End of Israel? The fatal flaw of its security doctrine

Key Markets report for Friday, 11 April 2025

Israel is now engaged in military conflicts on five fronts: against Hamas in Gaza, against Hezbollah in Lebanon, against​ Turkey in Syria, against Ansar Allah in Yemen and against Iran’s proxy forces in Iraq. At the same time, the pro-Israel cohort in the West seem to believe that there’s no limit to what the supernaturally clever and invincible Israelis can take on, so there’s a certain enthusiasm now for taking on Iran and ending the regime of the Mullahs in Tehran.

The overarching objective of that conflict would be to prevent the evil Mullahs from acquiring a nuclear bomb. If they did, that would be a grave threat to our democracies and our wonderful rules-based global order. It would also be a threat to the security of Israel so, whatever the cost and risks of attacking Iran, the deed must be done. A couple of well-planned, supernaturally clever bombing raids should do the trick. In the West there’s no shortage of true believers who are convinced that this should be easily within the realm of possibility for the clever and invincible Israelis.

No way to live, whichever side of the wall you’re on.

But apart from a small group of zealots around Benjamin Netanyahu, that same enthusiasm isn’t matched by the mood in Israel itself. The nation’s economy is in shambles, the IDF troops are exhausted and increasingly unwilling to fight and many fear that the political tensions at home could erupt into a civil war which could spell the end of the Zionist project. This shouldn’t be unthinkable as a potential fallout from this crisis: it is what Henry Kissinger had predicted already in 2012.

Life behind a rusting iron wall

Since its creation, the only democracy in the Middle East has been engaged in 19 major military conflicts in the region. As Harley Schlanger traced in his superb recent article, even from before its creation, Israel’s security was based on Jabotinsky’s “Iron Wall” concept and to this day Israel’s leadership is enamored with the idea (so much so that they named their current operation in the West Bank, “Operation Iron Wall”). But for all its tough combativeness, the concept is ultimately unsustainable. In “The Lost ‘Iron Wall’: Rethinking an Obsolete National Security Plan,” (June 2024), military historian Uri Bar-Joseph wrote that,

“The ultimate goal of the founders of the Zionist movement was to establish a sustainable Jewish state, and upon its establishment, to persuade the Arabs to agree to end the conflict by building an insurmountable military ‘iron wall.’ This strategy was realized in 1967. Prior to the Six-Day War, Israel did not have the bargaining chips that could be traded for Arab recognition of its right to exist, but the conquest of the territories during the war created this option. Nevertheless, Israel continued to emphasize military force and ‘security lines’ as its security concept. … the persistent reliance on military force while ignoring the diplomatic channel, especially the Arab Peace Initiative that strives to end the conflict, is leading Israel into a military dead end, and it could pay a heavy price for this in the future.”

Bar-Joseph’s latest book, “Beyond the Iron Wall: the Fatal Flaw in Israel’s National Security” argues that Israel has not updated its security concept, “which has undergone little change since it was shaped by Ben-Gurion in the 1950s.” Avi Shlaim, author of “The Iron Wall: Israel and the Arab World,” stated that, “Israel was created as a safe haven for the Jews… [it] has become the least safe place for Jews.” The problem, says Shlaim, is that “Israel’s leaders fell in love with the Iron Wall; they fell in love with military power…”

Yitzak Rabin, who spent most of his military career as well as his first term as Prime Minister (1974-1977) as an enforcer of the Iron Wall doctrine ultimately came to the realization that the approach had no future. After his election in 1992 he decided to take a different approach based on mutually beneficial economic cooperation between Israel and the Palestinians and incentivizing both sides to cease fighting. Unfortunately, Rabin’s life was cut short by the very zealots and fanatics who are running Israel off the cliff today.

What did Rabin see from his first hand experience of enforcing the Iron Wall, that today’s blind zealots don’t? He saw that Israel’s security strategy wasn’t working. Today, this is masked with all the financial and military support pouring into Israel from the US and UK. Well, that’s exactly the problem: Israel’s very existence entirely depends on support from the United States and UK. But that support can no longer be taken for granted.

The Americans no longer believe

Since the October 7, 2023 Hamas attack, the country’s reputation in the US has cratered. According to the most recent Pew Research survey, 53% of Americans now view Israel unfavorably, which is 11 points higher than in March 2022 (via ZeroHedge). Over the same interval, the proportion of Americans with "very unfavorable" views of Israel has almost doubled from 10% to 19%.

President Trump, who is overtly fully supportive of Israel and who has surrounded himself with Israel-firsters, has not jumped onboard with Benjamin Netanyahu’s pet project of bombing Iran. Instead, he rattled his sabre but at the same time he initiated indirect talks with the Iranians which could lead to a breakthrough without war. On account of bombing Iran, he said that this would be led by Israel, not the U.S. - not exactly what Netanyahu had hoped to hear.

Toward a new security architecture

If that be the case, all the consequences of such an attack, which will likely be catastrophic for the region and for Western economies, will be on Israel. World opinion will hold Israeli leadership responsible and Iran’s counterstrike will likely be regarded as justified, and there’s every chance that such a counterstrike will prove devastating, once and for all destroying the illusion of Israel’s invulnerability behind its Iron Wall. Ultimately, this will necessarily precipitate a root-and-branch restructuring of the region’s security architecture.

Inevitably, this will spell the end of Western hegemony in the region and the biggest losers will be the Western financial institutions who, thanks to Israel, have been able to turn the Middle East’s resources into collateral that’s supporting the value of hundreds of billions of dollars in loans extended to their corporate clients.

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Trading signals for Key Markets, 10 April 2025

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