What economic impacts will war with Iran have on Israel?

Al-Jazeera Podcasts

Millions of Israelis forced to take shelter day and night from repeated Iranian missile attacks.

The economic shock waves of the war Israel and the U.S. have launched against Iran

are being felt across the world.

How's it affecting Israel and its future?

I'm James Bayes and you're listening to the Inside Story Podcast where we dissect, analyze, and help define major global stories.

Well, let's meet our guests for today's discussion three prominent Israeli experts joining us on Inside Story.

And they are Gideon Levy, a columnist at Haretz newspaper, he joins us from Tel Aviv.

In Levki, Greece, Alex Komen, a professor at Halon Institute of Technology and a commentator on economic and political affairs.

And also in Tel Aviv, Dan Perry, political analyst and former editor at the Associated Press is worked in Europe, the Middle East.

And Africa, thank you all of you for joining us.

Let me start with you, Dan.

I mean, the world is watching very closely the developments in recent hours, Trump's diplomacy or talk of diplomacy.

And some being rather skeptical, saying you might just be buying time with the oil and energy markets and waiting while more military assets arrive.

What's the feeling there from people in Israel about what's really going on?

Be perfectly honest, I think most Israelis know that it would be full-arty trying to predict what Trump is going to do or even to analyze whether or not he's telling the truth or what he could possibly have as his motivation.

There is some suspicion that Trump back down from his threat because of the Iranian counter threats.

There is also a general sense in Israel that Trump simply wants to emerge from this a winner.

And he cannot afford to appear to have ended the war simply because Iran blocked his trade of hormones.

And therefore some elegant solution is being sought out of this conundrum.

But the big question really is whether when the war ends, if the Islamic Republic hasn't collapsed as such and that seems to be unlikely the most Israelis are welcoming, then what has it achieved?

Will Iran be compelled to aggregate its ambitions with the missiles, with the nukes, and in particular with the militias?

Gideon, let me ask you what you make of what Trump's up to by reading you one, and I have selected this carefully, but one quote from the president.

This will be peace for Israel, long-term peace, guaranteed peace if that happens.

And then without pausing, without pausing at all, he said, and I can't guarantee it.

What do you make of what President Trump's up to?

I wish James that the aspirations would have been much lower.

When he speaks about peace in the Middle East, I lose him because we were never so far from peace in the Middle East.

We were never so far from solving the Palestinian issue, which is the core issue.

But still, I have to say that unlike many analysts, I tend to believe that we are closer to an agreement.

And I hope that the American president does not go so low and spreads all kinds of fake news only to get better positions in the negotiations.

I really want to believe that Donald Trump got to the conclusion that this war is enough for him.

He cannot gain much more. He is losing from day to day.

I hope that this is the mindset, and then we might face an agreement in the very soon days.

Once Donald Trump will put an end to the war in Iran, Israel will have to join Israel.

He doesn't have any other choice.

Alex, if you look at that phrase that got a previous US president in trouble in 2003, mission accomplished.

In terms of where we are militarily, do you think Israel believes its mission accomplished?

Because Trump two weeks ago said, and I quote, very complete, pretty much.

And then a week ago, he said 100% of Iran's military capability had been destroyed.

And yet, on the Israeli side, the Israeli military have said several more weeks.

And in fact, the Israeli chief of staff said only on Saturday that the campaign was midway.

Yeah, very few missions have been accomplished so often.

And I'm saying this ironically because Netanyahu and Trump are very similar in the sense that they are both demagogues.

And they want to stay to victory time and time again.

Trump is very aware of what happens in Wall Street, what happens to the financial markets.

The financial markets ironically have responded very well to his promises of success.

So whenever the oil prices went up and he calmed them immediately, they came down.

And then they realized that actually we shouldn't take him too seriously and they mounted again.

And I'm afraid that this is going to happen yet again.

So we shouldn't take these statements of victory, success, ultimate, whatever.

We should not take them seriously at all.

Dan, I mean, throughout this, whenever he's a fit here in front of reporters,

Prime Minister Netanyahu has seen, as though he is joined at the hip with President Trump.

And he's praised him repeatedly in this joint operation.

But do you think from the beginning, Israel and the US have had somewhat different goals in all of this,

particularly on that key issue of whether there should be regime change?

Yeah, I think the government of Israel has certainly concluded that regime change would be highly desirable.

And I think in this regard, rather unusual for the Netanyahu government, they are not misaligned with the Israeli public.

I think most Israelis think that the Islamic Republic regime is illegitimate,

has threatened them far too much, threatens they are world far too much,

massacres with so many people far too much, and they really do want regime change.

They have lost all hope and dealing with this government rightly or wrongly,

whether you think the war is legal or illegal.

From the American side, Trump doesn't care about democracy.

He explicitly walked away from democracy promotion in December, a national security strategy.

He seems to be okay with autocracies, as long as they are domesticated and do what he wants.

There is little evidence that Trump has appetite for doing what's needed to achieve regime change in Iran,

which is difficult to contemplate without boots on the ground.

I think they toyed with it. They might have suspected that the regime might collapse upon itself,

in reaction to the original shock of the spectacular February 28th decapitation,

but that hasn't happened.

And I don't sense that regime change is on a table for the Americans at this point.

They would like some sort of arrangement that Trump can spin as a win,

and to a certain degree, because it's just as a professor comment had said,

Netanyahu was no less of a demagogue.

I think we can pretty much assume that no matter how the war ends,

the Israelis and the Americans will present it as a victory.

Even if that victory is limited to the weakening of the regime,

and of course the regime has been weakened, there's no doubt about it.

Obviously they've taken out missile launchers,

and they've attacked more nuclear sites, and they've badly battered the besiege

and the IRGC's headquarters, and they've caused damage.

And whatever bluster the Iranians produce after the war,

there is a reason to believe, or at least to hope,

that they've been somewhat cowed and chastened,

and perhaps they'll behave a little bit better in the future.

But of course that isn't no way guaranteed.

What has been made clear is that the Americans have crossed the Rubicon,

where they've shown a willingness to attack Iran,

and that was brazen, some may think it was reckless,

but I think it will factor potentially into Iranian behavior in the future.

If the war ends right now, all sides will declare victory.

The Israelis and Americans will say what I just said,

and the Iranians, of course, given that the sum of their ambition was for the regime to stay in power,

so they can live to oppress their people another day,

they will declare victory as well.

And I suppose when there is a, however, fictitious win-win-win on the table in this way,

the dynamic may be pushing it out the ranks.

Gideon, is it not just about different aims,

but is there a bigger context here that Israel has a different attitude

to war from the United States?

Israel is prepared to pay higher costs, both economic and military.

Israeli citizens do military service, apart from some who have a religious exemption

the country has, you could say, been on a war footing for all of its existence.

It's much worse than this, because Israel saw the years,

and especially in the last years,

sees in many cases a war as a great opportunity.

See the war as a first choice, a total last choice.

Israel saw the years, especially in recent years,

it is much easier to launch a war rather than to conduct a diplomatic compromise,

a political compromise with kind of enemy.

You can much easier recruit the public opinion to launch another war,

so time in Lebanon, this fifth-stiming Gaza, you name it,

rather than to try once a diplomatic compromise, diplomacy,

negotiations, compromising, giving up some of your positions for the sake of stability.

I don't want to use the word peace,

but Israel will always choose the war as the first option.

And this reached a peak in this war in which, as it was mentioned by your reporter,

93% of the Jewish Israelis support this war.

This is a North Korean figure.

In no democracy in the world, you get such figures about any question.

93% are supporting the war, this is unbelievable.

Okay, Alex, you wanted to jump in on that.

Dan, you can have a word in about Alex first, please.

I beg to differ. It's interesting because Gidan Levy is a big fan of Netanyahu's,

but what we've seen is that Netanyahu, over the years, he projected a lot of weakness,

whether it was in the North with Hasbalah building tents within Israel,

and whether it was with viewing Hamas as an asset and funneling money into Hamas, etc.

So Netanyahu, right now, right now, it's true about Netanyahu.

It's very important for him to wage war and to show that he is not a coward,

that he is this feisty leader, but this is the result of his weakness over many, many years.

Let me bring you in, Dan, on these points, because on Netanyahu himself,

I mean, you could say this has been a central goal of his entire political career,

the longest serving Israeli Prime Minister in history,

and he doesn't want to lose an extraordinary opportunity that he now has to destroy Iran.

To destroy Iran is Islamic Republic, which many people around the world,

and many Iranian diaspora leaders that I speak to regularly,

think he's a favor to the Iranians.

Netanyahu is in an odd position here where he might just potentially be right

in the view of most Israelis. He's not accustomed to that.

My friend Gideon speaks of the North Korean aspect of 90% support.

There are many reasons why you might have 90% support for a thing.

One could be, sure, North Korean level indoctrination and fear.

Another could be that people are stupid, as there could be that it's true.

And you will find that Netanyahu does not have 90% support on his dealings

with the Palestinians, where indeed the dynamic is that they could in a right wing refuse to compromise.

And so Israel's desperately divided on that issue.

But when it comes to Iran, when it comes to his bullet,

when it comes to Iran's other jihadist proxies that has spread chaos,

mayhem, misery, and death around the Middle East,

I think most Israelis have concluded there is nothing to discuss and no compromise

that is possible, and that is why you have this level of support,

and this willingness to sacrifice. And of course, these Israelis are closer to the facts

and be closer to the consequences that the Americans are.

So as a result of that, there are more willing to sacrifice.

The idea, however, is uncomfortable for many Israelis.

Netanyahu has minority support in Israel and trust me.

There is cognitive dissonance right now in Israel with people who support the goals of the war

of scaling back the ambitions and abilities of regime that is committed to jihad.

But uncomfortable with being put in the position of believing the claims of Netanyahu

and supporting his actions, especially from their perspective,

God forbid the outcome will assist them in the upcoming election.

Gideon, I mean, you heard there from Dan that Israelis are closer to the consequences

and Israel has taken a fair bit of a pounding during this war.

You have the most sophisticated missile defense system on Earth,

Iron Dome, David Sling, Fad, Arrow II, Arrow III,

and yet the missiles have been getting through,

and that hasn't dented public support for the war.

Why do you think that is, even though where you are, Tel Aviv has been pounded

and just in recent days, the area around Demona, where Israel has that not-so-secret,

nuclear site has also been attacked and the missiles have got through.

Somehow, throughout years of brainwash, Israelis see the war as a force major,

as something which was imposed on us and we can do anything about it,

as the only open choice, as an earthquake.

I guess that if it would have been an earthquake, God forbid,

Israelis would react to say, what can we do? I mean, there is no alternative.

We have to fight, we have to struggle, we have to run to the shelters five, six times a day.

There is no other option, but the mental effect is that in many cases,

there is an option, and in any case, the war didn't bring Israel many achievement.

We are now after two and a half years of a very bitter war, including genocide in Gaza.

70,000 people paid in the other side of the other side in Gaza in their lives.

1,000 babies, I don't have to mention all the figures here, they are known to your viewers.

Did Israel achieve its goals after those two and a half years? Is Hamas still in power?

He is, it is in power, life and kicking.

So the question is not only if the war is justified.

The question is also if it can reach all the goals that we put to ourselves.

Okay. Get in, get in, let me bring Alexian.

I'm embarrassed. First of all, this did not address the question of why Israelis absorb all these missiles

and still support the war.

Israelis, like myself, basically thought that there was a peace process that was started by Rabin many years ago and it failed.

And we believe that there would be peace and quiet and on October 7th we saw the reality.

So I'm really disgusted by Gidonlev's focus on what happened in Gaza because obviously Israel did not initiate that.

And what's happening is that Israelis, yes, what happened on October 7th made Israelis much more determined,

much more tolerant of losses because we've seen how bad these attacks can be and how painful they can be.

And actually what's happening in Tel Aviv is nothing compared to what's happening in the North where his brother is keeping firing missiles day and night.

So it's really devastating.

So the Gidonlev is sitting Tel Aviv and has fun because he's surrounded by all these brainwashed North Korean Israelis.

This is a lot, this is a joke.

When you think about the North, what's happening in Tel Aviv is really not so terrible.

I mean, it is painful when Israelis absorb accept that even though many Israelis, like the gentleman said before, many Israelis oppose staunchly opposed Netanyahu and his part and his government.

But because Israelis were so hurt by what happened on October 7th and now they view Iran as a similar option, real caring.

And that's why they are so willing to continue the war.

Dan, we have had to be blamed.

Dan, on something that was just raised by Alex there, which clearly is what's going on, Israel's attack on Lebanon, which many human rights activists say is breaching the rules of war that is not proportionate what is happening in Lebanon.

Do you see that as a second front or a second war?

Because in Lebanon, it is not a joint venture, joint operation with the United States, Israel alone.

If Trump tries to stop the war with Iran, does the war with Lebanon or with his baller in Lebanon continue?

James, I think it's a little bit semantics as if it's an extension or parallel or the saying it's related very clearly.

Lebanon, the war is not with Lebanon, the war is with Hezbollah and Hezbollah is an extension of Iran.

And Hezbollah is implacably opposed to Israel and they have embroiled Lebanon in conflict with Israel.

And basically, Hezbollah is a blogger head with a government of Lebanon.

The government of Lebanon wants his baller disarmed.

Joseph Iones government today basically took steps to essentially expel the Iranian representative, they've outlawed the IRGC.

Israel is helping Lebanon get rid of his baller, which has created a state within a state that is hostile to Lebanon.

So I don't think we need to do anything about it.

With the greatest respect, Dan, I've not found many people in Lebanon who are saying what you're happening that Lebanese people are not welcoming, being bombed, are they Gideon?

Well, by the way, I have, I speak to many Lebanese and I can assure you they want his baller gone.

Gideon.

Yeah, I guess that is right.

They want his baller done, but they don't want to see the state, the country being destroyed one time after the other.

The home don't be wrong with one million uprooted people from their homes, wandering around North Lebanon and not having a place to sleep.

This does not exactly meet their dreams.

It does not make Israel popular in Lebanon.

I mean, we really think.

Getting up.

Honestly, let me ask you.

Do you think Israel wants this place a million Lebanese or is this an aid of freeing Lebanon of his baller?

Is it just some crazy desire to oppress the Lebanese?

Yeah, right now there are six million people uprooted in the Middle East, two million in Gaza, three million in Iran, one million in Lebanon.

You really think that this is legitimate?

You really think that this will bring peace to the region?

You really think that this will bring peace to the region?

No, I think what's happened is that a lot of hostility has been created by Iran and its proxies bringing about these wars in which all this misery has occurred.

But I do not think even the current government of Israel, of which I am no supporter, wishes to displace anyone from anywhere.

People overthink with Israel.

Israel wants his baller gone.

Israel wants these swallowing.

But down, down, down, down.

The problem.

And many Iranians would welcome this.

The problem is that many believe what Israel is doing is not proportionate to what is coming from his baller.

And is causing huge civilian harm and war crimes taking place.

And Alex, we now have the finance minister of Israel, Bezal al-Smotrich, saying that perhaps there should be a sway of Lebanese territory, about 10% of Lebanon,

and everything south of the Latani river taken permanently by Israel.

That's about a thousand square kilometers.

That's bigger than Singapore.

I agree.

You should, we should completely ignore Bezal al-Smotrich.

He's really a Zilat.

I mean, for a long time, I had hoped that you would not be elected again.

He's really radical, Messianic.

I mean, I cannot be negative enough about Bezal al-Smotrich, his Messianic ambitions, et cetera.

But I can also not accept Gidon Levy's description of Israel as the great Satan creating refugees all over the Middle East,

because this is so unidimensional, it's embarrassing to see an adult speaking in this way that this big Satan creating refugees.

What's happening in Lebanon is incredibly painful for Israel, in particular, because it's the second time that it happened,

and I have friends living on the border, and they've been displaced from their homes.

They went back and now they're facing exactly the same situation.

So this is something that, for a long time, Netanyahu, being the coward that he is,

he believed that he would be able to contain that, but just by...

We do need to go back to the beginning, don't we?

To the 28th of February, who started this war?

And most of the world is hearing this narrative that Trump was bullied into this...

Most of the more started with an attack on Iran by Israel,

and the narrative that everyone is hearing, and it's not being contradicted very much,

is that Israel bullied the US into starting all this.

It's now affecting the economy of the entire world, isn't the world,

who doesn't have a particularly many of those countries, a particularly good view of Israel right now,

it's going to further be concerned, and I think that Israel is the troublemaker in this region.

I'm sorry, first of all, we were talking about Lebanon,

and the fact that Lebanon attacks civilians in the north has very little to do with Israel attacking Iran.

Well, some people say it was the result of Trump's speech,

but I'm surprised that you're justifying Hizbullah,

which is a religious military movement in Lebanon attacking civilians in Israel.

There's no justification for that whatsoever.

The next thing is you're talking about Israel bullying the US,

which is an extension of what Gidon Levy said before.

We bullied Gaza, Lebanon, and Iran, and now we've bullied the US.

I think it's also far-fetched.

Thank you very much, Jethan, and we could go on with this discussion for a lot longer.

I'd love to come back to you down, I will next time,

because we have you on this program.

Very regularly, thanks to Alex Cumman, Dan, Perry, and Gidon Levy.

This episode was produced by Dermott, Flowing Laura Khan,

Maria Kavanacheshvili, and Niki Duda.

Studio Sound was by Dragon Frankovich.

The program was edited by Catherine Nuhan and Jo DeFrias.

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Coming up on the take,

as US pressure mounts and fuel shortages plunged Cuba into blackouts,

can new alliances help it break its isolation before it's too late?

That's the take by Al Jazeera. Find it wherever you get your podcasts.