Friday, December 22, 2006

The Thai Crisis and Israel


By Douglas Wong and Darren Boey

Dec. 20 (Bloomberg) – “Thailand's reputation with investors has suffered long-term damage following a Sept. 19 coup and this week's on-again-off-again capital controls, which wiped out $23 billion of market value from Thai stocks yesterday…

The Bank of Thailand on Dec. 18 announced controls on overseas short-term investments in Thailand to stem a sharp rise in the value of the baht. Yesterday, the Finance Ministry made a volte face and exempted equities from the rules following a 15 percent slide in the benchmark SET index.”


So what does this averted Thai crisis have to do with Israel? Israel’s economy is largely dependent on global trade.

One key reason Israel MUST “cooperate” with world bodies—most of whose members presently do not care whether Israel is squeezed and marginalized—is because failure to cooperate might cut off Israel’s ability to conduct global trade. This could be disastrous for Israel.

Israeli political leaders are aware of this. They are not naive. In choosing their course of political action, they are being probabilistic. No one can foretell the future. They have calculated the odds of future events unfolding in certain ways, and they are acting on their views of expected outcomes.

I believe they are miscalculating. They are focusing on the risks of what can go wrong, and not on the rewards of what can go right.

They should ask themselves: “How large need Israel be to thrive, succeed and be viable in the Middle-East?”

They probably ask themselves: “Will a smaller, less vilified Israel better provide for its citizens than a larger, vilified one?

This latter kind of question, asked because of perceived international pressures may lead to a “Yes” answer that jeopardized Israel in the long-term.

A smaller Israel will be less important in the world, and ultimately less able to provide for itself, and a growing population. Remember, there is plenty of room in the Middle-East for everyone.

Large or small, Israel will still be vilified for years to come.

To stem and fight vilification, Israel must get more important, not less. Israel must take the calculated risk of becoming more demanding of the international community, not less.

Israel must strive to achieve what it needs to succeed, not succumb to current perceived pressure that may make it a perpetually limping, and withering State.

--David Naggar

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