-- July 30, 2012- Government Economic Actions, Romney in Israel, Sunni vs Alawite's a Fight to the End?

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Israel Update
A Daily Analysis
By Marc Schulman

July 30, 2012- Government Economic Actions, Romney in Israel, Sunni vs Alawite's a Fight to the End?

The news in Israel today was dominated by the government's approval of a series of measures to cut the budget deficit. The list of actions includes, but is not limited to: increasing the V. A.T., increasing the marginal rates on those earning more the than the average wage, and across the board decrease in government spending by 5%– with the exception of the departments of Education and Defense. The palpable anger in the country seems not necessarily focused on the need for cutbacks, but rather, how the changes were executed. After years of saying that everything in the economy was doing so well, suddenly, it seems the government has changed direction. Netanyahu blames the cost increases on the policy actions he took in response to the Social Protest Movement. Critics point out that the commission that Netanyahu appointed to make recommendations for social change, also had specific recommendations for the raising the revenue to pay for them. Unfortunately, the critics say, Netanyahu ignored those recommendations. Thus, the new government actions will offset any gains made last year by the protest movement.

As a result of both the economic news and all of the blunders with the Plessner Report and the Kadima Party, Netanyahu's popularity has been plummeting. 52% of Israelis now think Netanyahu is doing a bad job. 33% say he is doing a "so-so" job and 17% say he is doing a good job.

Mitt Romney has come and gone. The main news of his visit played to three issues: 1) His advisor, Dan Senor’s comments that the United States would stand with Israel if it decided to attack Iran. Senor's words have been endlessly parsed. The general sense here is that what Senor stated was not really any better than any of the statements that have been coming out of the Obama Administration. The main question comes down to whether the US will attack Iran or not. There is a growing sense in Israel that we can not go it alone. Yes, we could successfully strike the targets the first time. The question is, but then what? Only the US can can do the followup to keep Teheran from getting nuclear weapons. 2) The second issue that came up was Romney's decision to cancel his meeting with Labor Party leader, Shelly Yachimovich. By all accounts, he canceled the meeting after the Prime Minister's office asked him to cancel. It made both Romney and Netanyahu look like small pelicans. 3) Finally, there is clearly a strong level of discomfort among "those in the know" here, with Sheldon Adelson sitting in the front row of the Romney fundraisers. Adelson has pledged up to $100 million to defeat Obama. Through his ownership and funding of Yisrael HaYom (a free paper that is now Israel's leading daily), he is also Netanyahu's biggest supporter. The juxtaposition is not a good one for Israel.

The situation in Syria is going to be a fight to the finish; it will be Sunni against Alawite to the end. What we have seen in Aleppo this week is defection of the Sunni economic elite from the Alawites. The Alawites have the edge in weapon supplies for the moment. However, in terms of manpower, they ultimately cannot win. Of course, we could see direct intervention by Iran. If that comes to pass, anything could happen.

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