In the Palestinian Authority-controlled Gaza Strip and the Area “A” parts of Judea and Samaria under its rule, a full-scale civil war is likely to erupt among the local Arabs, with unpredictable consequences.
This time around, the talk of "brotherhood" will likely be finally exposed for the myth it is. Fatah, Hamas, Islamic Jihad and other assorted terrorist gangs will participate, while outside sponsors such as Iran, Syria, and Jordan will supply the bullets, rockets, money and ill-will.
International and American sanctions against Iran and Syria will likely increase, as will defiance by the two nations. Will George Bush unleash an attack on Iran to foil its ambitions to obtain nuclear weapons? Judging by America’s dismal performances in Afghanistan and Iraq, Israel will be left holding the bag forced alone to face an existential threat in which the options are all bad.
Damascus and Tehran will team up to destabilize Lebanon by activating their proxy, Hizbullah and their allies - the 400,000 Arabs who left Israel in the 1948 and 1967 wars. The bigger powers will push Israel’s northern neighbor into a second civil war, one likely to be far more vicious than the 15-year conflict that ended in 1990.
Like the PA Arab battle, Lebanon's civil war will attract support and weapons, drawing in Western and Middle Eastern sponsors to supply the country's Christians, Shi’ites, Sunnis, Druze and Armenians. Jihadists, always on the lookout for training spots, also will flock into Lebanon to establish new bases of operations.
In Iraq and Iran — but also in Afghanistan, Lebanon, Somalia, Pakistan, and at least one major country in the Persian Gulf — jihadist Muslim fundamentalists will become the main agenda-setters, emerging from the shadows to dictate the tempo of events, war, and peace.
The flow of refugees from Iraq, which now stands at two million, will double. Meanwhile the trickle of educated Arabs leaving the Gaza Strip and Judea and Samaria will continue to grow, resulting in a brain drain of the region’s best and brightest.
In America, a Democratic-controlled Congress will turn the Iraqi mess into a full-blown tragedy by opposing any proposals advanced by the Bush administration short of a total and immediate withdrawal of American troops. The American population will progress toward a total rejection of further overseas involvements.
Somalia, which has disintegrated into a vast morass sheltering international jihadist Muslim fundamentalists, will continue its descent into bloody chaos, drawing the Horn of Africa down with it.
The presence of American military personnel already involved in Somalia, as well as the CIA and other semi-military American outfits, will increase with more western advisors to the local army. The flow of weapons to Christian Ethiopia will explode, as will Western satellite and surveillance outposts there. With the Indian Ocean thus wide open, the U.S. Navy and NATO will have to double their presence to block incoming mayhem from the sea.
In Israel - which in the summer of 2006 painfully discovered the limits of its military prowess against Hizullah's guerrilla-style warfare in Lebanon - politicians and the military will find that their enemies have been further emboldened.
Hamas and Hizbullah rockets aimed inland from Gaza and from Lebanon will test Israel again. Prime Minister Olmert's unwieldy coalition government once more will be pushed to the edge. The government is widely expected to remain in place, but its ability to develop effective responses will be as incomplete and as incompetent in 2007 as it has showed itself to be this year.
More important, PM Olmert and his feckless Defense Minister Amir Peretz — as well as Israel's entire opposition — will continue to exhibit a shocking lack of vision, failing to put forward a strategy to deal with the tide of Islamic fundamentalists and the consequences of Egypt's failed government. The total collapse of the Palestinian Authority will increase the internal challenge for Israel.
On the macro-economic front, the price of oil will continue to slip, as more alternative sources, from coal to oil sands to ethanol, grab a larger share of the world’s markets.
The role of Russia as the world's major new supplier of "conventional energy"- now bigger than that of Saudi Arabia - will grow remarkably. Russia is already Europe's main supplier of natural gas, and it is moving to become a major supplier of oil and gas to Asia, as well. Canada, with its endless reserves of oil sands in remote northern Alberta, will join Russia as a major new energy power. The strategic consequences of these two countries' advances for American influence have yet to be calculated by think tanks, NATO, and the OECD.
Where does all this leave the Israeli man in the street? The slight cut on December 31 of the government-set price for gasoline, together with the Bank of Israel’s decision earlier last month to slash interest rates by half a percent to 4.5 % - three quarters of a point below the Federal Reserve Bank’s rate – suggest continued strong growth in the Israeli economy and an ongoing reduction in the unemployment levels.
Want some unsolicited investment advice? Park your dollars in Israeli shekels, and watch as the greenback continues to shrink.