It's the Iranian Economy, Stupid!
Also, new details emerge about October 7, and the battle for the opposition heats up.
It’s Sunday, June 7, and before we get to today’s articles, a breaking news update.
A deadly terror attack unfolded across multiple locations in Israel’s Sharon region this morning, leaving one person dead and at least five others wounded. The violence included a drive-by shooting at a gas station near Kochav Yair, where Magen David Adom paramedics treated victims in serious and moderate conditions. The attacks continued at several other scenes, including Route 5533 and the community of Tzur Yitzhak, marking an attack of rare scale and coordination inside the country.
In response to the coordinated assaults, the IDF and Israel Police launched a massive security operation, successfully arresting one of the suspected terrorists. A large-scale manhunt is currently underway for a second attacker who managed to flee into Tzur Yitzhak. Both suspects are confirmed to be Arab citizens of Israel. The Home Front Command activated terrorist infiltration sirens in the area, officially advising local residents to shelter in place while security forces conduct door-to-door searches for the fugitive and work to fully secure the region.
Now, onto today’s stories.
A U.S. Sailor observes a commercial vessel as the ship patrols the Arabian Sea while enforcing the U.S. blockade against Iran. (CENTCOM/X)
After 55 days of hemorrhaging an estimated $500 million daily in blockaded revenue, economic pressure has begun to manifest. According to a senior Iranian official speaking to CNN, a potential peace agreement with the administration of U.S. President Donald Trump now hinges on the release of $24 billion in frozen Iranian assets.
Does this mean the nuclear issue has been settled? Unlikely, but it does reveal that other priorities are taking precedence.
At the onset of Operation Epic Fury, the United States outlined four primary objectives: dismantling Iran’s nuclear program, destroying its ballistic missile capacity, severing its support for regional proxies, and stopping the violent crackdown on protesters. As negotiations progressed, the protesters appeared to have been the first abandoned, quickly followed by the proxies and missiles. Now, only the dismantling of the nuclear program remains on the negotiating table.
However, what diplomacy has omitted, military intervention has largely addressed. The bombing campaign left Iran’s ballistic missile infrastructure—and the primary industries supplying it—in ruins. The state’s oppression apparatus also suffered a severe beating, while crippling sanctions and the blockade have handicapped Iran’s ability to fund its proxy networks. Repair costs have been estimated at a minimum of $144 billion. However, Iranian government spokespeople claim that direct and indirect damages have reached up to $270 billion. The regime is teetering over an economic abyss that only liquidity can bridge. This is why two weeks ago Qatar offered to sweeten an agreement with a $6 billion “humanitarian” loan, and why “peace” now comes with a $24 billion price tag.
The regime’s victory narrative bears a striking resemblance to the classic punchline about Jewish holidays: They tried to kill us, they failed, let’s eat—just without the festive meal. Yet, that story can only be told if the regime survives the war’s aftermath. The Iranian economy is floundering, and the nation cannot survive on fumes indefinitely. Caught between nuclear obstinacy and economic strangulation, the regime faces the choice of concessions or asphyxiation. Experience suggests the IRGC would rather be deprived of air than nuclear material, in which case, unless Trump folds, it will not survive for much longer.
Meanwhile, domestic unrest continues to simmer. According to a Saturday report by Iran International, high school students have organized mass protests across roughly 20 provinces. Authorities have met several of these demonstrations with immediate violence and arrests.
Although the students’ grievances currently focus on educational reform rather than explicit anti-regime sentiment, the potential remains. All it took was one Tunisian street vendor protesting local corruption to ignite the Arab Spring and topple four established regimes. Perhaps the treatment of an as-yet-unknown student could be the catalyst for an upheaval no one could have predicted.
Palestinians take control of an Israeli tank after crossing the border fence with Israel from Khan Yunis in the southern Gaza Strip, October 7, 2023. (Abed Rahim Khatib/Flash90)
“There’s going to be a raid,” IDF lookout Yael Leibushor told her replacement at the post at 4:00 AM on October 7, 2023. The replacement’s name was Karina Ariev. A few hours later, Yael would be murdered in the Nahal Oz war room and Karina would be abducted to Gaza. Their friends back home said that when the war broke out, while most Israeli citizens thought to themselves, “What is this?” the lookouts thought: This is what we saw all along.
This story, and many others that have remained untold until today, appear in the important new book by Haaretz military commentator Amos Harel, titled “06:29.” Surprisingly, it turns out that even before that fateful minute, the attack had already begun. At 6:17 AM, a terrorist on a paraglider had already landed in Israeli territory. It was an infiltration into Israel that no one saw and no one heard—the failure before the failure.
Harel’s eye-opening book paints a horrifyingly bleak picture. Though Harel did not vote for Prime Minister Benjamin Netanyahu, he writes that former Prime Ministers Naftali Bennett and Yair Lapid also failed to alter the destructive military “conceptzia” (the governing military assumption) Netanyahu led within the IDF. He covers the army closely but does not hesitate to slam it with harsh words like “rot.”
But let’s assume intelligence had noticed the signs, woken up the prime minister and the forces on the ground, and successfully halted the initial assault. Israel still would have ended the event with two Iranian commando divisions sitting directly on its border, a reality that would have erupted eventually.
“Divisions whose importance we all downplayed,” Harel said in a recent discussion. “But the question is the scale. When they say ‘the defense line will eventually be breached,’ the meaning is tactical, not strategic like what happened. There is a difference between a localized success where five soldiers are killed and a resounding defeat, a massacre, and national trauma.”
Yet this monstrous force was allowed to grow on the border. In a parallel universe where the security wall didn’t fall, if the prime minister or the chief of staff had proposed a preemptive war to eliminate it, the move would never have passed politically.
“True. They didn’t want to,” Harel noted. “‘Didn’t want to’ includes the media, it includes me. Not out of a desire to protect the Palestinians, but from the thought of ‘you don’t know how you’ll end this,’ that you’ll eventually get stuck. There was a saying that whoever defeats Hamas wins a prize—Gaza. And there is, of course, the fear of losing soldiers, the lack of consensus, and a clear tension between Netanyahu and everyone below him. An officer who was involved told me: ‘Let’s tell the truth, none of us wanted to fight there.’ He spoke about everyone including everyone. Even the Shin Bet and the Mossad, who were more hawkish—in the end, it’s the army that buries its soldiers. After all, it’s not Shin Bet or Mossad personnel who are killed in mass ground operations.”
Could Israel have lived with this threat on its borders indefinitely?
“No. I didn’t understand it like that in real time because I didn’t grasp the magnitude of the threat,” Harel admitted. “But when you understand, on the one hand, what Hamas built in terms of a defensive array that they probably planned for us to crash against at some point, and on the other hand their offensive capabilities—it had to be dealt with at some point. You don’t have to be right-wing to think that Israel, over time, cannot tolerate the building of two monstrous terror armies on its borders while taking no action. Look at that recording of the terrorist saying, ‘I have the blood of ten Jews on my hands, which I washed.’ This is someone who was brainwashed from age zero; the Gazan education system invested in him for 20 years, and it bore fruit.”
This raises inevitable questions about the 2005 Gaza Disengagement. Even from a non-ideological perspective, removed from debates over ancestral land rights, doesn’t Israel ultimately have to maintain a presence everywhere between the Jordan River and the Mediterranean Sea?
“I do think that this project of holding an enclave of 9,000 people inside 1.5 million Palestinians would have turned into some sort of Vietnam for us over time,” Harel argued. “I admit that I underestimated the risk of the rockets, their range, and the speed at which that threat would grow. But staying would have been bleeding us dry in a different way. There are no good solutions here.”
As disturbing as it sounds, October 7 could have looked much worse. The head of the Southern Command, Maj. Gen. Yaron Finkelman, noted during the fighting that Israel “might meet 200,000 Gazans in our territory.” That is to say nothing of the northern border, where IDF battalions were at partial strength due to holiday leave, facing a heavily equipped enemy trained specifically to invade northern Israeli communities. The enduring lesson for the defense establishment is the vital development of imagination. As a senior Military Intelligence officer is quoted in the book: “They pictured our defeat and occupation in their imaginations, and we did not imagine that they were imagining it.”
Chairman of the “Together” party and former Prime Minister Naftali Bennett and Gadi Eisenkot, head of the Yashar! party. (Yonatan Sindel/Avshalom Sassoni/Flash90)
National Unity Chairman Benny Gantz effectively cut ties with Gadi Eisenkot the day the latter’s statements from a private faction meeting were leaked to the press, painting Gantz in a negative light. Eisenkot never forgave him, and his departure from that alliance was a matter of time. Those same underlying tensions, anger, and allegations of a breach of trust now color Eisenkot’s view of Naftali Bennett.
The sense of betrayal is palpable. “A crack in trust was formed,” Eisenkot said during an interview on “Uvda,” the Israeli equivalent of “60 Minutes,” referencing the sudden Bennett-Lapid unification. In the world of politics, strategists rarely ask for permission from rivals before making major shifts, and Bennett’s team did call Eisenkot seven minutes before the press release—which, in political terms, is practically an eternity.
Either way, accusations are being traded at a fever pitch between Eisenkot’s Yashar! party and Bennett’s Together alliance. Bennett has publicly claimed Eisenkot is politically naive, while Eisenkot suggested Bennett maintain his composure. Bennett has dropped hints that Eisenkot leans too far to the left, while Eisenkot countered by reminding the public that Bennett previously extorted the premiership with just six mandates.
This friction is expected to escalate, as both parties operate under the assumption that the decisive moment of the campaign will be reached this month. If Eisenkot continues to gain strength and consistently surpasses the Bennett-Lapid alliance in public polling, the Together party will be left with little campaign ammunition. For months, their central argument for unifying under Bennett was that they represented the largest opposition list; if that ceases to be true, their rationale evaporates.
The dynamic is reminiscent of the 1999 Israeli election, which featured a three-way race for prime minister. Yitzhak Mordechai—a centrist candidate who had defected from the right—ran a campaign whose entire rationale relied on data. His slogan declared, “Only Mordechai can win big,” arguing he was the only alternative palatable enough to right-wing voters to unseat the incumbent, Benjamin Netanyahu. However, the moment the main center-left challenger, former military chief of staff Ehud Barak, gained momentum and proved he could win on his own, Barak surged in the polls, and Mordechai’s support almost instantly evaporated.
Perhaps that is why Bennett has shifted to a different argument, asserting that any prime minister who defeats Netanyahu must come from the right. Meanwhile, Eisenkot is already hinting that Bennett might take his mandates and form a coalition with Netanyahu, mirroring his 2021 maneuver in reverse. Eisenkot’s legislative initiative this week to establish that the head of the largest party automatically receives the mandate to form a government attempts to leverage his lead in suitability polls among opposition voters. With that same arrow, he hopes to hit another target: Avigdor Lieberman.
Within the Change bloc, there is deep concern regarding reports from a month and a half ago indicating that Lieberman will consider demanding the premiership regardless of how many mandates his party receives. Even if a reconciliation is eventually brokered between the two frontrunners, Eisenkot has no intention of playing the sacrificial lamb.
This is an excerpt from my weekly column in Israel Hayom.
English Editor: Ari Tatarka
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Prior to October 7, I always wondered how Israel was going to elude the trap set by the Iranian regime. With Hezbollah to the North and Hamas to the South, and with Iran slowly and deliberately moving forward on its nuclear and ballistics program (notwithstanding the setbacks from Mossad and CIA actions), the situation seemed to be getting worse by the day.
And, of course, the “world community” would never have tolerated a preemptive war by Israel - which would have been perceived as a war of aggression and extermination, which is pretty much how it is still looking at a textbook definition of a defensive war. Israeli leaders had little inclination to act on either front, for the reasons set out in the article.
Instead, Israel latched on to the same delusion that accompanied the Oslo Accords. Then, they ignored Arafat’s clear and unambiguous declarations to his followers that the Oslo Accords were a means to advance his phased strategy to destroy Israel. Now, they ignored Hamas’ (and Iran and Hezbollah’s) clear and unambiguous genocidal incitement. It was all dismissed as typical Arab and Persian rhetoric and purple pride - not dissimilar to President Obama’s airy dismissal of the Iranian regime’s antisemitism as some practical political organizing tool and not a deep seated motivating belief.
Instead, everyone in the West assumed that Israel’s enemies shared Western universal principles and its politics of material versus spiritual rewards. So, rather than deal with reality, Israel (and the West) followed the fantasy that Hamas was interested in good governance in Gaza, not in the exterminationist goal it kept going on about.
Even after October 7, the West by and large retains its delusion. Hence, the view that only “diplomacy” can resolve the underlying issues and violence can never be justified. It’s as if they still see Hamas, Hezbollah and even Iran as, at best, a problem for the police not the military.
In a terrible historical irony, Israel’s dilemma was solved for it by Sinwar’s lack of strategic patience - and, it seems, his miscalculation was due in no small part to an autocrat’s basic misunderstanding of how democracies work and what political argument looks like. So, one might say that Israel was “saved” by the massive protests over judicial reform which Sinwar misinterpreted as Israel’s democratic institutions coming apart at the seams.
He then began a war for which Iran was unprepared but couldn’t sit out without losing face. And so the half-measures it and Hezbollah took provided Israel with the justification to act in self-defense - but this time with the goal of eradicating the threat altogether.
Not surprisingly, the West was horrified (but only at Israel, because that’s its habit) and the Biden Administration tried to apply the “old” rules but failed. It remains unclear what President Trump’s endgame might be, accommodate the Iranian regime and throw it a lifeline or display the strategic patience required to let the counter-blockade collapse the Iranian economy.
Today, by every measure, Israel is in a better position than it was on October 6. The scales have fallen from its leaders and populations eyes and there will be no going back. I can say with complete candor that as October 7 was happening, I never would have imagined today’s outcome. Now I worry that the “world” will once again force Israel to give up its gains. It’s perhaps now time to borrow from the Arab playbook and show sumud, steadfastness. I think it will no matter who wins the upcoming elections.