ISRAEL

• Document Type: FOIA
• Keywords: ISRAEL
• Collection: FOIA Collection
• Document Number (FOIA) /ESDN (CREST): 0001518686
• Release Decision: RIPPUB
• Original Classification: U
• Document Page Count: 13
• Document Creation Date: June 22, 2015
• Document Release Date: September 30, 2008
• Case Number: F-2007-01889
• Publication Date: April 11, 1968

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 ISRAEL
NOTE
This estimate assesses Israel's situation with particular reference to
its central problem of security. In the radically altered situation aris-
ing from the June war, Israel's security problems have two major as-
pects : (a) its military capabilities compared to those of the Arabs; and
(b) the political, psychological, diplomatic, and administrative ques-
tions involved in dealing with the occupied territories and with its Arab
neighbors in circumstances short of war.
CONCLUSIONS
A. Despite its smashing victory in the June 1967 war, Israel finds
that acceptance by its Arab neighbors continues to elude it. A formal
peace settlement is out of the question, and the present stalemate, with
Israel occupying large tracts of territory and controlling a million Arabs,
will probably continue for a long time.
B. Arab terrorist activity is likely to increase, though Israel will be
able to keep it under control. Incidents along the cease-fire lines will
also continue. Israel will retaliate on occasion, and this could develop
into heavy fighting. In the longer run, continued Israeli occupation
will almost certainly lead to a new round of major hostilities.
C. In this condition of uneasy truce, Israel will maintain a military
superiority over the Arabs, with a view to deterring them or, if war
comes, defeating them quickly enough to prevent serious damage to
itself. This means modern weapons. Israel probably sees France as
a not very reliable source of such arms, at least as long as de Gaulle is
in power, and will look increasingly to the US. But it will also try to
produce as much as possible of its own military equipment.
D. Six years ago, Israel contracted with a French supplier for a
surface-to-surface missile with a range of 280 nautical miles. It could
be deployed in Israel in 1969, if de Gaulle permits it. If he refuses to
 allow the French firm to deliver the missiles or to assist Israel in manu-
facturing them, the latter could go ahead on its own, but it would
probably take at least five years to deploy a missile system.
 DISCUSSION
1. ISRAEL'S PROBLEMS
1. At the beginning of its third decade of existence, Israel has won a quick and
decisive victory in the largest of its three wars with its Arab neighbors. Israel
feels that this has put it in a uniquely strong position to achieve its long sought
objectives of obliging the Arabs to recognize its existence, to enter into direct
negotiations, and to make permanent peace with it. Yet the Arabs are stubbornly
refusing to do anything of the kind. In these circumstances, Israel has three
broad courses of action it can follow, i.e., hold out for its maximum demands,
seek the substance of its territorial and security aims without formal agreement,
or scale down its demands in return for Arab concessions.
2. Israel's leaders have a united country behind them on virtually all the critical
issues which affect the country's security. The country is still dominated by an
aging "establishment"-largely of East European origin-which has its center
of power in the Mapai Party. A younger generation, mostly native Israelis, seeks
to break the old guard's hold on power. For the most part, the challengers are
now working within the new Israel Labor Party and share the domestic views of
their elders-a moderate socialism, devotion to maintaining high living standards,
and a determination to maintain and inculcate essentially European values in
society despite Israel's location in the Middle East and its growing majority of
Jews of oriental origin. The rise of new men to power in the next several years-
Dayan, for example, is a leading contender to succeed Eshkol as Prime Minister-
will probably not bring about much change in Israel's domestic policies and
politics. The main difference between the generations is one of approach to
international problems; the new generation of native-born Israelis feels fewer
inhibitions about retaining Arab territory and is less inclined to compromise with
great power interests in the area. While such Israelis will almost certainly seek
big power support, they will be less amenable than their elders to external
influence.
3. Compared to the issue of security, Israel's domestic concerns, though
troublesome, are scarcely critical. Its economy, for example, has shown im-
pressive growth and has brought Israel a standard of living comparable to that
of most of Western Europe. But the economy has weaknesses of high cost and
of strong orientation toward internal consumption; these hinder the growth of
exports. 'Economic activity has been heavily dependent on construction, and
this has fallen off when the level of immigration declines. As a consequence of
the above factors and of government action to promote exports and control
inflation, Israel's gross national product increased only about one percent in 1966,
as against an annual average of 9.5 percent for the preceding 10 years.
4. The government's efforts to revive the economy will probably result in a
four to five percent growth rate in the next year or so. Israel will remain heavily
 dependent for years to come on foreign financial support. Such support has
tended to increase markedly in times of Arab-Israeli tension and has enabled
Israel to increase its foreign exchange reserves steadily over the past half dozen
years, despite an annual average trade gap of $350 million. The 1967 war re-
sulted in a net gain of at least $350 million in foreign exchange (two-thirds of
it from the US). The war also brought added foreign exchange costs for re-
placing expended armament and acquiring more modern equipment, especially
aircraft. On the whole, however, foreign exchange is unlikely to be a problem
for Israel for a very long time to come, since its appeal to foreign sentiment will
almost certainly continue to fill its needs.
5. Israel also has the problem of integrating Jews from the Near East and North
Africa-now about 50 percent of the total Jewish population of the state-into
a society dominated by European cultural values. The high birthrate of the
oriental Jews, slackening immigration from Europe, and increased emigration by
Israelis of European origin portend long-term social and cultural trends which may
eventually bring significant changes in the character of the Israeli state. But it
will be many years before such changes substantially alter the nature of the gov-
ernment or its policies. Meanwhile, all these domestic issues will remain sub-
ordinate to the overriding questions of security, relations with the Arabs, and
Israel's ultimate status in the Near East.
II. THE QUEST FOR SECURITY
6. Israel's fundamental foreign policy is to secure the broadest possible support
for itself as the rightful occupant of Palestine. Israel's insistence on direct ne-
gotiations and its desire for a formal peace settlement stem from its desire to
commit the Arabs to a binding acceptance of Israel's legitimacy. In regard
to specific issues, Israel wants secure transit of the Suez Canal and the Tiran
Strait, permanent borders which give it certain pieces of land important for
security, and demilitarized zones on the Arab side of at least certain of the new
borders. It also wants to retain East Jerusalem-important to the Israelis for
historical and religious reasons. Israeli public opinion would not tolerate re-
turning this area to Jordanian control, and the Israeli Government will almost
certainly not do so, though it probably would concede to outsiders a voice in
the supervision of Muslim and Christian holy places.
7. The Arab States regard Israeli insistence on direct negotiations as an attempt
to force them into a permanent peace with Israel. Even in their defeated con-
dition, they show no sign of yielding to this demand. They continue to believe
that external pressure, especially from the US, could make Israel bring the form
and substance of its peace terms closer to Arab positions. For most Arabs, no
settlement would be acceptable which did not involve Israeli withdrawal from
most of the territory taken in the June war and give the refugees of the 1948-
1949 war at least some option to return to Israel. Jordan and Egypt probably
would be willing to agree to some modifications of prehostilities lines in return
for Israeli withdrawal, but such modifications would be smaller than those Israel
 wants. Syria rejects any compromise and publicly advocates military action,
although it has avoided provoking Israeli forces along its cease-fire line. Many
Palestinian Arabs also take a highly intransigent position. Nasser and Hussain,
aware of their military weakness, are trying to use diplomatic means to get Israel
to withdraw. Hussain feels that he cannot make any deal with Israel that is
not acceptable to Nasser. Moreover, both rulers are inhibited from dealing di-
rectly with Israel, and feel limited in the concessions they can make, by fear of
domestic opposition and of criticism from other Arab States.
8. The gap between the two sides is very wide. In time, Israel might abandon
its insistence on direct negotiations and a formal settlement. It is unlikely sub-
stantially to reduce its territorial demands or to withdraw from Sinai without
obtaining transit rights through the Suez Canal. Though Israel has reluctantly
accepted the UN as a communications channel, it will strenuously resist giving
powers as a mediator to the UN or any other intermediary. The Arab States
give little indication of readiness even to edge into discussions with Israel. In
these circumstances, a formal peace settlement is out of the question, and progress
toward even a limited accommodation will at best be slow and halting. Mean-
while, the Israelis are prepared to keep their forces deployed along the present
lines.
9. A stalemate of this sort presents problems for Israel and could, in time,
sharpen internal differences concerning policies toward the Arabs. The Israelis
must decide how to cope with the population of the occupied lands, especially
the West Bank and Gaza. About 200,000 Arabs fled from the West Bank and
Gaza during and immediately after the June war; the flow now is a few thousand
monthly, and relatively few have been allowed to return. But even so, in-
corporating the newly occupied territory into Israel would add a million Arabs
to the population, of which they would then constitute one-third. Almost all
Israelis would regard this as an unacceptably high proportion. An alternative
would be to give occupied Palestine some form of autonomy. But it would be
difficult to get enough cooperation from Palestinian leaders to make such a scheme
workable. Most of them would fear that the territory might later be turned
back to Jordan or Egypt as part of a broader settlement, in which case there
would be reprisals against them for collaboration.
10. Another troublesome aspect of the problem of Arab population concerns
the refugees of the 1948-1949 war. Camps containing some 400,000 of these
refugees have now come under Israeli control. The Israelis have considered
resettling some of them in certain parts of the West Bank and in the al-Arish
region of northern Sinai, but neither of these areas has known water resources
adequate for large agricultural or industrial development, and any effort to
provide the water would be very expensive. Israel would welcome the departure
of these refugees to Arab lands. It has to some extent encouraged such a move-
ment, though it recognizes that world opinion would sharply oppose a mass
expulsion. On the whole, we doubt that the Israelis will make much progress
in reducing the numbers of camp-dwelling refugees.
 11. The present situation has certain advantages from the Israeli point of view;
the cease-fire lines are now shorter and more defensible than before the June
war, and farther away from major Israeli cities and towns. Increased revenues
from tourism and from exploitation of Sinai oil offset to some degree occupation
costs, which in any case are not excessive-some $45-$60 million annually. Israel
feels that these territories are useful as a bargaining counter.
12. On the other hand, if Israel continues to occupy conquered territory for
an extended period, say two to three years, it will find it increasingly difficult
to relinquish control. Domestic pressures to establish Israeli paramilitary settle-
ments in occupied areas would grow, and it would be harder to turn back to
the Arabs land which contained such settlements.
13. The continued stalemate is already encouraging the Arabs, especially the
Palestinians, to look increasingly to terrorism as a means of compelling Israeli
withdrawal from occupied territory. The Syrians will probably continue to dis-
patch terrorists through Jordan with the objectives of harassing Israel and causing
trouble for Hussain while trying to avoid Israeli retaliation on Syria. Other
terrorist activities will probably be carried out or instigated from time to time by
various Palestinian organizations in Jordan and elsewhere. Israeli security
forces will continue to deal harshly with infiltrators and to retaliate for border
incidents or sabotage. Such retaliation will sometimes be on a scale which could
lead to heavy fighting.
14. So far, Jordan has borne the brunt of Israeli reprisals. Hussain has tried
to control terrorism and to send home the Iraqi troops in Jordan who assist
the terrorists. However, the unpopularity of this stand has been increased by
the Israeli reprisals, and Hussain now is tending to tolerate such activity in order
to avoid further weakening his position. The Israelis appear to be little con-
cerned whether he stays or goes.
15. In the longer run, the frustration of the Arab States would almost certainly
drive them to seek military means of compelling Israeli withdrawal. For some
time to come, Arab leaders will probably not believe their forces capable of de-
feating the Israelis. But they will build up these forces and, in time, will probably
seek to avenge the 1967 defeat. The Egyptians, in particular, may come to
believe that they could win a limited victory over the Israelis, e.g., dislodging
them from the East Bank of the Suez Canal. The Arabs will, of course, be in-
fluenced by their reading of the attitudes and commitments of the major powers,
but whatever the precise course of events, continued Israeli occupation will
almost certainly lead to a new round of major hostilities in the future.
16. Israel considers that a close association with the US is very important to
its own security and would hesitate to follow a course that it thought would
jeopardize the relationship. It believes-as do the Arabs-that the US would
not permit Israel to suffer a substantial military defeat. To further this associa-
tion, Israel will continue to depict US and Israeli interests in the area as identical.
It will stress that US support will build up Israel as a strong counter to the
extension of Soviet influence in the region.
 17. Israeli attitudes toward the Soviets are ambivalent. The Soviets provide
political support for the Arab cause and are the main source of arms for militant
Arab regimes. Israel will continue to be concerned lest the USSR's eagerness
to cultivate the Arabs might encourage the latter to adopt a dangerously aggres-
sive attitude. On the other hand, the USSR affirms Israel's right to exist and
has advised the Arabs to recognize Israel's existence and to use peaceful means
of settling their disputes with it. Moreover, the Soviet Union is the home of
two and a half million Jews-potential emigrants and potential victims in purges
and plots. Accordingly, Israel will seek to keep Soviet-Israeli relations as friendly
as circumstances will allow, but it will also continue to regard Moscow with
suspicion and distrust.
The Military Balance
18. In light of all this, Israel sees a continuing need for a clear military su-
periority. At present, this superiority rests on a combination of factors, in some
of which the Arabs suffer very deep, long-term disadvantages. Arab armed
forces can easily enough acquire good weaponry, but they lack the intangibles
of high motivation, effective training, and vigorous and imaginative leadership.
Current programs for the resupply of weapons and extensive training of Arab
armed forces will probably restore and even increase their capabilities, although
they probably will not be back at their 4 June 1967 standard before 1969. But
it would require years to effect fundamental changes in the unimaginative and
inflexible attitudes of the Arab officer corps, or to change the conditions under
which Arab military professionalism is now undermined by recurrent purges,
arrests, and reassignments for political reasons. Hence, the Israelis will remain
militarily stronger than their Arab neighbors.
19. The Israelis see a need not only to be militarily stronger than the Arabs,
but to be able to defeat them quickly and without suffering much damage in
return. The Israelis are convinced that if their own armed forces were badly
defeated or if their small country suffered serious physical damage, it would
mean the end of Israel as a state. Hence, they are determined to stay well ahead
of their Arab neighbors in modern weapons.
20. Until the 1960's, Israel bought most of its military equipment from European
sources; its aircraft were almost exclusively from France, its naval vessels and
newer tanks mostly from Great Britain. Since 1962, the US has played an in-
creasing role as a supplier, first with Hawk surface-to-air missiles, then with
medium tanks, more recently with tactical attack aircraft. Israel has made it
clear that it will continue to look to the US for certain types of military equip-
ment, including aircraft and probably armored vehicles. Israel will also continue
to seek armored vehicles from the UK.
21. The special relationship which France and Israel built up in the 1950's has
been weakening. In the wake of the June war, Paris placed an embargo on cer-
tain arms shipments to combatants. This has already been relaxed to some extent,
and there is a fair chance that Israel will eventually get the 50 Mirage-5 aircraft
 EE ITEr
it contracted for some time ago, though delivery is likely to be further delayed.
Israel has already received from France the first of at least five of a new class of
torpedo boats which will carry the Israeli-developed Gabriel cruise missile. How-
ever, France is not likely to be a reliable source of military equipment for Israel,
at least as long as de Gaulle remains in power.
22. The uncertainties of dependence upon foreign suppliers is impelling Israel
toward the manufacture of as much as possible of its own military equipment.
It already produces almost all its small arms, most categories of ammunition, some
artillery, some transport equipment, and even some missiles and aircraft. The
industrial base for the manufacture of heavy equipment, e.g., tanks, submarines,
and sophisticated aircraft, is deficient but improving; for materiel in these cate-
gories, Israel will continue to be dependent on external sources. But in some
types of advanced weapons, Israel has the know-how and the resources to supply
itself, if need be.
23. Missiles. In 1962, Israel made an agreement with the French firm of
Marcel Dassault for the design, building, and testing of the MD-620, a missile
with a payload of 3,000 pounds and a range of about 280 nautical miles. The
program has proceeded slowly, but the missile has now been fired at least once
at full range. Although considerable testing and refinement still remain to be
done, we believe that development of the missile by Dassault has proceeded
to the point that deployment in Israel in 1969 would be technically possible. We
do not know how many missiles the Israelis intend to deploy. If they propose
to use a high-explosive or chemical warfare warhead, they will presumably see
a need for many more missiles than if nuclear warheads were used. It may be
that Israel will decide to have some warheads of each type.
24. The picture is complicated by the pro-Arab stand that de Gaulle has taken
since the June 1967 war. There is some question whether he would permit
MD-620 missiles to be manufactured in France for Israel. He might be more
disposed to let Israel get French technical help in building missiles for itself.
In any case, he would find it more difficult to prevent Israel from getting this
sort of assistance. Israel has, of course, paid substantial sums for the MD-620
research, development, and testing program, and almost certainly has specifica-
tions and other useful data. Moreover, Israel has done a considerable amount
of domestic missile research, and has purchased missile-related manufacturing and
testing equipment over the past six years or so. It has developed the Gabriel
ship-to-ship cruise missile, which has a range of 3.3 to 11 nautical miles and is
about ready for use. With the knowledge gained in these various ways, Israel
could go ahead on its own to build the MD-620, if de Gaulle refused to permit
the Dassault firm either to deliver the missiles or to assist Israel in manufacturing
them. But without French help, it probably would take Israel at least five
years to deploy a missile system, and the cost would be substantially greater.
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