Bloomberg News

Oren Says Israel Faces Unprecedented Upheaval (Transcript)

August 16, 2012

Michael Oren, Israel’s Ambassador to the U.S., spoke of the Mideast upheaval facing Israel, from Iran’s nuclear program to the turmoil of the Arab Spring, during a Bloomberg Government breakfast yesterday in Washington.

(This is not a legal transcript. Bloomberg LP cannot guarantee its accuracy.)

OREN: Let me begin by quoting the classic Israeli Jewish author Charles Dickens by saying it’s the best of times and the worst of times. That really sums up where Israel is at this juncture in its history. It is the worst of times and I can also speak as an historian, not just as an ambassador. Looking back at Israel’s 64-year history, I can very rarely point out a time where Israel has faced such an array of monumental threats at the same time.

It begins with what you might call the Arab Spring, the Arab Awakening, the upheaval throughout the Arab world, which has thrown into question all of our assumptions. Everything you assumed about the Middle East three years ago no longer holds, and it begins with the changes in Egypt. We’ve had now a peace treaty with Egypt for 33-plus years, which has been the cornerstone of our strategic [inaudible]. It’s enabled us to beat a lot of our swords into plowshares, it helped enable us to absorb nearly a million immigrants from the former Soviet Union, from the Soviet bloc, Ethiopia. It enabled us to transform Israeli society from a small, largely Socialist society to a high-tech powerhouse, more about that later.

And there are changes afoot. We respect the ability of the Egyptian people to choose their government democratically. Our major concern there is the maintenance of the peace treaty. And we have a specific problem in the Sinai, where patrols that existed in Sinai have been weakened and we’ve seen now three major terrorist attacks launched against Israel in the last year, starting last August. We had a major terrorist attack in which eight Israelis were killed.

A very sophisticated operation involving multiple groups of terrorists, many of them wearing Egyptian uniforms, planted ambushes [inaudible] and they were able to carry out this terror attack before they were interdicted by the Israeli Defense Forces.

Most recent terrorist attacks was only partly against us, mostly it was directed at an Egyptian bunker. Sixteen Egyptian soldiers were killed, but they, the terrorists, managed to take over two armored vehicles. One of them tried to smash through the border and was finally neutralized by the Israeli Air Force.

So it was also directed against us and at the same time our, our towns, our villages in the southern part of the country were pummeled by rockets and mortar shells from Gaza. And that has happened about four or five times since last year.

And the situation in Sinai, and I think Nicole, you were with the secretary of State when she came to Israel, she stressed on her visit to Egypt that this is not just an Israeli problem, it’s a regional problem. If terrorist groups from around the region including World Jihad are setting up shop in Sinai, it’s a problem not just for Egypt. They can access from Sinai -- they can access Jordan, they can access Saudi Arabia, they can strike at the Suez Canal, which at this point is the major source of income for Egypt. We have an interest in a strong Egyptian economy and a stable Egypt. So the Sinai situation presents multiple threats to Israel, multiple threats.

Now we have to worry about what seeps out of Gaza into Sinai and in Gaza itself. Though it’s nominally under control of Hamas, Islamic Jihad, an organization that’s owned and operated exclusively by Tehran, is posing a challenge to Hamas rule there.

They’ve tried to drag Hamas into battles with us because Iran has an interest in diverting from its nuclear program, it has an interest from diverting attention from the Syrian civil war and several times we have been posed with the question, with the threat of being dragged into a war by Islamic Jihad in Gaza.

They’ll mount a terrorist attack. We’ll have to make a decision whether to preempt and stop the terrorist attack. We do that, then they respond with barrages on our southern border and there’s a limit to which any Israeli government, left, right, up, down, center, can keep a million and a half Israelis underground in bunkers.

We also come up against the law of averages. If they’re firing hundreds of rockets at our, say three southern cities, Beersheva, Ashkelon, Ashdod, eventually you’re going to hit something. They’re going to hit a school, hit a house, and that’s going to create enormous pressure for the Israeli government to move ground forces into Gaza. Move ground forces into Gaza and you’ve set into motion an ineluctable process, the end of which you do not know. And it could have profound implications for our relationship with Egypt, other countries in the region, and it has been to the credit of this government that we have not been dragged into war.

The previous government was dragged into war twice in two years under very similar circumstances. One of the great advantages we have is the Iron Dome system, which is an Israeli technology that went from drawing board to deployment in four years and has become the only anti-ballistic system in the world to prove effective in combat. And right now [inaudible] has had an 85 percent success rate. One of our batteries in the last round of salvos registered 100 percent success rate, which means we can actually get to 100 percent. And it is literally rocket science. It’s two bullets hitting each other in midair, but it does, it does the job and it’s given the government latitude and time to negotiate various ceasefires usually through Egyptian mediation.

But the situation in the south remains hair-trigger, it simply does, and it’s a source of concern, not just for Israel, but for countries throughout the region and the United States.

Moving north, the Syrian situation, which we are not coming out in support of the opposition. We feel in doing so, we’ll not be helping the opposition, but for many years now, well before the outbreak of the violence in Syria, we have considered Bashar al-Assad and his regime prohibitive. His father was ruthless but in some strange way responsible. His son is ruthless and reckless. He has provided now 60,000 rockets to Hezbollah, about 10,000 rockets to Hamas, the number that they’ve, the Syrians through the Iranians, have provided to Islamic Jihad is approaching the 10,000 level.

He is deeply engaged in an alliance with Iran. He tried to create a clandestine nuclear facility, things his father never would have done. Has provided missiles to terrorists that can hit any city in the state of Israel if they’re fired north of Litani River, which is a psychological game changer.

Things that his father wouldn’t have done and for a long time we’ve wanted his departure, and if he departs we would not mourn his passing, his departure, even at the risk of a Sunni government that might have some difficult components for us. We believe it would deal a, a tremendous blow to Iran were the Baathist regime to fall. This doesn’t mean we don’t have concerns in Syria, we do, we’re concerned about [inaudible] a potential inundation of refugees. That is occurring in Turkey and Jordan. We are prepared for an influx of Christians, Druze, Alawites. Strangely enough we have some relations with the Alawites. We have an Alawite village on the Golan Heights with which we have good relations. And we’re prepared, prepared for the possibility of thousands of people coming across that border.

But our biggest concern is, relates to the unconventional weaponry in Syria’s arsenal. It is a very large arsenal. It is a very diversified arsenal. It is splayed out geographically, which makes it doubly difficult. Many of the stockpiles are adjacent to population areas. And how should I put this, it is a non-trivial task for us. And we are in close consultation with the United States. We recently had a long series of visits from a procession of high-level American officials from the deputy secretary of State, the national security adviser, the secretary of State, the secretary of Defense. And the Syrian situation was at the top of our agenda.

We have concerns about the future stability of Jordan. We look at all the situations in Syria. We see its impact on Jordan and the stability and integrity of Jordan is a, of paramount strategic importance to the State of Israel. We have a very close security relationship with Jordan and we wish them very, very well.

Someone’s going to say, if I don’t mention Turkey, how come I didn’t mention Turkey, so let me just quickly mention Turkey and say that we’ve had some vicissitudes in our relationship with Turkey in the last few years. We are still trying to rectify, redress our relationship with Turkey to improve it in any way we can. We regard Turkey as a very important power in the Middle East, we regard it as a friendly power, we have a 500-year friendship between the Jewish people and the Turkish people, and we are, uh, what can I say, it’s a work in progress, it’s a work in progress.

We are not Pollyanna-ish. We don’t think our relationship can go back to what it was before, say, 2002, when we used to have very, very close security relations and we used to have annual maneuvers. For about 14 years we had joint maneuvers with the Turks. But we think that it can, the relationship can be much better than this today, and there’s a tremendous confluence of interests between us and the Turks right now, dealing with the Syrian situation, the Iranian situation. So there’s a basis for improving this relationship, and we’re working on it.

The Palestinians. It’s interesting how much the Palestinian issue does not come up now, whether on the official level or even in briefings. I’ve done several briefings with different news channels. No one asks about the Palestinians, and I want to talk about the Palestinians and, “No, no don’t talk about the Palestinians, talk about Iran.”

We should flash back to two years ago when I wanted to talk about Iran and “No, we want to talk about the Palestinians.” But I want to talk about the Palestinians. Briefly, we’re in conversations with the Palestinians. I have to frame it as conversations, nothing beyond contacts, the contacts are designed to discuss the possibility of whether we can resume negotiations.

For most of the last three-plus years, the Palestinians have refused to negotiate with us directly. There’ve been very brief interregna. Six hours in September of 2010 when we negotiated directly. The Palestinians have a number of preconditions that they insist on. We have no preconditions and agree with the Obama administration, with the Quartet that the negotiations should resume without preconditions, immediately, on all the core issues: refugees, borders, recognition, security, Jerusalem, everything’s on the table and these negotiations should conclude with a Palestinian nation-state living side-by-side with the Jewish nation state, which is the state of Israel, in permanent legitimacy and security and peace.

Whether this is going to happen anytime soon, I can’t tell you. Palestinians have in the past tried to move unilaterally through the UN and its associated organizations to achieve Palestinian statehood without recognizing Israel, without making peace. This is a violation of their signed agreement, it’s not just with us but with the United States. The 1993 Oslo Accords say there is no alternative to direct negotiations and we hope that they’ll desist from doing that.

At the same time there’ve been efforts by the Palestinian Authority to reach some rapprochement with Hamas, which is also a violation of our agreements with them as well as their agreements with the United States. Hamas is considered by the United States and the Quartet as a terrorist organization and there are very specific conditions for Hamas joining the peace process, and they won’t meet those conditions.

We still hope. We just hope that they can join us at the negotiating table. We have to, we are interested in maintaining the process of economic growth within the Palestinian Authority. We just signed an agreement with Salaam Fayyad about releasing monies and improvements in import laws. We’re always, we have a very good relationship with him and we’ve made some significant progress there, we’ve got to keep up the momentum because the Palestinian Territories are not immune from the world economic recession.

In previous years, we’ve had between 8 and 11 percent growth rate. This year was about 6 percent. We have to keep that up, we also want to provide a political horizon for the Palestinians, we view that as essential as well.

I’m moving swiftly in order to get to Iran. I’m going to do this very briefly. I understand you have questions about Iran. Some of you have read an article I wrote in the Wall Street Journal about a week and a half ago. Yes, the Olympics were on, yes, Paul Ryan was named after that. It got lost in a lot of the noise, but that article was the fullest iteration of Israel’s position on Iran to date.

I’ll give you the short version, which is that Israel’s been warning the world about Iran for 20 years. It took the world ten years to take us seriously, that was after the revelation of the Natanz facility in 2002. It took several more years before the Iran, the international community to think about and then impose sanctions on Iran. A lot of time was wasted, a lot of time was lost. Now we have the sanctions, the sanctions have taken a bite out of the Iranian economy, they’ve done some mischief with the Iranian currency, but they have not slowed down the Iranian nuclear program.

According to the International Atomic Energy Agency, that program has accelerated by as much as 50 percent. Iran now has sufficient enriched uranium for about five devices. Iran has made significant progress on its missile program and at the same time it is moving its program underground. Thousands of the centrifuges. They have between 10,000, 11,000 centrifuges and thousands of these centrifuges have been moved underground into Qom. And we believe that eventually they are trying to move their program into a situation where they will have inaccessible and redundant facilities, and we will not know what is going on in these facilities and these facilities will be beyond our capabilities.

Israel, small country. We have capabilities, but they’re not the capabilities of a country like the United States and there will be a point at which we will pass what Defense Minister Barak has called the sphere of immunity. The percentage, a critical mass, of Iranian nuclear program will be underground beyond our reach and maybe perhaps beyond our knowledge.

We’ve had about five months of diplomacy, the P5 plus one, it’s position actually has softened over the last few years. Two years ago, they were demanding a complete suspension of Iranian enrichment. They were demanding the export, sending abroad of almost the entire stockpile of enriched uranium.

Today, the P-5 plus one in its first phase are only talking about the suspension of the 20 percent, which the Iranians subsequently escalated their escalation from 3.5 to 20 percent. And shutting and closing down the Qom facility, there are subsequent phases but our assumption is that the Iranians will drag out those negotiations. They won’t even agree to these most minimal gestures.

Five months may not sound like a long time, but in the five months the Iranians have enriched enough 20 percent to significantly fill up another device. And they are moving very, very rapidly. And every day that goes by is a net gain for the Iranians.

And so what I said in the article is that our window, which in any case is smaller than the American’s window, because it’s a structural difference. Big country, far away from the Middle East with very big capabilities has a bigger window than we have. That our window is small and getting smaller. We’re coming up to a crucial juncture in the situation with Iran.

Iran is a country which is today the leading state sponsor of terror. It has to date mounted and sometimes succeeded terrorist attacks across five continents, 25 countries, including Washington, D.C., where not only the Saudi Arabia, Saudi Ambassador but this Ambassador was the target. They didn’t talk much about me being the target of that, but I was also the target. And quite an impressive terror operation worldwide, extraordinary. Cost the lives of five Israelis in Bulgaria. We’ve been very successful and been lucky in dodging Iranian bullets around the world, India, Thailand, Cyprus, Africa, to mention just a few. We weren’t so lucky in Bulgaria.

They have been involved in supplying just an outrageous number of missiles to Hezbollah, Hamas, Islamic Jihad, somewhere in the order of 70-80,000 rockets are aimed at Israel today.

I don’t know any country in the history that’s ever faced a threat like that. They can hit any city, some of them quite accurate. Their leaders regularly call for our destruction. Today there was a new quote by a leading Iranian general that called for wiping Israel off the map. There’s rarely a day where they don’t say it.

We have no choice but to take this very, very seriously. This is just what they’re doing to us. What they’ve done to America -- they’ve killed American soldiers in Iraq and Afghanistan. They are supporting the Bashar al-Assad regime quite energetically, both with money and with personnel. They’re doing all this without nuclear weapons. Imagine what they would do with nuclear weapons. It’s unthinkable. And we think that even if the Iranians reach breakout capacity, it will trigger an arms race in the Middle East. An arms race in the Middle East where a great number of Middle Eastern countries will acquire nuclear weapons. And we’re going to see what’s occurring in the Middle East, this upheaval, not just worrying about chemical weapons or biological weapons, we have to worry about nuclear arsenals throughout the Middle East.

So I can’t think of many times in Israel’s history we’ve faced such a wide, actually dizzying array of threats of this type of magnitude all at the same time. Extraordinary. And yet, worst of times, best of times.

Israel, I’m going to shock you, Israel today is probably in a better geostrategic, political economic situation it’s ever been in the last 64 years. It’s good to have a good historical perspective on this. When I was a young person the thought of peace with Egypt, peace with Jordan was unthinkable. The thought that some day, you know, what was then the Soviet bloc countries, Russia and 13 of the Soviet bloc countries would have very good relations with Israel -- we just had a very successful visit from Putin in Israel, he was greeted on the streets --some of our best friends in Europe are former Soviet bloc countries.

The fact that we have relations with India. We had terrible relations with India [inaudible]. They wouldn’t let our Davis Cup team play there. They wouldn’t let our chess team play there. That was only 20 years ago. We have, India -- tremendous customer, probably our second-largest customer in military relations in the world.

China. Twenty years ago we didn’t have a relationship with China. Our trade with China goes up about 30 percent every year. I have a son living in China, working for an American-Israeli firm that’s doing very well. Relations with China: excellent.

We have a strategic relationship with the United States that didn’t exist in 1967. I say this without reservation, it is one of, if not the most, multi-faceted and deepest strategic alliances that this country has had with any foreign nation in the post-World War II period.

The Israeli economy has weathered the recession pretty well. We’ve gone from a pretty high growth rate last year, just over five percent, less this year, alas, but our unemployment rate is one of the lowest in our history, about five percent. Inflation rate very low. Tel Aviv Stock Exchange has just been listed the best investment in the world in case any of you have any expendable capital and want to invest.

Tourism is off the map. 2010 was our largest tourism year in history. 2011, 2012 we’ve exceeded it by about 30 percent. You cannot get a hotel room in the state of Israel, you can’t get a seat on a plane to Israel. We’re trying to get me to Israel on Thursday. We’re having a hard time, there’s no seats. Tomorrow I’m supposed to fly, trying to get a seat, there are no seats.

We have six universities, three of them just made the top 100 universities in the world. Think about it. This is a country of 8 million people. Less than 8 million people. It’s No. 3 on the Nasdaq exchange in terms of high tech companies, which is just behind the United States and China, which have somewhat bigger populations.

We have actually the greatest number of start-up companies. We invest the most of any country in innovation. We lead the world in innovation, just after the United States. We lead the world in per capita education just after Canada.

The strangest thing, we’re one of the happiest countries in the world. Because if you talk to Israelis they do nothing but complain 24 hours a day. And every year, they come up with one of the highest levels of citizen satisfaction and patriotism in the world.

What else? We’re exporting caviar to Russia, exporting wine to France. You go to Israel, the food is fabulous. Great food. The infrastructure is good and you’d never know that this country is in the middle of this maelstrom. So it’s truly the best of times and the worst of times.

How it’s all going to play out, I hope the best of times will be the regnant vision for Israel in the future, but nobody knows and I used to say as an historian, Matt, that I had enough trouble projecting the past. I’d be very doubtful, I’d be very careful about predicting the future about Syria, about Egypt, about any country in the Middle East. I don’t think anybody knows, but one thing we do know: We do know what the Middle East would look like the next day after Iran gets a nuclear weapon. We have a very, very good sense of what the Middle East would look like. So on that less than upbeat note, I’ll open it up for questions.

Q: So, is this time different?

OREN: This time meaning?

Q: You were just describing Israel, and our own observations are people are preparing for a strike in Israel.

OREN: We are preparing for any possibility.

Q: Which has happened before.

OREN: Which has happened before. We have to be very vigilant. We believe, we sincerely believe that that window that I talked about, which was small and getting smaller, is getting smaller.

The Iranians show no signs of reacting, the Iranian leadership, no sign of reacting to, they show no sign of showing flexibility at the negotiating table, or even coming back to the negotiating table at this point.

Given what we know from our intelligence sources, American intelligence sources and UN investigating them, we know that their program is progressing apace. And it is moving in two directions: It is moving sort of vertically in the growth of the stockpiles of 3.5 percent and 20 percent, and it is moving vertically underground, moving horizontally underground.

That will become, that is becoming for us an existential situation. An Iranian nuclear weapon is an existential threat.

They say it’s an existential threat. We don’t just say it. They say it as well. They confirm it.

Q: Former Defense Secretary William Cohen said last week there was a better than a 50-50 probability there would be a strike this year. Does that sound about right?

OREN: William Cohen? I’m not going to assign a percentage to it. I’m not going to reveal operational issues, but Israel, as President Obama said, “Israel has the right to defend itself.” This is certainly a threat par excellence.

And he said Israel as a sovereign nation has the right to, can best decide -- only Israel can best decide how to defend its citizens. And this not just our right. It’s our duty and Israeli leaders, from all different parties in the past presented with similar situations -- in 1948, in 1956, in 1967, where Israel had to decide whether to insure its own security, its own survival, and had to make some very tough decisions, always decided to act to ensure Israel’s survival.

That is our raison d’etre as the Jewish State. That’s why the state was created, so we’d never be in the situation. Having said all that, no country has a greater stake than Israel in resolving the Iranian nuclear threat by diplomatic, non-violent means. We have the most skin in the game right now.

[Inaudible] at some point in the line the United States will have a lot of skin in the game too, and especially if the entire Middle East goes nuclear. And President Obama has said that even if Israel wasn’t involved, he’d regard the Iranian nuclear program as a paramount threat to America’s security.

Right now we are the country that’s being threatened with obliteration. We would be unspeakably remiss if we didn’t address, if we wouldn’t take up this responsibility. The buck ends here. In our case the buck lies with the government of Israel in Jerusalem.

Q: You emphasized in your preamble Syria. Which is the most pressing, immediate threat -- is it Iran or the Syrian stockpiles?

OREN: One of the most pressing in terms of its magnitude or its timing?

Q: Let’s take time.

OREN: Right now the situation in Syria is fluid, highly flammable. We don’t know. We can walk out of this room today and find that the Assad machine has collapsed. And the issue that will rise immediately is who is in control of the CW stockpiles. It’s already an issue but the issue will become increasingly acute. If you had to assign a clock to that, the clock is ticking as we are sitting here and we may have to confront it very shortly.

Nobody knows. A year ago, people said that Assad was going to fall in two weeks. He hasn’t. We don’t know and so far from what we can tell, the control has been maintained over the stockpiles but it can change and very quickly.

As for the Iranian issue, Prime Minister Netanyahu said it’s not a matter of days and weeks but neither is it years. Beyond that, I can’t go.

Q: So it sounds like you are saying that Syria will have to be dealt with first.

OREN: It could have to be dealt with first. It’s nothing I can give you an absolute, unequivocal answer. The civil war there could rage on for weeks and months. We don’t know. Or the regime could collapse in a day. The front page of the New York Times, the former prime minister said that Syria is unraveling.

Q: Mr. Ambassador, when you are speaking of a window closing and Israel’s ability to stop the program, what’s the best estimation of when Israel will no longer have that ability.

OREN: Not in the too-far distant future.

Q: Before January 1st

Oren: Not in the too far distant future. It’s not as though I don’t ever get this question, by the way. Every forum every, TV interview: “When is Israel going to attack?”

I can’t give you an actual date.

Q: Is there a change in U.S. policy that Israel [inaudible]

OREN: We believe the best means for persuading -- and there is no guarantee -- but the best means for persuading is a combination of truly crippling sanctions and a credible military threat.

Truly crippling sanctions -- Iranians cannot do business worldwide. A credible military threat is where not only do we say all options are on the table but when we say it the Ayatollah believes us, that the Supreme Leader, and ultimately this decision is going to reside with him, is going to a juncture where he understands that he can either pursue military nuclear weapons capabilities or stay in power. He can’t have both. And he’s not there yet -- all of our intelligence assessments say he’s not there yet and I’d think you’d find agreement in the American intelligence assessments as well.

Q. You talk about “truly crippling sanctions.” The United States has been touting their efforts to squeeze Iran. They’ve also issued quite a few waivers to countries that buy Iranian oil and gas, and I’m wondering when you talk about “truly crippling sanctions” whether you are urging the administration to revoke those waivers or stop issuing them? Whether any of what you’re talking to them about has to do with the oil and gas measures they’ve put in place?

OREN: There are ways we can ramp up the sanctions. I can’t get into specifics here. There was an article in the Israeli press yesterday quoting some high, unnamed source in the Israeli government, which wasn’t myself, saying, that mentioned the possibility of doing away with the waivers. But it’s not an official position.

Q: Is it something you’d like to see?

OREN: It’s not an official position. Look at the article. If you’re looking for a source, it’s not me.

Q. But I have you here. Is it something you’re discussing with the administration?

OREN: We are discussing all the time ways we can ramp up, ratchet up the sanctions on Iran.

Q: And last follow-up: Are you discussing this with the countries that received waivers…

OREN: The United States is leading this effort. The United States and the European Union are leading the effort. And the president and the Congress have done a, actually, an extraordinary job in leading this effort.

Alas, it hasn’t proven effective in stopping the nuclear program.

We still think there are ways that the sanctions can be ratcheted up in ways that are crippling. And we think that it’s not enough that the Iranians hear the position “all options on the table” and see the presence of American forces in the Persian Gulf.

They have to believe that they will be used if the Iranians move toward breakout capacity.

We would view breakout capacity as a game changer for the region as well. The breakout capacity, particularly if it’s underground, poses multiple threats to us.

One would be that they will shorten the period they need for the breakout period. As the program progresses, not only could they make more devices, but the time they need to put those devices together will shorten. And that they can do this in these inaccessible and redundant facilities. And they may wait for a time when the United States is preoccupied with something else, maybe, you know, a natural disaster, God forbid, and then they will move to break out and we would not be able to stop it, and we might not be able to know about it.

Let’s all recall that we didn’t know about Natanz for a while. We didn’t know about Qom for a while. That’s one. We also believe there are countries in the region which will move to nuclearize once Iran achieves breakout capacity. They also will view this as a game changer, not just Israel.

Q: Mr. Ambassador, you described putting Iran’s own Supreme leader at existential risk. What combination of factors [inaudible]

OREN: I can’t go into details as this is an operational matter. But there have been cases in the past in the Straits of Hormuz or the reflagging operations in the mid-1980s that made it clear to the Iranians what a red line was and that the military threat was credible.

Q: Is there a way of actually removing the Khamenei regime from power?

OREN: That we don’t know. The Iranians got lucky in that they had a dry run with the Arab Spring at an early stage and they have learned very well how to suppress it. If you go on an opposition website, within an hour you are going to get a knock on your door -- not a soft one. They’ve been very good at mobilizing to suppress. I wouldn’t be looking for that type of upheaval in their future.

I can’t predict, I don’t know, but we can’t bank on it either.

Q: Before this story became the most-read on the Bloomberg terminal, the story that was most read was about Standard Chartered during its settlement with regulators yesterday. Is it your sense that the violations that Standard Chartered acknowledged were, if you will, technical and inconsequential? Or were they significant and enabling Iran in fact to flout the embargo?

When you talk about the ability of the Iranians to suppress dissent now, as Bloomberg has written in the past as well as others, there are western companies that have aided them in terms of their ability to conduct surveillance on their own people and so forth. What’s your sense of how well the embargo is working and are there financial and other institutions that still, for one reason or another, are engaging in commerce with Iran?

OREN: Well, obviously the Iranian economy hasn’t collapsed. And though they’ve experienced these, the upheavals in the currency and a very high unemployment rate, we see that they’re able to spend significant sums in Syria. We have seen them put out, they’re now hosting the Non-Aligned Conference and spending a lot of money on that. Where did all that come from?

During the London Olympics they put out a bus, you see this bus poster campaigns? They plastered the double-deckered buses with anti-Israel posters, so they certainly had enough money for all that, no problem.

Q: [inaudible]

OREN: Because there are companies going under the radar and finding ways to get around the sanctions. And the fact is that the longer they have to deal with the sanctions, particularly if sanctions aren’t in a continual escalation, they learn to adapt, and they learn to get around, and they create straw companies, and they reflag their tankers, or they disguise their oil as oil from other countries. And they find ways to get around it. And it’s a fact.

The Iranian economy hasn’t collapsed. There is no shortage of food stuffs. There’s no shortage of medicines and they manage to have enough spare cash to lavish on the Assad regime in Syria. Where’s all that coming from? It’s a very expensive operation in Syria. There’s no shortage of weaponry for Hezbollah, there’s no shortage of weaponry for Islamic Jihad.

Q: Does all this talk of war have an impact on the economy inside of Israel?

OREN: Uh, no. That’s not unusual. In 2006, we had a war with Hezbollah, the second Lebanon war and everyone thought it was going to be ruinous for the Israeli economy. We had something approximating a hiccup at that point.

For better or for worse, Israel’s become particularly adept at dealing with uncertainty and with periodic upheavals. So far, no. It even has not had an impact on tourism. People have called me and said, ’Should I have that bar mitzvah at the end of August?’ And the hotels remain full. No. The answer’s no.

Q: Let me ask you, Mr. Ambassador, about the likelihood or the efficacy of U.S.-led air strikes in Syria, a no-fly zone.

OREN: No. Can’t ask me. It’s an American question! Got to ask American officials, someone from the defense department.

Q: Do you think a no-fly zone could work in Syria?

OREN: I don’t know. I know that Syria is not Libya. Syria has anti-aircraft defenses. Again, I’m going to date myself, but do you remember back in ’83 when Syria shot down an American aircraft? Jesse Jackson had to go get them out and Reagan had to receive them in the Rose Garden and it was a whole thing?

They have, the Syrian military is a pretty, is a formidable military.

Q: So it would be tough?

OREN: That doesn’t mean it can’t be done. Just saying it’s not Libya.

Q: If it could be done, would it be effective?

OREN: Don’t know. Again, we’re not saying anything for the opposition. We don’t think it would be helpful for the opposition. All we do say is whatever measures that would lead to a swift end to the suffering of the Syrian people, we will support.

Q: Mr. Ambassador, on the military aspects of a potential strike? I asked General Dempsey yesterday what are Israel’s capabilities if they executed.

OREN: Oh, you asked that question.

Q: He did say, a fair characterization, that they could delay but not destroy. What would be the intent, given that backdrop, of strikes, given Israel’s capabilities?

OREN: Ok, I can’t go into detail about the capabilities but even assuming that it would be a delay, when we struck at the Iraqi nuclear facility, the assumption was that we would gain a delay of between one and two years on that program. To this day, Iraq does not have a nuclear weapon, 30 years later.

One, two, three, four years are a long time in the Middle East -- look what’s happened in the last year alone. In our neighborhood, those are the rules of the game.

Q: So the U.S. assumption, they’ve said this repeatedly, that a strike could possibly delay Israel’s program two to three years?

OREN: Iran.

Q: Do your military people agree with that?

OREN: I’m not saying we agree or disagree. What I am saying is that is not -- on the basis of our previous experience -- is not an argument against.

Q: Ok, then a two or three-year delay is not an argument for not, I think, doing anything.

OREN: Precisely.

Q: If you can’t destroy it totally. A half of loaf is --

OREN: In the past we have operated on the assumption that we can only delay.

Q: And that hasn’t changed?

OREN: That’s based on our past experience.

Q: One capabilities question -- GBU-28s are key to your arsenal because you have non-stealthy aircraft. Have you pressed the United States, requested the United States to replenish the supply?

OREN: Can’t go into tactical details. Our security relationship with the United States is superb. The United States has been very generous in our security needs, particularly in the fields of missile defense, which has been really extraordinary. We now have three different projects with them. Layered defenses will give us the best anti-missile defense system in the world.

We believe that in Gaza there are missiles that can hit downtown Tel Aviv.

Q: I had one other hardware program: The F-35 is the largest program in the Pentagon. Your country is participating. Can you give us a sense of where things stand? I understand there was an agreement reached recently that allowed Israeli companies to put a lot of their own equipment on the jets.

OREN: We are one of the non-partner countries that are buying the largest tranche of fighter. We are looking at 19 to 20 units and hope to get more. We are basing our future strategic outlook, our plan, on the F-35. It will be the plane of our future. It will enable us to counter-balance some of the threats we face -- the whole question of Qualitative Military Edge. We are committed to the program. We are committed to the program.

Recently, the outgoing head of the Israeli Air Force was visiting Fort Worth with a delegation to reiterate our commitment. We welcome that agreement. The way we use fighter aircraft is different than any other countries [inaudible] enabling us to adapt some aspects of the JSF to meet our needs.

Q: Has the Israeli-U.S. alliance under the Obama administration basically been a continuation of the Bush and Clinton years, or has there been a marked difference? I know there are nuances, but --

OREN: Every administration brings a certain emphasis, but there is also the continuing traditions and themes in our relationship and that is a very close strategic alliance. Very close. I don’t know any other country in the world where there is sharing of intelligence with the intensity and continuity that we do, that is developing anti-missile systems the way we do, that is engaged in protecting American soldiers around the world, the way we do, in all different ways.

A big area of mine that I knew nothing about before coming to this job was the whole field of U.S.-Israel commercial relationships. Israel is rapidly becoming a vital American commercial interest -- something that was unthinkable 40, 50 years ago. We outsource thousands of jobs to the United States.

All of America’s high-tech companies now have their R&D branches in Israel.

Q: Fundamentally the relationship has not changed?

OREN: Fundamentally it’s not changed. If you look at the figures that come across my desk -- support for Israel in this country is at an all-time high in spite of all the headlines, near all-time high. That’s not a matter of administration, it’s not a matter of Congress, it’s the American people.

I do a lot of traveling around and I see it first-hand. We have to be very energetic, especially to new communities that don’t know us so well. We spend a lot of time reaching out to the Latino community, African-American communities -- different communities that don’t know us so well. We are very energetic about it.



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