students, the alternative to that vision was typically expressed by a rocket attack from Gaza. On Thursday morning the contrast between the two visions was clearly illustrated; Just a day later the violent alternative received a tremendous boost.
Hamas applauded Turkish PM Erdogan on finally getting his apology, declaring it “A victory” - and so they should: The effort to rescue the Hamas regime in Gaza, taken by the Turkish Islamist organization IHH three years ago, ended Friday with their calamitous moral victory. Since IHH radicals on board of the Mavi Marmara are still too often related to as “carrying humanitarian aid” and as “peace activists”, I’m inclined to remind my readers who they were, via this 3:35 video I made with my friend Guy Ross:
Gaza Flotilla - What Really Happened

No, these were no peace activists attacked by ruthless commandos while selflessly seeking justice; These were fanatic Islamists confronted with paint guns while seeking martyrdom and itching for a holy fight. These “peace activists”, die-hard supporters of Hamas and the alternative it offers to the region, were never looking for peace. And on Thursday morning, back in their homes in Turkey, they were very happy to see some rockets flying into Israel. These are the people granted an apology.
Beyond the context of intent and ideology, there’s also the issue of affiliation. Three years ago the Muslim Brotherhood was unknown to the Western public; Today it’s a household name, making the significance of IHH’s ties to the global Brotherhood clear. A report by the Jerusalem Center for Public Affairs showed that “The IHH ... was an integral part of a Turkish Muslim Brotherhood network” and that “Since 2006, Turkey has become a new center for the Global Muslim Brotherhood, while the Hamas regime in the Gaza Strip acted as the main axis for this activity.” You can’t expect the IHH to care for Shiites, or even non-Brotherhood Sunnis (like the Palestinian Authority). The flotilla was an act of alliance between Muslim Brotherhood affiliates; The thin veneer of “humanitarian aid” that miraculously still holds, was intended for those who are foolish enough to still believe in it.
Erdogan did not hesitate to throw his weight behind the IHH and keep it there for three years. The PM and his Justice and Development party, (which last year received Hamas leader Khaled Mashaal with a standing ovation and “damn Israel!” chants), are Brotherhood sympathizers, if not affiliates themselves. The moral ramifications are to be expected.
Erdogan doesn’t think Hamas is a terrorist organization, but calls Israel a “terrorist nation”. He takes no notice of Hamas’ violence and accuses Israel of genocide in Gaza, while ironically facing a very similar situation with the Kurdish PKK, a challenge he responds to with lethal ferociousness. Describing Erdogan as a non-objective mediator is an understatement. In 1998 he said that “the image of the Jews is no different than that of the Nazis”; In 2011 he rallied an Arab League meeting: “Israel must pay the price for its aggression and crimes.” He told his Parliament that Israel is engaged in ethnic cleansing; He said that “Israel is inexplicably cruel” and “hiding behind the Nazi Holocaust”. Some classic Antisemitic themes? Here you go: “The world media is under the control of Israel” and “Wherever Jews settle, they make money.” Bizarro roots? By all means: Back in 1974 Mr. Erdogan wrote, directed and starred in the play “Maskomya” about a Free-Mason - Communist - Jewish (Mas-Kom-Ya) evil conspiracy.
And finally, just three weeks ago he told a press conference in Vienna that Zionism is a crime against humanity. This coming from the PM of Turkey, whose nationalism cost an enormous number of Armenian, Greek and Kurdish lives - is infuriating. This is the man granted an apology...? The game of apologies in the Middle East is a one-way affair: the provocateur demands it, the provocateur is granted it.
Commentator Robin Wright was correct to say on Friday’s “Left Right & Center” that the apology “was the most important thing to come out of Obama’s visit”. The diplomatic necessity for Turkish-Israeli cooperation in light of the chaos in Syria is clear; Access to NATO facilities in Turkey and the dismissal of abusive legal charges against Israeli officers are just two of many immediate benefits. It’s a prospect you can’t refuse.
This is an artificial apology, a product of extortion. Israelis don’t believe in it, their PM had to eat a dish-full of frogs in order to make the call. The Turkish PM will escalate again very soon - he won’t be able to help it. It’s the ideology, stupid. Did I hear reconciliation? Erdogan was remarkably quick to cool it down on Saturday using confrontational language the world has grown so deaf to identify.
The moral consequences are devastating. If I were an Islamist anywhere in the world - I’d be launching a new flotilla tomorrow. For the rest of the world, the understanding of good and bad intentions, violent and peaceful ideologies and the very principle of justice, is more blurry today. As I wrote here yesterday, reality and perception are growing further and further removed.

Friday, March 29, 2013

The True Obstacle To Peace Between Israelis And Palestinians
by Asaf Romirowsky and Alexander Joffe
March 26, 2013Forum.

With the completion of Barack Obama’s first Presidential visit to Israel, as expected there was a great deal of symbolism reinforcing the bond between the two allies. Yet still, doves on both sides acknowledge that peace is hardly around the corner.
Understanding the true barriers to a comprehensive agreement is key to knowing where the pressure to compromise will be coming from. Contrary to popular belief, the core of the conflict is not borders, Israeli settlements, or the status of Jerusalem.

An honest look at the relationship between Israelis and Palestinians requires Obama to understand two major things before he attempts to jump-start any peace process. One is that the two state model today is only applicable to Israel and the West Bank; there can be no contiguous Palestine state between the West Bank and Gaza with Hamas in power. This would represent a threat to both Israel and to Palestine.
Second, the crux of the Israeli-Palestinian conflict is rooted in the Palestinian “Right of Return,” the collective belief in a legal and moral right for Palestinian refugees, and more importantly their descendents from around the world, to return to ancestral homes in Israel that were once part of Mandatory Palestine. The “right of return” is central to Palestinian national identity and is a high barrier to any peace agreement.
This is underscored in a recent telling statement made by Hamas leader Mahmoud Al-Zahar on the Ezzedeen Al-Qassam Brigade’s website. He said that that Israel’s attempts to end the UN classification of the Palestinian refugees is doomed to fail because of how Palestinian identity is linked to the Right of Return for eternity. “The Palestinian refugee is a citizen forcibly displaced from his land and his return is one of the constants that cannot be controlled by the occupation; it is sacred like our faith… Our grandfathers were once in their land and their grandchildren will return to it no matter how long it takes.”
This is a quasi-religious belief that crosses all sectors of Palestinian society, and which is endlessly reproduced in Palestinian media, education and culture, and which is endorsed by UNRWA, the UN organ charged with maintaining health, welfare and education services for those it has deemed Palestinian refugees.
But Al-Zahar is also misinformed regarding the Israeli position. Recent Israeli governments have been forthright in stating that there is no “right of return” and increasingly they point to it as one of the most formidable obstacles to making peace between the Israeli and Palestinian states, as well as peoples. But there have been no official Israeli efforts to end or even curtail UNRWA. Only recently has former Member of Knesset Einat Wilf called attention to UNRWA’s administrative decisions to extend refugee status to additional generations of Palestinians, creating more “refugees” and extending its own mandate. Wilf notes correctly that UNRWA’s endorsement of the “right of return” lies at the root of the Arab-Israeli conflict and not co-incidentally UNRWA’s continued existence. Important legislation to reform UNRWA has also come from U.S. Senator Mark Kirk but has not yet succeeded in passing through the Congress.
But Al-Zahar understands the problem in the most fundamental way, that the “right of return” – and until then, “refugee” status guaranteed and funded by the international community – are the cornerstones of Palestinian national identity. From his perspective, of course, it is therefore necessary to put the onus entirely on Israel for the “Nakba,” the “catastrophe” of 1948 and Israel’s creation, as opposed to seeing any Palestinian and Arab responsibility or agency in the matter. If this is the core of Palestinian identity, that can be satisfied only by exercising the Palestinian “right of return” and the destruction of Israel, then there is no room for compromise.
To understand the core of the Arab-Israeli conflict, the Obama administration would be wise to listen to Al-Zahar, as well as Palestinian president Mahmoud Abbas who stated “I have never and will never give up the right of return.” Abbas’s statement is as important as Al-Zahar’s since he was forced by Palestinian and Arab outrage to clarify an earlier comment where he had appeared to waver on the “right of return.”
In the meantime, UNRWA will continue to support continuing generations of “refugees,” the majority of whom were born outside of Palestine, a large proportion of whom are national citizens of other states. In fact, UNRWA’s former general counsel James Lindsay has observed that “In truth, the vast majority of UNRWA’s registered refugees have already been “resettled” (or, to use the UN euphemism, “reintegrated”)” and that “only thing preventing all of these citizens from ceasing to be “refugees” is UNRWA’s singular definition of what constitutes a refugee.”
Understanding how a UN agency is an integral ingredient of a long-term Arab strategy to perpetuate the misery of the Palestinians, and to keep this humanitarian burden at the center of the Arab-Israeli conflict is another key for President Obama to keep in mind as he visits Israel, and perhaps the West Bank. This has been the Arab world’s biggest success against Israel, only at the expense of the Palestinians. If Obama truly wants to move the peace process forward it would behoove him to look at what our taxpayer dollars are buying in UNRWA, and at those who are truly being served. Until he understands that the “right of return” is the essence of the conflict, and that we need to start changing this core Palestinian belief, President Obama should not expect any change in the near future.
Asaf Romirowsky is an adjunct scholar at the Middle East Forum. Alexander Joffe is a Shillman-Ginsburg Fellow at the Middle East Forum.

Senseless & spineless: Speaking truth to power

Into The Fray: Israel’s abject apology to Erdogan conveys an unequivocal message to both friend and foe: If confronted with sufficient resolve, the Jews will capitulate.
  1. Shut up. Go back to Auschwitz! 
  2. – Radio transmission from the 2010 Gaza-bound flotilla, in response to the Israel Navy’s warning that it was entering area under maritime blockade.
  1. God forbid we apologize. National pride is not just something people say on the street… it has strategic significance. If Erdogan goes around afterward and says that he brought us to our knees, he will appear as a regional leader…. He won’t leave it alone, even after we apologize.
  2. - Moshe “Bogey” Ya’alon, Haaretz, August 17, 2011 – then deputy prime minister

  1. You can take the Jew out of the ghetto, but you cannot take the ghetto out of the Jew. 
  2. – A derogatory dictum of undetermined origins.
This is a column I write with a profound sense of sadness and bitter disappointment – bordering on despair – with people I have held in the highest regard. It is a column I would have preferred not to write, but events dictate speaking truth to power.
Stupid and servile
Indeed, given the recent apology issued by Prime Minister Netanyahu to his Turkish counterpart, Recep Tayyip Erdogan, one is compelled to question whether there is any limit to the depths of selfdefeating stupidity and self-debasing servility that the Israeli leadership is willing to sink to.
No less troubling – and depressing – than the ignominious decision itself, is the warm endorsement it received from virtually all government quarters, including those that in the past expressed vigorous opposition to it. Indeed, given the vehemence of previous denunciations of any apology by senior government ministers, who now seem to have elected to underwrite it, we are once again compelled to question whether there is any principle they will not sacrifice in order to preserve positions of personal prestige and power.
For it is difficult to imagine how this unbecoming climb-down could result in any substantial upside for Israel – other than a brief, condescending pat on the head for obsequious obedience.
By contrast, the potential for a downside is enormous – and is immediately beginning to manifest itself.
Submission of the infidel
Israeli officialdom has scrambled to try and explain the reasons for this inexplicable debacle and provide excuses for this inexcusable capitulation. It is a futile effort.
The verbatim text of the PM’s apology, the possible nuances of mitigating interpretations that can be ascribed to it, or any allegedly extenuating subtext that can be read into it, are of little relevance.
Attempts to invoke them ring hollow.
What really counts is the big picture. And they speak for themselves, without accompanying clarifications to convey their significance.
For the undeniable portrait that is being publicly conveyed – and internalized – is one of a triumphant Erdogan, on the one hand, and a humbled Israel in humiliating retreat, on the other.
Having wrung the unwarranted apology from Netanyahu, the Turkish Islamist premier is not only backing away from his commitments to normalize relations with the Jewish state, but is brashly strutting around, brandishing his achievement of coercing the infidel adversary to submit to his will. Even more gallingly, he is declaring himself the adjudicator of Israel’s good behavior, according to which he will deign to honor his normalization pledge – or not.
Unsurprisingly, Israel’s enemies across the region are jubilant. Indeed, one can hardly conceive of a better boost for the morale of the myriad of malevolent malefactors who wish it ill. By submitting to Erdogan’s demands, Israel has sent an unequivocal message to its foes and friends: If confronted with sufficient resolve, the Jews will capitulate to the will of their adversaries, no matter how absurd or outrageous their terms.
Collapse of credibility
All of this seems to have provoked a belated expression of justifiable exasperation from newly appointed minister Naftali Bennett, who hitherto has expended much of his energies on boycotting haredim and empowering Yair Lapid, rather than bolstering Netanyahu’s right/hawkish flank.
Bennett remarked: “It seems that since [Netanyahu’s] apology, Erdogan is doing everything to make Israel regret it,” sternly warning, “It must be clear to Erdogan that if Israel encounters any future terrorism, our response will be no less severe [than against the Mavi Marmara flotilla in May 2010].”
And that is precisely the problem. What possible weight can any proclamation by any Israeli minister have, after the government’s systematic retreat from one firmly stated position after another over the past two decades. It first prohibited, then endorsed, negotiations with the arch-terrorist Arafat and his murderous PLO; it first opposed, then embraced, the establishment of a Palestinian state; it first firmly forswore, then conceded to, Hamas’s demand for mass prisoner releases in exchange for Gilad Schalit.
It has stood by while the Palestinians violated virtually every clause of the agreements with them – from Judeophobic incitement in their education system and official media; through the size of their armed forces; to the kinds of weaponry they were to be armed with.
Moreover, after virtually every coercive encounter with terror, no matter how severe the losses/damage inflicted by the IDF, poor political leadership has left the terrorists better off than they were before.
Thus, the 2006 Second Lebanon War left Hezbollah in a perceptibly enhanced position, both militarily and politically – with its arsenals replenished and its influence on government in Beirut increased; the Cast Lead and Pillar of Defense operations in Gaza in 2008/9 and 2012, respectively, left Hamas firmly entrenched, having won wider international recognition and with far-reaching benefits for local farmers and fisherman in the wake of the fighting; even the Gaza-flotilla interception, undertaken to enforce the quarantine of the Hamas-held territory, resulted in substantial easing of the blockade.
Collapse (cont.)
Israel has given its adversaries little reason for concern. For, if war is, as Clausewitz remarked, merely the continuation of politics by other means, Israel has been defeated resoundingly and repeatedly.
True, it has forced both Hezbollah and Hamas to regroup, redeploy and rearm.
But that should not be confused with having deterred them – for their will to fight remains undiminished.
In this regard, Israel’s latest display of submission is particularly untimely and uncalled for. It is untimely, because it can only raise the spirits and stiffen the resolve of those seeking to undermine its security and the safety of its citizens. It is uncalled for, since the Gaza flotilla incident was one of the rare occasions in which Israel was accorded at least partial justification by a UN-entity for coercive measures it undertook to ensure its security.
In a rare display of something approaching balance, the UN-appointed Palmer Commission determined that “Israel faces a real threat to its security from militant groups in Gaza… The naval blockade was imposed as a legitimate security measure in order to prevent weapons from entering Gaza by sea and its implementation complied with the requirements of international law.”
Although the commission did determine that Israel used “excessive” force (leaving one to wonder precisely what level of force would be “appropriate” to prevent oneself from being disemboweled by a frenzied lynch mob such as the IDF commandos encountered on the Mavi Marmara), the report stopped significantly short of calling for an Israeli apology.
Likewise, prominent legal experts – Professors Alan Dershowitz (Harvard), Eric Posner (University of Chicago), and Ruth Wedgwood (Johns Hopkins) – have endorsed this position, stipulating that the naval blockade and boarding in international waters were in accordance with long-standing international law and precedent.
Both Dershowitz and Posner defended the specific use of force as legal.
In a stroke, this has been sacrificed.
Rather than seize the access to the high moral ground it had been granted, and fight for its honor and good name, Israel opted for surrender, pleading guilty despite being largely exonerated – eroding even further whatever remains of the country’s badly shredded credibility.
Myth of “common interests”
The unanticipated ignominy of the apology left many Israelis shaking their heads in bewilderment, and hanging them in shame.
Reflecting these sentiments is this remark from The Jerusalem Post’s diplomatic correspondent Herb Keinon: “Not Netanyahu, International Relations Minister Yuval Steinitz, Naftali Bennett, who is charged with public diplomacy, or even Tzipi Livni, the justice minister… bothered to explain to the Israeli public why Israel said it was sorry, and what – indeed – it was sorry for.”
In an unpersuasive endeavor to rationalize the apology, the idea that rapprochement between Israel and Turkey is necessary because the countries share “common interests” has been widely invoked. This should be summarily dismissed for the claptrap that it so obviously is.
Indeed, we have seen incontrovertible proof of how little store the regime in Ankara places on those alleged “common interests.”
After all, it proved willing to forgo these much-vaunted “interests” if such an apology was not forthcoming – underlining how hopelessly precarious any alliance with it will be.
In the past, I have staunchly supported a Turco-Israeli alliance. But that was when Turkey was a secular, Western-oriented Kemalist state. But virtually the only thing that has remained unchanged since the ascent of Erdogan’s party to power is its geographical location.
Today, moving steadily toward an Islamic theocracy, Turkey is a very different country, with very different interests. Few, if any, of them are concomitant with those of Israel. As I pointed out in a previous column, “Turkish tantrums” (September 10, 2011): “The loss of Turkey as a strategic ally is a huge blow. But it is a result of what Turkey has become, not what Israel has – or has not – done.” It is futile and foolish to believe otherwise.
Not the “responsible adult”
Some claim that Erdogan’s hostility is unrepresentative of overall sentiment in Turkey and that Israel has much latent support in many sectors of the population.
Even if this is true, one can hardly conceive of a more counter-productive move than meekly handing him what is perceived as a huge victory.
After all, this can only serve to elevate his status and further entrench his antagonistic regime in power, making the chance of empowering more supportive elements commensurably more remote.
By acceding to Turkish demands and US pressure, Israel has not assumed the role of the “responsible adult.” Responsible adults protect their interests. They do not bow to puerile petulance.
Moshe Ya’alon was absolutely correct when, as deputy PM, he rejected any idea of apology, declaring: “National pride…
has strategic significance.”
Regrettably, as minister of defense he seems to have retreated from that commendable position, opting to support Netahyahu’s untenable move.
Sadly, disregarding the strategic significance of national pride is likely to have strategic consequences far more tangible than the mere loss of prestige entailed in national humiliation.
Obama an excuse not a reason
Of course, apologists for Israel’s apology will protest that it was the result of pressure from Obama. But US pressure is a poor excuse, not a persuasive reason.
After all, leaders are elected to resist pressure, not to submit to it; to sidestep it, not to succumb to it; to divert it, not to yield to it. With Israel’s favorable ratings at almost unprecedented highs in the US, one would have thought that transforming this popular support into commensurate political clout would not be an insurmountable challenge.
One would hope that after seven decades of independence and staggering achievement, Israel and Israelis would have emerged from the clutches of the pliant galut exilic mentality. One would hope Israel would no longer conduct itself as some servile shtetl-state that can be bullied into submission. One would hope…
Martin Sherman ( is the founder and executive director of the Israel Institute for Strategic Studies.

Thursday, March 28, 2013

Recognition First, Recognition Above All
Published: March 28th, 2013

Palestinians must recognize that Israel will be a Jewish state.

The ‘Jewish state.’ What is a ‘Jewish state?’ We call it, the ‘State of Israel.’ You can call yourselves whatever you want. But I will not accept it. And I say this on a live broadcast… It’s not my job to define it, to provide a definition for the state and what it contains. You can call yourselves the Zionist Republic, the Hebrew, the National, the Socialist [Republic] call it whatever you like. I don’t care.

When some 120 Israeli figures came here, they said, ‘What’s your opinion concerning the Jewish state?’, and I said that we wouldn’t agree to it. We know what they mean by it, and therefore we shall not agree to a Jewish state…

We say to him [Netanyahu], when he claims — that they [Jews] have a historical right dating back to 3000 years BCE — we say that the nation of Palestine upon the land of Canaan had a 7000 year history BCE. This is the truth, which must be understood and we have to note it, in order to say: ‘Netanyahu, you are incidental in history. We are the people of history. We are the owners of history.

Obama did not suggest that recognition of Israel as a Jewish state be a precondition for negotiations with the Palestinian Authority, and Prime Minister Netanyahu has called for “negotiations without preconditions.” But there is no doubt that it must be a precondition — not just for talking to the P.A., but for diplomacy with anybody about anything. How can a nation have a give and take discussion with someone who thinks that it is fundamentally illegitimate?

The Arab League initiative, for example, which I discussed here, does not include any mention of recognition. This is not merely an oversight: the initiative was conceived and is understood as an admission by the “Zionist regime” that is fully responsible for the conflict. The initiative calls for a redress of their historic grievance in part by means of the ‘return’ of almost five million Arabs who claim hereditary refugee status — something unheard of in the annals of diplomacy — which is incompatible with a Jewish state of Israel.

This is not a symbolic issue. Like Turkey’s Erdoğan, the Arabs have a narrative that they are not willing to compromise, not even a little. It includes the propositions that
* The Zionists created the conflict by taking Arab land and expelling the residents
* Israel perpetuated it by starting wars
* All the land from the Mediterranean to the Jordan is ‘occupied Palestinian land’
*Terrorism against Israelis is justified resistance to occupation

An agreement acceptable to the P.A. or the Arab nations must include an admission of guilt and an acceptance of the ‘ownership’ of the land by Arabs. Once this is done, then they may be more or less magnanimous to the Jewish residents — Hamas talks about killing them and the Arab league is willing to have ‘normal relations’ with them — but true Jewish sovereignty is out of the question.

So the Arabs insist on ‘right of return’ in order to reverse the nakba. They insist on withdrawal from 1967 territories to reverse the results of the several wars, and they insist on the release of all terrorist prisoners, even convicted murderers. All this sounds entirely fair and reasonable to them within the framework of their narrative.

This is why discussions about borders and security entirely miss the point, it is why the Camp David, Taba and Olmert proposals went nowhere, and why the negotiations that President Obama intends to restart will fail as well.

Unfortunately, many Israelis are blind to the importance of Arab ideology. They see the harsh statements of Arab leaders as ‘merely symbolic’, made for propaganda purposes or for home consumption. They believe that the Arabs are at bottom pragmatists like themselves, willing to set aside ideology for economic development or some degree of political autonomy.

This explains some really terrible ideas, such as the plan which surfaces periodically to grant the ‘refugees’ a ‘right of return’ in principle, but not in fact. Proponents say that it would satisfy the Arabs’ need for symbolism without destroying the Jewish state. But if such an abstract right were granted, then it would immediately be followed by demands to implement it in reality — just as the ‘apology’ to Erdoğan has been followed by demands to end restrictions on the flow of weapons and explosives to Hamas in Gaza.

They are not posturing. They mean what they say, and what they say is that they don’t accept a Jewish state.

As long as the Arabs cling to the idea that Jewish sovereignty is unacceptable, then no possible negotiations can end the conflict. But the process of negotiating under pressure from the U.S. — and the pressure is always almost all on Israel — is not only frustrating and pointless, it can be humiliating and even dangerous.

There is a simple solution. Israel must insist that there can be no negotiations until all parties agree that Israel is the Jewish state of the Jewish people.

Obama to Palestinians: Accept the Jewish State
Published: March 28th, 2013

One key shift in U.S. policy was overlooked in the barrage of news about Barack Obama's eventful fifty-hour visit to Israel last week. That would be the demand that Palestinians recognize Israel as the Jewish state, called by Hamas leader Salah Bardawil "the most dangerous statement by an American president regarding the Palestinian issue."

First, some background: Israel's founding documents aimed to make the country a Jewish state. Modern Zionism effectively began with the publication in 1896 of Theodor Herzl's book, Der Judenstaat ("The Jewish State"). The Balfour Declaration of 1917 favors "a national home for the Jewish people." U.N. General Assembly resolution 181 of 1947, partitioning Palestine into two, mentions the termJewish state 30 times. Israel's Declaration of Establishment of 1948 mentions Jewish state 5 times, as in "we … hereby declare the establishment of a Jewish state in Eretz-Israel, to be known as the State of Israel."

Because of this tight connection, when Arab-Israeli diplomacy began in earnest in the 1970s, the Jewish state formulation largely disappeared from view; everyone simply assumed that diplomatic recognition of Israel meant accepting it as the Jewish state. Only in recent years did Israelis realize otherwise, as Israeli Arabs came to accept Israel but reject its Jewish nature. For example, an important 2006 publication from the Mossawa Center in Haifa, The Future Vision of Palestinian Arabs in Israel, proposes that the country become a religiously neutral state and joint homeland. In brief, Israeli Arabs have come to see Israel as a variant of Palestine.

Awakened to this linguistic shift, winning Arab acceptance of Israel no longer sufficed; Israelis and their friends realized that they had to insist on explicit Arab acceptance of Israel as the Jewish state. In 2007, Israeli prime minister Ehud Olmert announced that unless Palestinians did so, diplomacy would be aborted: "I do not intend to compromise in any way over the issue of the Jewish state," he emphasized. The Palestinian Authority immediately and unanimously rejected this demand. Its head, Mahmoud Abbas, responded: "In Israel, there are Jews and others living there. This we are willing to recognize, nothing else."

Only six weeks ago, Abbas again blasted the Jewish state concept. The Palestinian rejection of Jewish statehood could not be more emphatic. (For a compilation of their assertions, see "Recognizing Israel as the Jewish State: Statements" at

When Benjamin Netanyahu succeeded Olmert as prime minister in 2009, he reiterated this demand as a precondition to serious negotiations: "Israel expects the Palestinians to first recognize Israel as a Jewish state before talking about two states for two peoples." The Palestinians not only refused to budge but ridiculed the very idea. Again, Abbas: "What is a 'Jewish state?' We call it the 'State of Israel.' You can call yourselves whatever you want. But I will not accept it. ... It's not my job to … provide a definition for the state and what it contains. You can call yourselves the Zionist Republic, the Hebrew, the National, the Socialist [Republic] call it whatever you like, I don't care."

American politicians, including both George W. Bush and Obama, have since 2008 occasionally referred to Israel as the Jewish state, even as they studiously avoided demanding Palestinians to do likewise. In a typical declaration, Obama in 2011 sketched the ultimate diplomatic goal as "two states for two people: Israel as a Jewish state and the homeland for the Jewish people and the State of Palestine as the homeland for the Palestinian people."

That sentence breaks important new ground and cannot readily be undone. It also makes for excellent policy, for without such recognition, Palestinian acceptance of Israel is hollow, indicating only a willingness to call the future state they dominate "Israel" rather than "Palestine." Then, in his Jerusalem speech last week, Obama suddenly and unexpectedly adopted in full the Israeli demand: "Palestinians must recognize that Israel will be a Jewish state."

While not the only shift in policy announced during Obama's trip (another: telling the Palestinians not to set preconditions for negotiations), this one looms largest because it starkly contravenes the Palestinian consensus. Bardawil may hyperbolically assert that it "shows that Obama has turned his back to all Arabs" but those ten words in fact establish a readiness to deal with the conflict's central issue. They likely will be his most important, most lasting, and most constructive contribution to Arab-Israeli diplomacy.

Crossing Jordan   Clifford D. May  3-29-13

(In the Islamic world “peacemakers” are murdered)

Meeting with King Abdullah II in Jordan last Friday, U.S. President Barack Obama was gracious enough to mention the monarch's great-grandfather, King Abdullah I, who "gave his life in the name of peace." To Western ears, that sounded like a tribute. To Arab and Muslim ears, it may have sounded like a warning.
To understand why, it's necessary to dip into the history that Westerners seldom learn and Middle Easterners seldom forget. What we now call Jordan was for centuries a backwater of the Ottoman Empire, the last of the great Islamic caliphates. Ottoman forces made the mistake of fighting on the losing side in World War I. Defeat precipitated the collapse of the empire and the dissolution of the caliphate. Ottoman lands were divided between the British and the French. The territory east of the Jordan River, referred to as Transjordan, became part of the British Mandate of Palestine.
Further east, in Arabia, fierce warriors of the Saudi clan overthrew the Hashemite clan, whose members are said to be descended from the Prophet Muhammad and who had long ruled the Hejaz, which includes the holy cities of Mecca and Medina. Displaced Hashemites were installed by the British in Transjordan. Abdullah — who had fought against the Ottomans and alongside T. E. Lawrence — was named emir of Transjordan in 1921.
A quarter century later, when the Palestine Mandate was dissolved, a fully independent Hashemite Kingdom of Transjordan was founded with Abdullah on the throne. He opposed the establishment of Israel, and his Arab Legion was among the five armies that attempted to crush the fledgling Jewish state in 1948. That effort failed, of course, but the king's men did cross the Jordan River and seize Judea and Samaria, subsequently renamed the West Bank, including sections of Jerusalem. Interesting to note: At that time, no Arab leader proposed establishing an independent Palestinian state in the West Bank and east Jerusalem, nor in Gaza, then under Egyptian control.
In April 1949, Abdullah changed his country's name to what it is today: the Hashemite Kingdom of Jordan. Officially, it remained at war with Israel. Unofficially, Abdullah recognized that a long and bloody conflict with his western neighbor would benefit no one. In 1951, as he was leaving al-Aqsa mosque in Jerusalem, he was assassinated by Mustafa Ashu, a member Jaysh al-Jihad al-Muqaddas, the Army of the Holy War. Winston Churchill said, "I deeply regret the murder of this wise and faithful Arab ruler, who never deserted the cause of Britain and held out the hand of reconciliation to Israel."
You see my point? Imagine you are Mahmoud Abbas, president of the Palestinian Authority. You know that making peace with Israel will bring you the praise of British prime ministers and American presidents. Perhaps you understand that peace would be in the best interest of your people. But you also are keenly aware that serious peacemaking will place you and members of your family in severe peril.
Egypt's President Anwar Sadat made peace with Israel in 1979. Two years later, he was assassinated in accord with a fatwa written by Omar Abdel-Rahman, aka the Blind Sheikh, who would go on to be convicted by federal prosecutor Andrew C. McCarthy for his role in the 1993 bombing of the World Trade Center. Since becoming president of Egypt, Mohammed Morsi, a member of the Muslim Brotherhood, has been calling for the Blind Sheikh's release.
And the assassination of Lebanese President Bachir Gemayel in September 1982 was not unrelated to the fact that, just two weeks earlier, he had agreed to start the process of establishing diplomatic relations with Israel.
I'm not persuaded that Abbas is a peacemaker at heart. But even if I'm wrong about that, I'm right about this: Abbas knows that Hamas, Hezbollah and Iranian terrorists are watching him. Israelis know that, too, which is why they cannot make concessions to Abbas that would leave them weaker vis-à-vis other sworn enemies.
The day before his visit to Jordan, Obama addressed an audience of about 1,000 Israeli students in Jerusalem. "Political leaders," he told them, "will not take risks if the people do not demand that they do." On his next visit to the Middle East, perhaps the president will visit Birzeit University in the West Bank and make a similar statement. I don't doubt that some in the audience will want to applaud. I do wonder how many will have the courage to put their hands together.
Clifford D. May is president of the Foundation for Defense of Democracies, a policy institute focusing on national security.

Tuesday, March 26, 2013

Israel's Demographic Miracle
by David P. Goldman
inFocus Quarterly
Spring 2013

"The word 'miracle' in Hebrew does not possess the connotation of the supernatural," Rabbi J. B. Soloveitchik once wrote. "Miracle describes only an outstanding event which causes amazement." Whether the term applies to Israel's demographics is a question for higher authority, but the Jewish State's population characteristics stand out as unique in the developed world.
Israel's fertility rate of three children per Jewish woman is higher than that of any other country in the developed world, and the only fertility rate substantially above replacement. Only the United States among the world's industrial nations has a fertility rate around the replacement level of 2.1; Europe and East Asia are headed for eventual population decline with fertility of just 1.5 children per woman. Israeli women, by contrast, have three children on average; non-Haredi Jewish women have an average of 2.6.
Just as remarkable is that fertility in most of the Muslim world has fallen below Israel's, while the fertility of Israeli Arabs and Arabs in Judea and Samaria has converged on the Jewish fertility rate in Israel. At present fertility rates there is no risk that a non-Jewish majority will emerge between the Mediterranean and the Jordan River. Not only has the so-called population time bomb disappeared in Israel; in large parts of the Muslim world, fertility has fallen below the Jewish fertility rate in Israel.
Whether the proportion of Arabs in Judea and Samaria as well as in Israel itself is growing may be the most politicized demographic question in the world.
The late Yasser Arafat can take credit for the worst demographic forecast of the twentieth century. "The womb of the Arab woman," the late Palestinian strongman averred, "is my strongest weapon." By this he meant that the Arabs of Israel and the occupied territories would outbreed and overwhelm the Jews. A generation of Israeli politicians believed him, fearing that a "ticking demographic time bomb" threatened the integrity of the Jewish state. In 2001, for example, The Christian Science Monitor noted a report to the Knesset, Israel's parliament, which said:
In the whole area west of the Jordan—including Israel, the West Bank, and Gaza—Jews last year represented 50.5 percent of the population; the Arabs, 49.5 percent. Testifying before the Knesset Foreign Affairs and Defense Committee, Prof. Arnon Sofer of Haifa University projected that with their higher birthrate, Arabs would constitute 58 percent of this population by the year 2020 and Jews, 42 percent. Without final borders and a clear separation between states, he said Israel faces an existential crisis.
The supposed demographic threat loomed behind the late Yitzhak Rabin's celebrated Rose Garden handshake with Arafat in 1994. It motivated then-Prime Minister Ehud Olmert to offer the Palestinians half of Jerusalem and almost all of the West Bank in return for a peace agreement in 2007. In October of that year Olmert warned the Knesset of "a demographic battle, drowned in blood and tears," if Israel did not achieve peace through concessions of land. A month later Olmert predicted "the end of the State of Israel" by demographic exhaustion. "Mr. Olmert," reported the BBC in November, "said it was not the first time he had articulated his fears about the demographic threat to Israel as a Jewish state from a faster growing Palestinian population. He made similar comments in 2003 to justify the failed strategy of unilateral withdrawals from Israeli-occupied land which holds large Palestinian populations." Israeli concessions in the first decade of the twenty-first century were motivated by fear that Arab fecundity would swamp Israel's Jewish population.
Yet the Israeli Jewish fertility rate has risen to three children per female while the Arab fertility rate has fallen to the point where the two trend lines have converged and perhaps even crossed. A 2006 study by the Begin-Sadat Center for Strategic Studies claims that the West Bank and Gaza population in 2004 was only 2.5 million, rather than the 3.8 million claimed by the Palestinian authorities. Presumably the numbers were inflated to increase foreign aid and exaggerate the importance of the Palestinian population.
Most of the phantom population, the report argues, comes from births that never occurred:
[The Palestine Central Bureau of Statistics] projected that the number of births in the Territories would total almost 908,000 for the seven-year period from 1997 to 2003. Yet, the actual number of births documented by the PA Ministry of Health for the same period was significantly lower at 699,000, or 238,000 fewer births than had been forecast by the PCBS. … The size of the discrepancy accelerated over time. Whereas the PCBS predicted there would be over 143,000 births in 2003, the PA Ministry of Health reported only 102,000 births, which pointed to a PCBS forecast 40% beyond actual results.
Palestinian fertility on the West Bank has already fallen to the Israeli fertility rate of three children per woman, if we believe the Palestine Ministry of Health numbers rather than the highly suspect Central Bureau of Statistics data. In 1963, Israeli Arab women had eight or nine children; today they have three, about the same as Israeli Jews. Education explains most of the fertility decline among Arabs, and it is likely that Arab fertility behind the Green Line as well as in Judea and Samaria will continue to fall.
More recent data also show that the Israeli Jewish birth rate has risen faster than predicted. Jewish births rose from 96,000 in the year 2000 to 125,000 in 2010, while Arab births fell slightly over the same period—from about 40,781 to 40,750, according to a new study by Yaakov Faitelson at the Institute for Zionist Strategies. The proportion of Jewish pupils in Israel's elementary schools is increasing, Faitelson reports:
The percentage of students in the Arab educational system out of all Israel's total first grade student body will decrease from 29.1% in 2007 to only 24.3% in 2016 and 22.5% in 2020. At the same time the percentage of students in the Jewish educational system out of the total first grade student body will reach 75.7% by 2016 and 77.5% by 2020.
While Israel's ultra-Orthodox minority contributes disproportionately to Jewish population growth, most of the increase in Jewish births comes from the secular and non-Orthodox religious categories, which average 2.6 children per woman. Faitelson notes that the ultra-Orthodox fertility rate fell over the past decade, while the fertility of the general Jewish population rose.
An Israeli fertility rate of nearly 3 births per woman exceeds the industrial nations' norm by such a wide margin that Israel—assuming that fertility remains unchanged—will have a larger population than Poland by 2085. Poland's median age, moreover, will be 57, an outcome impossible for the Polish state to manage (because the majority of Poles in that case would be elderly dependents), while Israel's median age will be only 32. Even more remarkable is that Israel will have more young people than Italy or Spain and as many as Germany by the end of the century if fertility remains unchanged. A century and a half after the Holocaust, that is, the Jewish State will have more military-age men, and will be able to field a larger land army, than Germany.
Secular sociologist Eric Kaufmann complains of the "Haredization" of Jewish life—a shift towards ultra-Orthodoxy— but the numbers tell a different story. In Israel, the so-called secular (a designation that in actuality covers a wide spectrum of religious belief and practice) account for Israel's uniquely high fertility rate. In fact, the line between "secular" and "religious" is blurred in the Jewish state. Fifty-six percent of Israelis light Sabbath candles every Friday evening (and a further 22 percent light them sometimes), according to Daniel J. Elazar at the Jerusalem Center for Public Affairs in the most comprehensive survey of Israel's religious practice. Fifty-five percent believe that Moses received the Torah at Mount Sinai. And 69 percent observe Jewish dietary laws at home. Synagogue attendance is low, at only 22%, but the comparison between synagogue attendance in Israel and Church attendance in the U.S. may be misleading. About half of the three-hour Saturday morning service is devoted to reading and study of the Pentateuch and some extracts from the prophets, providing a lesson both in Bible and Hebrew language lesson for the Jewish people in exile. Israeli schoolchildren use the language of the Bible on the playground, and take mandatory Bible study throughout primary and secondary school.
Elazar observes:
Israel's Jews are not divided into two groups but into four: ultra-orthodox, religious Zionists, traditional Jews, and secular. Some 8 percent are ultra-Orthodox. These are the strangely (to Western eyes) garbed, black hatted Jews who are featured in all the pictures, despite the fact that they represent only 8 percent of Israel's Jewish population. Another 17 percent are religious Zionists who normally are lost to view in the studies and the statistics because they are generally lumped with everyone else. The religious Zionists are similar to the modern or centrist Orthodox Jews in the diaspora, partaking of most or all aspects of modern civilization, except that they maintain Orthodox observance of Jewish religious law and tradition. The third group consists of the vast majority of Israeli Jews, some 55 percent, who define themselves as "traditional." …They cover the whole range of belief and observance from people of fundamentalist belief and looser practice to people who have interpreted Judaism in the most modern manner but retain some of its customs and ceremonies.
It might be added that inhabiting the Promised Land is one of Judaism's central commandments. There was a deep religious sensibility among the secular Zionists who set out to rebuild the Land of Israel. David Ben-Gurion, the country's first prime minister, rejected all religious beliefs, yet he personally gave Bible lessons to Israeli students and fought to secure a central role for the Bible in the school curriculum. Devotion to the State of Israel distinguishes nominally secular Israelis from really secular American Jews, whose fertility divides by denomination quite as clearly, as can be seen in the following statistics from Anthony Gordon and Richard Horowitz in the 2000 National Jewish Population Survey.
American Jewish Fertility by Religious Current
Religious Sect
Average No. of Children per Woman
Modern Orthodox
That Israel's exceptional fertility stems from religious commitment rather than ethnicity is suggested by the enormous contrast between orthodox and secular Jewish birth rates in the United States. Nowhere is the fertility gap between religious and non-religious more extreme than among American Jews. As a group, American Jews show the lowest fertility of any ethnic group in the country. That is a matter of great anguish for Jewish community leaders. According to sociologist Steven Cohen, "We are now in the midst of a non-Orthodox Jewish population meltdown… Among Jews in their 50s, for every 100 Orthodox adults, we have 192 Orthodox children. And for the non-Orthodox, for every 100 adults, we have merely 55 such children." Reform and secular Jews average one child per family; the Modern (university-educated) Orthodox typically raise three to four children, and the ultra-Orthodox seven or eight."
The American data suggest an explanation of fertility similar to what is encountered in Israel: the stronger the Jewish commitment, the more likely Jews are to have children. Living in Eretz Yisrael is one of the strongest manifestations of Jewish commitment, such that Israeli Jews within a broad spectrum of religious observance have as many children as the most religiously engaged American Jews. As unique as the Jews are among the world's people, their fertility in the State of Israel is also unique among the nations, and cause for optimism about the future of Am Yisrael.
David P. Goldman is the author of How Civilizations Die (and Why Islam is Dying, Too) (Regnery 2011), a PJ Media columnist, and a former essayist at Asia Times Online.

Monday, March 25, 2013

When it Comes to Iran, Energy Market Shows the World Believes U.S. is Bluffing  
David P. Goldman  JINSA Fellow  3-25-13

The Obama administration has utterly failed to convince the world that it is serious when it says the U.S. would attack Iran if it does not halt its nuclear weapons program. Analysis of energy markets reveals that crude oil is trading today with no greater risk than stocks and currency. Even China, notoriously conservative when it comes to the energy imports upon which its economy depends, demonstrates little concern over the prospect that Gulf oil flows might be interrupted by American military action against Iran.

Do oil prices reflect the risk of a military strike against Iran's nuclear weapons program? This is not an academic question. If oil buyers ignore President Obama's claim that he is not bluffing about Iran, it is likely that the Iranian government will ignore it as well. Measurement of a risk premium in the oil price indirectly gauges the credibility of the Obama administration's stance towards Iran. The oil price has fallen by 16 percent during the past 12 months (from $107 to $90 for the benchmark West Texas Intermediate) as the Iranian nuclear threat has escalated. That suggests that the oil market does not assign a high probability that military force will be used against Iran.

Markets are not necessarily good forecasters of strategic events. Nonetheless, corporations and investors devote vast resources to hedging prospective oil price movements, and the market consensus is an important data point.

Last March, President Obama claimed that "uncertainty about what's going on in Iran and the Middle East" was adding a $20 or $30 premium to oil prices." Two weeks ago the Organization for Economic Cooperation and Development (OECD) claimed to measure a big risk premium in oil prices. But a strong case can be made that oil is trading on economic factors alone, with no strategic risk premium at all. My own firm, Macrostrategy LLC, has built an econometric model of oil prices that explains nearly 90 percent of weekly oil price movements during the past four years.

Major oil buyers continue to display a high degree of complacency about supplies. For example, China's oil stockpiles have shrunk to the lowest level since March 2012, Bloomberg News reported Feb. 20: "Crude supplies, excluding emergency reserves, dropped by one percent from a month earlier, a report from Xinhua News Agency's China Oil, Gas & Petrochemicals newsletter showed today. Inventories dropped to 28.86 million tons, which was the lowest since March, according to calculations by Bloomberg based on the Xinhua data." Although Chinese strategic oil reserve data are secret, the International Energy Agency believes that China stopped adding to reserves last November. China's strategic petroleum reserve aims to reach 500 million barrels, or 90 days' of imports, but presently holds perhaps a quarter of that amount.

Economists at the Organization for Economic Cooperation and Development claimed in a working paper titled "The Price of Oil - Will it Start Rising Again?," to have measured a large risk premium in the present price of oil equal to about a fifth of the oil price.(1) The OECD makes the large assumption that whatever their model fails to explain can be interpreted as a risk premium.(2) Using the OECD's flawed method, it is possible to attribute virtually all the movement in the oil price during the past several years to economic expectations.

Macrostrategy LLC, conducted a different modeling exercise utilizing weekly data for the past four years that simulated the change in the West Texas Intermediate oil price based on three variables: stock prices (a proxy for growth expectations), the trade-weighted value of the dollar (a proxy for the cost of oil to other major oil importing countries), and the level of crude oil inventories in the United States (a proxy for supply and demand).

The Macrostrategy model estimates weekly changes in the oil price, and adds up the weekly changes to simulate the level of the oil price over the four-year interval. The factors are intuitive and their relationship to the oil price is evident. Each of these variables clearly tracked the oil price.(3) When combined in a rigorous econometric model, they produce an exceptionally good fit.(4)

Volatility is another gauge of the degree of perceived risk in the oil market. The traded oil price is now around 30-year lows, whether volatility is calculated using a rolling standard deviation of returns or with more sophisticated methods.(5) Oil price volatility is also very low because the volatility of economic variables in general is very low. The implied volatilities of the S&P 500 index, gold, oil, and the Euro exchange rate with the U.S. dollar have moved in lockstep during the past four years. The fact that oil price risk as gauged by the options corresponds quite closely with economic risk further confirms the conclusion of the Macrostrategy econometric model.

We conclude that oil is trading on economic not strategic risk. Recent variations in the oil price can be explained almost entirely by variables reflecting economic expectations with a rigorous econometric model. In light of this result, there is no reason to believe that there is a strategic risk premium in the oil market. Evidently, the world remains convinced that when it comes to the use of military force against Iran's nuclear weapons development program, the United States is bluffing. 

David P. Goldman, JINSA Fellow, writes the "Spengler" column for Asia Times Online and the "Spengler" blog at PJ Media. He is also a columnist at Tablet, and contributes frequently to numerous other publications. 

s.gif(1) The OECD writes:

Starting from the earliest possible quarter given data availability constraints, namely the second quarter of 1992, the model is solved for each quarter of the simulation period using a linearization which assumes that the variation in oil demand/supply is small relative to its level. The dynamic simulation underestimates oil prices in the second quarter of 2012.It is assumed that half of this gap reflected a risk premium due to fears of more severe supply shocks in the future.

s.gif(2) In my view, the model is flawed. Like most conventional macroeconomic models, the OECD estimation uses backward-looking data that do not take into account the expectations of oil market participants. It takes quarterly data for oil production, which is known, and attempts to estimate demand for oil based on three factors: "the real price of oil, the level of national disposable income, and the preferences of the consumer." In other words, oil demand falls when the oil price is relatively high, when national income falls, and when consumers feel like buying other things than oil. Consumer preferences are notoriously hard to gauge, and the OECD model piles assumption atop assumption in its estimation. That is not the model's worst failing, though. The overriding error in this approach is that it does not take into account expectations about economic growth and inflation.

s.gif(3) The Granger Causality Test confirms that the predictor variables anticipate changes in the oil price rather than vice versa.

s.gif(4) To maintain econometric rigor, Macrostrategy employed a two-stage modeling process. In the first stage, weekly changes in the oil price were regressed against weekly percentage changes (returns) to the trade-weighted dollar index, the S&P 500 equity index, and the level of oil stocks as reported by the Energy Information Agency.

The model explains 31% of weekly changes in the oil price. The three predictors all are significant above the 99 percent confidence level.

In the second stage, the weekly changes are added up into a forecast of the level of the oil price during the past four years. The forecast of levels has an 87 percent fit with the actual oil price. As of March 1, the oil price was trading marginally lower than the model forecast-quite the opposite of a risk premium.

s.gif(5) Generalized Auto-Regressive Conditional Heteroskedasticity is an econometric technique used to calculate volatility by giving extra weight to extreme movements.