Israel and the Flotilla

At this point, two days after the Israeli Navy's assault on the Turkish ferry and the other vessels attempting to head to Gaza, we all recognize that the Netanyahu government is in damage control mode. Whether the assault in international waters was justified or not is no longer the point. At a minimum, it was mishandled.

Even Israeli military officials are now saying their intelligence was faulty. However, other Israeli commentators speak of the government's "self-righteousness", its "fear", even its stupidity. Both Israeli and international commentators lament the public relations trap that Israel willingly entered into, giving the "activists" all the victimhood they really sought, while further tarnishing Israel's international reputation.

It is easy for Israelis and Israel's supporters to hide behind the claim that the ships had terrorists aboard. However, it's beside the point. The presence of terrorists, even the head of the IHH, sponsor of the operation, was part of the goad to get Israel to overreact. The point is that managing provocations such as this has been part and parcel of Israel's survival for more than six decades.  What has happened to that skill?

At this point, two perspectives are needed. One is to look back on this operation in the form of an inquiry for the government and military to assess how to balance their security and international public relations needs. In the past, Israel was a master at this art. Now, it is the Palestinians, particularly Hamas and Hezbollah, that direct this orchestra.

The second is to look forward to repair the damage done to the country's reputation. Israel's leaders need to visit all its friends rapidly with a message that is not based on insecurity and truculence (the responses I've read so far, even from Shimon Peres, President of Israel and Nobel Peace Prize winner). Friends seem few and far between. Some transparency and detail would help too - why the government felt the assault on the ships was necessary in international waters, what it suspected it ships were carrying and why it had these suspicions. Because so far, the photos from Ashdod of wheelchairs and teddy bears among the cargo being released for shipment to Gaza are not very convincing that an immediate threat existed that demanded this type of commando operation.

Particularly, the value of the Gaza blockade should be assessed to see if this rigid measure is really restraining the importation of rockets (its supposed aim) into the territory. Operation Cast Lead existed to respond to the attacks by rockets stocked by Hamas and its allies while the blockade existed. While it was a "disproportionate" (a word used primarily by Israel's critics) response to the rockets, it effectively stopped them and has brought a much higher degree of calm to south central Israel.

Could Israel not achieve the same results through ship contraband inspections within Israel's maritime zone? With such a relaxation of the blockade, Egypt would not be as tempted as it must currently be to let the smuggling tunnels (the major source of entrance for weapons into Gaza) expand their activities. As well, it would represent a response to this morning's opening from Turkey to restore its positive relationship with Israel and perhaps offer a compromise that would put this episode, which everyone, everywhere, finds lamentable.

As a confirmed Israel supporter and Zionist, I am troubled. We need more friends and supporters internationally to pursue the goals that are really necessary for the long-term survival of the State of Israel.

Oil, Innovation and Risk

I was very impressed by Kenneth Rogoff's essay today in various papers about the larger implications of the BP disaster in the Gulf of Mexico. He had the foresight to question Brazil's ability to handle its oil reserves safely. This includes both the known and obtainable reserves and the now famous "pre-sal" (i.e., even deeper and harder to obtain) reserves that President Lula is touting as one of the great successes of his administration.

The economics of the pre-sal oil aside, can Petrobras and its drilling contractor partners really handle the technological problems and risks that are involved in bringing this oil to market. We know that Petrobras is currently undercapitalized - because it is in the market seeking new capitalization. One of the lessons of the BP experience is that attempts to manage risky assets such as deepwater oil without sufficient capital to fund controls systems and pay for their monitoring courts disaster.  Can Petrobras really assuage public concern about these risks? As Rogoff puts it in his article, "Will Brazil really risk its spectacular coastline, now that everyone has been reminded of what can happen?"

The other point that Rogoff emphasizes is regulation of the manner in which the technological innovations are applied to obtain the resources. Clearly in the case of BP, the Minerals Management Service of the US Department of Energy was not managing in any way that would suggest that it understood the risks involved with the technology nor with BP's management of the Deepwater Horizon platform.

I also find Rogoff's linkage of the BP disaster with the regulatory and financial technological meltdown that enabled the current economic recession compelling. Both disasters involved applications of poorly understood, highly risky new technologies (drilling technology and well shut down procedures in one and new financial instruments in the other) and lack of sufficient government regulation to protect society as a whole.

This article is very much worth reading.