Possible War with Iran and Regional Instability Worry Israel’s Investors

Tel Aviv Stock Exchange in Ehad Haam Street. Photo: Sambach.

Israel’s stock prices and its currency, the shekel, dropped sharply Monday amid a media campaign against a possible Israeli preemptive strike on Iran, and it seemed investors were also worried about a generally unstable regional security situation., including  upheavals in Egypt, Syria and Jordan.

“The TASE  (Tel Aviv Stock Exchange) fell hard across the board today, despite a mixed session in European markets,” reported the local financial newspaper, Globes, citing “new talk of a possible strike on Iran.”

There was no panic selling but, economic observers spoke of “jitters” among investors brought on by several regional developments, including the new Egyptian government’s shake-up of senior army officials yesterday, sending tanks, planes  and large forces into Sinai for the first time since the 1979 Egyptian-Israeli peace treaty in order to fight several terror groups, and the continued bloodshed in Syria that threatens to destabilize  the border regions of Israel, Turkey and Jordan with an ever-surging flow of refugees.

The air of uncertainty has also been fed by an campaign led by media opponents of the Israeli government and its consideration of a possible preemptive strike on Iran’s nuclear program.

“Not Ready for War,” headlined Yediot Aharonot, Israel’s top-selling newspaper yesterday, and today it ran a feature strongly suggesting that Defense Minister Ehud Barak was making his decisions for political and personal reasons.

Meanwhile, Haaretz newspaper headlined today “Price of Attacking Iran Too Dear.”

“We all know what happened the last time an Israeli prime minister led us to war without being properly prepared,” declared Carmela Menasheh, the military correspondent of Voice of Israel radio, who roundly criticized Prime Benjamin Netanyahu and  Defense Minister Ehud Barak.

She was not alone in comparing Netanyahu’s planning  to the bumbling war effort in Lebanon in 2006 by then-Prime Minister Ehud Olmert, or in making bold claims about Israel’s supposed lack of readiness.

Another reporter on Israeli television Channel One  somewhat off-handedly  suggested that 200,000 rockets would strike Israel in an upcoming face-off with Iran, and one protester said 300,000 rockets would strike Tel Aviv in one night, but pulled back his remarks and changed his figures when challenged to substantiate them.

“I would bet that 3,000 (three thousand) rockets will fall on Tel Aviv in one night,” asserted Roni Bair, a film director, who has been protesting at Defense Minister Barak’s home every evening.

Tel Aviv’s stock exchange (TASE) lost  a percentage and a half in two main indices, while  post-trading rates of foreign exchange showed the shekel losing almost one point seven percent against the dollar, reaching a level of 4.07 to the dollar.

Many Israelis are worried about the sudden and unexpected changes on Israel’s southern, northern and eastern fronts,  and few if any expert observers expected a Muslim Brotherhood-led regime in Egypt would quickly fire leading generals and send huge forces into the largely demilitarized Sinai Desert (with Israel’s approval).

The quick Islamization of Egypt has astonished many Israelis, who note that the Egyptian Islamists have moved much more quickly than the Islamists of Turkey.

“This happened incredibly quickly, especially if you compare it what happened in Turkey where it took (Turkish Prime Minister) Erdogan ten yeas to act against the army, and here (Egyptian President Muhammad)  Morsi acted against the army within a month,” remarked Professor Eyal Zisser of Tel Aviv University.

“It is certainly bad news for Israel,”  Tzvi Mazael, a former Israel ambassador to Egypt, who has been critical of  what he called overly optimistic Western assessments of the new Egyptian regime.

“It was to be expected that Morsi would show the generals the path to collecting their pensions,” Ambassador Mazel said, adding, “The Muslim Brotherhood is not interested in sharing power with the army.”

Center and   Right-of-center voices in the Israeli press suggested that US policy-makers were encouraging Israeli press criticism of the Netanyahu Government because President Barack Obama is opposed to hitting Iran, and he believes that US sanctions still have a good chance of stopping Iran’s nuclear plans.

“The cruelest war in our region is one won being waged by some of the Israeli media against Netanyahu and Barak on the issue of Iran,” wrote an op-ed columnist in the Israeli daily Maariv.

“This is a great scandal, and any minute we may find that operational plans are going to be discussed in public,” declared  Dr. Haim Schein, Shaarei Mishpat College, in a TV appearance. .

Dr. Michael Widlanski, an expert on Arab politics and communications, is the author of  Battle for Our Minds: Western Elites and the Terror Threat published by  Threshold/Simon and Schuster. He was  Strategic Affairs Advisor in Israel’s Ministry of Public Security and teaches at Bar Ilan University.