"Zio-nated" David McAlvaney's Interview from Jerusalem

[CrackSmokeRepublican]

Interesting comments on IAI's penetration into Aerospace around the world.  David McAlvaney's perspective represents probably 90% of the USA's diplomatic corp and Wallstreet financial decision makers. Like Chuck Missler, he's definitely in the Zio-Israeli Commando Helicopter in the Middle East.  He's obviously been reading the Old Testament with a "Crack Pipe" and it shows... ABSOLUTELY NO COVERAGE OF THE FLOTILLA MASSACRE.

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Israel and the Middle East: David McAlvany from Jerusalem

Posted on 16 June 2010.


http://www.mcalvanyweeklycommentary.com ... 0-0616.mp3

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http://mcalvanyweeklycommentary.com/tra ... 061610.pdf

Kevin: Welcome to the McAlvany Weekly Commentary. I'm Kevin Orrick, and on the phone with us today is David McAlvany in
Israel. In fact, David, I think you are in Jerusalem right now, are you not?

David: Kevin, I am in Jerusalem. I'm sitting just outside the old city walls, and I have been here for a couple of days. The group
that we were with, this was an interesting kind of tour, and I say that in quotes, because for anyone who has been to Israel on
a tour, you've probably been to sites and seen lots of things. This was more about meeting people, and getting an insight into
what's happening in the Middle East.
We met with current state officials, retired state officials. Our listeners will remember Yehuda Avner from an earlier commentary.
We had dinner with him and his wife. It has been an absolutely fascinating series of days, in terms of the meetings, the discussions,
the questions asked, the possible solutions offered. This was a very unique group.
Israel Bonds is the group which globally raises funds for infrastructure projects in Israel. This is a fascinating thing because if you
look at the miracle of Israel, and I say that, not overstating the case, there is no other instance in modern history, of development
taking place on a scale, or as quickly, as what I have seen here in Israel, whether it is the freeways, the transportation, the technology,
the telecommunications, the development of the land and property.
Just to contrast some differences, to show you just how different this place is, property is booming here, and you might say, well,
David, property is also booming in Dubai, or it was before that bubble burst, isn't that sort of a natural pattern where things develop,
get to sort of the point of crescendo, and then decline from there?

Kevin, as you know, the real estate bubble in Dubai was fed by easy credit, very much like the subprime market was in the United
States, and what we have here in Israel is radically different. With the requirement of putting 30-40% down on a loan, there is
no easy lending. Although people are eager to see you get into a home, there is a huge amount of responsibility in the banking
industry as it relates to the real estate sector. So, it is developing on a demographic basis.
Over a decade ago there were a million Russians that emigrated into this small place the size of Rhode Island, and of course, that
has a massive economic impact, and in terms of supply and demand and the need for new housing and everything else, that is
very, very interesting. Those are things that are very interesting component parts in the development of Israel. Israel Bonds play a
part in that, because in order to cater to the 6-7 million people who are here as a population, you have to have the ability to move,
to communicate, to do the things which, in any developed country, you take for granted, and can, in fact, take for granted in a place like this.
So this is a radically different place than what I saw even 15 years ago, Kevin. That was the last time I was here. I spent 4 weeks in
the old city and another 2 weeks down in the Sinai and in Egypt when I was here in 1995 and 1996, and I can tell you the roads are
different, the atmosphere is different. We met with business leaders, and in a minute we will talk about the gentleman that I spent
some time with while here in Israel.
This place has an energy and a dynamism which you can attribute to the people, the creativity, the energy and the efforts of the
Israeli government, and we will look, in just a minute, at just how different some of those efforts are, here in Israel, as opposed to
the rest of the world, and I think, what might be a good model for developing countries to look at a success story, something that
has developed in 50 years what it would take anywhere else in the world, or even the United States, 250 to accomplish.

Kevin: David, you made a comment to me earlier that there were about 7 million people in Israel, but there seemed to be about
14 million opinions on what the economic and political viewpoint is. Can you elaborate on that just a little bit? We have a general
idea of what the press has to say about Israel. We also have a general idea, the deeper you dig, of what we should really think
about what is going on in Israel, but even within the country there are divergent views.

David: Exactly, and one of our guests in Israel said the first day we arrived, "Get four Jewish politicians in a room and you have six
different opinions," and that really is the case. There are opinions that fly, and they are informed, and they are not always compatible.
There is a lot of debate, a lot of discussion, and I find that very refreshing. Perhaps that is digging into my philosophical roots,
but to find the different people that we talk to with different opinions, you will find as we talk about their messages and their
outlooks that they are not always consistent.
What I am not going to do today as we talk, Kevin, is try to convey something that is necessarily coherent or cohesive amongst all
the speakers and people that we met with, because I think it is actually helpful to see some of the divergence and difference of
opinion – different perspectives on similar issues.

Kevin: Why don't we start with the first person that you met with, Yoram Ettinger? He is Israel's Consul General. He was director of
the government press office in Jerusalem, minister for congressional affairs. This guy has done quite a bit. What were some of his
views, as far as the overview of what is going on in Israel right now?

David: This is from a historical perspective, looking back over 60 years. U.S./Israeli relations have been defined by two things, in
his opinion: Joint interests and mutual threats. There has been a series of events which have occurred which are now changing
and that is the context for some of his thoughts and opinions.
The cold war and the threat of communism was, in fact, a unifying issue between the U.S. and Israel, and that has gone away. That
does not mean that we don't have joint interests, it just means that a mutual threat has, in some sense, or to some degree, dissipated.
So for decades, Israel focused – and our attention, as well, U.S. foreign policy strategists were focused – on the cold war,
were focused on the threat of communism, and frankly the U.S. needed a stable and friendly presence in the middle east, and
there you have the fledgling state of Israel, they needed friends.
Here, again, is a joint interest and a cooperative venture. They needed friends, we needed a stable presence in the Middle East,
and so a support structure was built, both by the Jewish Community in the United States, but also in the form of backing from the
U.S. Congress and White House, to varying degrees, depending on the White House Administration.

Kevin: Sure. And then there was the other threat of Saddam Hussein. That was a threat that was there for several decades.
David: Exactly. So Saddam Hussein was, again, that joint threat to regional stability, and that has gone away, too. So, looking
back, while we think of the U.S.-Israeli relations as being consistently positive, there were regular periods of disapproval, regular
periods of deterioration in the relationship with the U.S. and Israel under Truman, under Johnson, with the no pre-emption message,
under Reagan. When Menachem Begin was pressured to not launch an attack on the Osirak nuclear facilities in Iraq, and
was, in fact, by the U.S. government, punished, with an arms embargo following the attack in Iraq. It was ten years later that the
U.S. was thanking Israel and saying it was a good thing that that happened. Of course, that was in the context of our first gulf war,
which would have been far more complicated and far more treacherous, had we had a nuclear facility in full production during
that particular period.

Kevin: As far as what we are looking at with these administrations, you mentioned Reagan, and Truman before that, and Johnson
in between. There have been tensions, and we are looking at the Obama administration right now, and I know there are varying
degrees of opinions as to how well the Obama administration is connecting or disconnecting from Israel, but is the administration
as important as, say, Congress and their view on Israel.

David: Looking forward, as we have seen in the past, as well, Congress is more important in setting policy relating to Israel than
the White House, which is good, because the White House has taken on views today, heavily influenced by two people. One is
Susan Rice, who is the U.S. ambassador to the United Nations, prior advisor to Clinton, John Kerry, and later Obama, during his
presidential campaign. The other person is Samantha Powers on the staff of the National Security Council. She is working as the
director of multilateral affairs.
In the final analysis, even though the Obama administration is leaning away from Israel, which again, this is Ettinger's view, a view
which, by the way, is not supported by other conversations we had, for instance, with Benjamin Netanyahu's personal spokesman.
So there are certainly divergent opinions here, but even if this were the case, Congress is more important as a representation of
broader U.S. constituencies and certainly, as the U.N. seeks to isolate and pressure Israel, as it has done many times in the past, U.S.
support will ultimately be there, and it will show up in the form of congressional measures, not necessarily White House measures.
Kevin: Yes, David, but right now there has been a huge shift over the last few weeks, especially with this blockade to Gaza, with
Turkey. Where does Turkey factor into this? We actually have some touchy relations, challenges right now, with Israel, Turkey, and
how it relates to the Soviet Union. This whole thing is a quilt that is interrelated. What is changing with Turkey?

David: It is absolutely interrelated, Kevin. Turkey adds to the regional complexity in many ways, and the die was really cast for
Turkey, changing its orientation from the West, when Angela Merkel was elected for the second time, and basically said, in no uncertain
terms, that Turkey would never be a part of the EU. And with that statement being made, Turkey has changed their foreign
policy dramatically, and is in the process of positioning themselves as a great power, if not the great power in the Middle East in
the Islamic world.

Kevin: And that is a Sunni majority, isn't it?

David: This is where it gets particularly complicated. You have a Sunni majority, 70-80% of the country, with a sense of history
and the remembrance of the Ottoman greatness that preceded the last several hundred years, where it has obviously been less
than an empire. On the other hand, you have Iran, which is Shi'a controlled and with a sense of Persian importance in the past,
and certainly wanting to project that Persian importance into the future of the region. They may, for a time, come together and
work together in cooperation, but ultimately, you have a deep, deep-seated conflict between the Sunni and the Shi'a, as we dis©
cussed in past conversations with Bernard Lewis, going back to interviews from last year.
So you are absolutely right, Kevin, Turkey adds to the regional complexity, and that is just a reality, Turkey finding a new
orientation and wanting to be in the center of a re-emergent Ottoman Empire at the center of the Islamic world. That, I think, will
become one of the defining things of the next hundred years, and we need to explore that more deeply.
We will continue to explore that issue in particular, as it relates to Iran, but as a stand-alone issue as well, as it will have a defining
role to play in the peace and stability of the Middle East, and thus, the stability and direction of the world commodity and
financial markets. So we will do that. George Friedman has been a guest on the program, and has taken particular interest in
Turkey over the last few years, so we will explore some of those ideas with him in the future.

Kevin: David, do you feel that Turkey, right now, is using Israel to reposition itself as a leader in the Islamic world?

David: I think absolutely vital to note – you have Israel, which is the unifying issue within the world of Islam. If it is the Shi'a
and Sunni who have their differences of opinion, theologically, and in terms of internal power struggles, what you have with Israel
is a unified issue across the Islamic world, both in terms of their position in Jerusalem, their position in the Middle East, even their
very existence, according to Ahmadinejad, which is not something that he thinks is a reasonable thing, and you have also got the
Iranian side, as I just mentioned, jockeying for a similar stature in the world.
You have Turkey, who wants to reposition itself as a leader in the Islamic world, you have Iran jockeying for the same stature,
and then you have Egypt, as well, who looks at this and says, "We have been a dominant leader in the Islamic world, and does this
somehow upset our position?" There are interesting transitions ahead for the Islamic world and the Middle East, and Israel just
happens to be smack dab in the middle of that. This is a part of the reason why we are here and asking these questions, exploring
in deeper conversation with the people that we have met with here, so that we have some depth of understanding.
Kevin: From a United States point of view, Alexander Haig at one point described Israel as the largest aircraft carrier in the
world. It cannot be sunk, it is vitally positioned, and requires no U.S. troops. Let's face it. Our alliance with Israel, up to this point,
has been idealistic, to a degree, but it is also strategic, wouldn't you say? With the changes in Turkey, it does put the United States
in a strange strategic predicament.

David: True, and we even have our Senate Intelligence Committee, who has looked at the intelligence and information provided
by the State of Israel, which has basically said it is five times greater than what the CIA has provided, and it is greater than all the
data coming from NATO member countries, so they are vital as an ally, vital as a friend in the Middle East, and as tensions soar, as
there is a power struggle ahead between the Shi'a and the Sunni, a continuation, but more defined along country lines, this will be
very interesting in terms of our relations with Israel. Those were some of the ideas we explored with Yoram Ettinger, some of the
complexity looking backward, looking forward.
The next person we met with was Yair Shamir, who is the son of Yitzhak Shamir, who was the 7th prime minister here in Israel, and
Yair, his son, has for many years been chairman of IAI, Israel Aerospace Industries. Kevin, this was amazing because we had an
insider's look into their operations.
This is the designer and manufacturer for some of the world's most sophisticated missile systems, unmanned aircraft, and other
military and civilian aerospace applications. When you hear about the unmanned aircraft flying over Afghanistan and Pakistan,
you are probably talking about product coming from IAI. Their technology is second to none in the world. They also do some
things that are more along the lines of civilian aerospace applications, commercial freight conversions, business jets, and that balances out their revenues.
They have a 2½ year backlog of orders, so obviously, their products are in demand. It is a company, in terms of size, that has about
3 billion dollars in revenue, and a massive R&D budget. Frankly, I would rather own this company than a Raytheon or Boeing, but
they are a state-owned enterprise, and this is what is particularly unique about them. It is not often that you have a state-owned
enterprise that is profitable, and I think that is one of the interesting things about the state of Israel.
When we have talked about China, and we have talked about state-sponsored capitalism, we have talked about it in terms of the
communist party, the 9-member politburo in China. This is a very different version. There is truly a capitalist bent in the management
models and everything else that goes into the running of this company, in particular. In a word – impressive. Impressive.
Kevin: Let me ask you – just the revenues from a company that is producing so much, a 2½ year backlog of orders in the midst of
the worst recession since 1933. How many families does that support? I would imagine that brings huge revenue into Israel just
from that one company.

David: For sure, it's 50,000 families in Israel, through various levels of employment with the company, that are supported by IAI.
That was a good meeting. We met, we looked at some of the drones, and it was fascinating, Kevin, some as small as remote control
airplanes, and some as large as 737s, if you can believe that. Drones flown remotely the size of a 737 aircraft, just mind-boggling
to me. Of course, this is me, a technological idiot, but it was fascinating, Kevin. A very interesting gentleman, Yair Shamir,
who also volunteers with a group called Gvahim, which helps immigrants assimilate and find community in Israel. Their goal is to
place top talent from around the world in high-tech areas, and in other areas of business in Israel. What they do is career development,
mentorship, networking, and this takes place directly with existing Israeli executives and businesspeople stepping into that
mentoring role. On the one hand, you have somebody who is a part of the "military industrial complex," whatever that means as
it directly applies to the state of Israel. On the other, a heart of gold, trying to find people jobs and get them assimilated and into
culture here. An interesting discussion, and an interesting exposure there at IAI.
The next person we met with was a guy by the name of Dori Gold, and if it is not a familiar name, he served as an advisor to former
prime ministers Ariel Sharon and Benjamin Netanyahu, and was the Israeli ambassador to the United Nations – actually, a very
prominent person, very well spoken. I had a fantastic time, in asking him some questions, and in discussion.

Kevin: One of the things that I would ask him, David, with his background with Sharon and Netanyahu, and being an ambassador
to the U.N., what are some of the assumptions that are being put forth right now with this flotilla and what are some of the facts?
The difference between what we are seeing on the news and actually what they are perceiving?

David: That is interesting, Kevin, because we are here in Israel, it was only about a week ago that we had an "international incident"
between aid ships that were launched from Turkey and were heading to Gaza in support of the Palestinian people there. What
Dori Gold drew were some interesting conclusions. He said, "This is the criticism that has been leveled against the State of Israel,
based on several assumptions. One assumption is that Gaza is under a cruel blockade. Another assumption is that the relief provided
was humanitarian in nature and was delivered by humanitarians. The third assumption was actually a followup to the first
and second, which is that the use of military force was unnecessary in light of the first two assumptions.
He did a very, very skillful job in looking at each of those and saying, "This simply is not true." The assumption that Gaza is under
a cruel blockade – that assumes a lot, Kevin. One is that blockades are not legal. Blockades are totally legal. They follow a very
formal protocol from notification to the country of origin, the ships should not try to run the blockade, soldiers should not be fired
upon. There is a certain stated and unstated protocol with blockades, and again, they are fairly common.
What do I mean by common? The British used them in the Falklands. The U.N. used them with Iraq following resolution 665. The
Spanish used blockades in 2002, and they were even more stringent in 2002, not just looking for guns, but oil, as well. The Balkans,
in late 1992 to 1996 – there were NATO blockades in the Adriatic Sea. Even the U.S., present tense, is orchestrating blockades
throughout the Indian Ocean, and the Mediterranean, looking for Al Qaeda and illicit weapons.
This is, I think, what was blown out of proportion with the news media, is that this is somehow catastrophic to the people on the
other side, and absolutely unnecessary and unprecedented, when, in fact, it is very precedented and is hardly catastrophic. What
was interesting is, following the blockade and following the ships being stopped, all of the legitimate supplies were passed on to
Hamas and Hamas rejected them. Hamas rejected the supplies from those ships.
Kevin: The food, the medicine, the things that weren't weapons, they rejected?

David: That's correct. We are talking about foodstuffs, medical supplies, and again, just to assume that it is very easy to understand
who the good guys are here, and who the bad guys are, according to what the news media presents, just understand, this
is deeply political. Deeply, deeply political. And anything but simple. And if coming to a snap judgment on the basis of pictures
released by Reuters is sufficient for you, just understand how you and your intelligence is being played.
There were some pictures, Kevin, from this particular incident, which Reuters had cropped. It was interesting, because what they
cropped was very significant. It was the blood of the Israeli soldiers on the floor which had been cropped, and it was the knife in
the hand of an assailant who had just stabbed the Israeli soldier, and conveniently, they published the picture without that being
in it. Literally, they just cut off the side. Now you tell me if that is not a manipulation of information to elicit a certain response
from the public. That, to me, spells world view communication. "We have an agenda, and we are working that agenda." And that,
in fact, is exactly what needed to be played if you think about this as a chest game, and not as a humanitarian effort, but as a chess
game issued and orchestrated by the Turkish authorities, this played so well to their hands.
Arguably, the Israeli government could have handled it better, handled it cleaner from a PR standpoint. But again, that first assumption
needs to be looked at much more critically. Hardly a cruel blockade. There is aid that goes through on a daily basis
to Gaza, by the truckload. We are talking dozens of trucks every day, in aid and supplies, once it has been screened for rockets.
Rockets are out, food is in. That's the basic issue.
The second assumption that the relief provided was humanitarian in nature and delivered by humanitarians, he did a great job of
unpacking. It has been long-established by both the CIA and French legal authorities, a judge in France, who has determined that
the IHH, which is the organization that was involved with this humanitarian effort, has terrorist leanings. So things are not always
easy, and it is worth looking a little bit deeper into the details before coming to conclusions. It has been very informative to be
here on that basis.

Kevin: David, what you are saying on this is, in reality, Turkey is probably the real issue, and the perception that we have with Turkey.
When we talked to Yehuda Avner before this all happened, the flotilla was coming, nothing had really happened as far as an
engagement yet, but Yehuda Avner said that this is really just a publicity stunt. This is to get the world's attention, Israel's response
to Turkey.

David: And that is exactly what it turned out to be. This is a man who has been around, has seen a lot, has participated in
a lot, and his opinions were, in fact, spot on. The Turkish flotilla was anything but a humanitarian crisis. It was a stunt, which is the
same kind of stunt that Iran is now trying to pull, almost as if they are trying to match the Turkish authorities and raise them one.
Think about this, Kevin. Again, in the context of what Yoram Ettinger shared, of there being a future conflict for influence in the
world of Islam between Iran and Turkey. On the one hand, you see Turkey sending their flotilla to end the blockade on Gaza, and
it is only about a week later that Iran is going to do the same thing. Is this Islamic solidarity, or do we have actually early stages of
gamesmanship between the two competing leaders of the Islamic world, if we move out 5, 10 or 15 years from now?
Those were a couple of things, Kevin, that we looked at with Dori Gold, that last of which, use of military force, unnecessary
in light of the first two assumptions. I think, Kevin, if you visit some of the towns here in Israel, you do see a very different
picture. There are Palestinians who have been cut off from their former way of life and it is absolutely tragic that they experience
economic turmoil and travail as a result of a small group of people in their community, those loyal to Hamas or Hezbollah. They
are paying a very dear and real price for safety which is created on the other side.
I I will just give you one example, Kevin, because I think this really brings home why this blockade exists. We are not used to this
in the United States, but consider this: Siderot is one town outside of Jerusalem. Siderot, up until a few years ago, was getting hit
by 8,000 rockets a year – 8,000 a year. So what do the "town fathers" do? They build a soccer field and playground for the children
underground.

Kevin: An entire soccer field underground?

David: Yes. And as a result of the wall – as you know there is a security wall through parts of the country – now they have less
than 4,000 rockets a year. The scale of this – consider this – that is still an insane amount of danger that they face every day when
they are just thinking about their kids going out to play soccer. This is the other side of the story, perhaps.
But one side of the story is, people in Gaza and the West Bank are being treated unfairly by the State of Israel, and economic
opportunity has been ripped away from them. All I can say is, yes, economic opportunity has been ripped way from them. The
charge that it is unfair – I don't know, I don't know. But if I were to vote for my town, if I had a vote amongst the town fathers,
and I were used to receiving 8,000 rockets a year? And if every day I woke up and knew that I had three minutes from the time
the alarm went off to be in a bunker? And in response to that, as town fathers we decided to spend the money to build an
underground soccer field? Again, it is just a different existence, it is not one that sitting in Toledo, Ohio, or Durango, Colorado, or
anywhere in the United States we can relate to at all. So if the news is that Palestinians are being treated unfairly and here is the
evidence, and that is what plays by Reuters, then that is what people are going to believe. And it is just simply not the case.

Kevin: You know, David, it is interesting, too, that in all of this antagonism toward Israel, there are still a lot of amazing
things going on. It is a little country of 7 million people, but what they produce has huge impact around the world. I know you
met with Dr. Yossi Vardi, who is a venture capitalist. This is not a guy who is focusing, necessarily, on the enemies of Israel all the
time, and what is going on as far as strategic or tactical war. This is a man who is actually going out and saying, "This is a great
place to invest. Look what we have done." Can you talk a little bit about the venture capital side of things?

David: Kevin, you are right, Dr. Yossi Vardi is not focused on crisis, necessarily, although he was one of the negotiators with the
Jordanians on economic issues back in the day. Everyone in business here has a tie into politics, has a tie into the military, has an
interesting perspective, because I think of their two years required service in the military. This is a guy who published his Ph.D.
thesis with MIT and has been remarkable in the technology field. He compared Israel with China and said that with a 7 million
population, we have GDP of about 200 billion. And then he went on to say, China has 200 times the population, 1.4 billion – 200
times the population – and their GDP is 1 trillion.

Kevin: So it is only 5 times bigger.

David: Exactly. So you are looking at little Israel, the size of Rhode Island, as a powerhouse – a small country the size of Rhode
Island with a huge global footprint. There is not a computer on the market that doesn't have a component or software application
designed or manufactured in Israel. You cannot visit a hospital today without Israeli technologies and tools being implemented.
The downturn, frankly, was not devastating to Israel, in part, because their products are very early on in the tech food chain, and
because also, the policy measures put in place by the current finance minister, which we will discuss in a minute.
It was an interesting conversation. Frankly, Kevin, it was more like comedy hour. As smart as he is, he loves to crack jokes and
that was basically what we had, non-stop. At a different meeting, it took on a very different tone. Mark Regev is the spokesman
for the prime minister, Benjamin Netanyahu. Before that, he was the spokesman for the state department, before that he was
the Israeli spokesman in Washington and in Bejing at those embassies, and on and off he lectures on international relations and
strategy at the IDF, the Israeli Defense Force staff college. A fascinating conversation, very different than some of the conclusions
driven by Yoram Ettinger, but worthy of note, as an insider.
I think the one thing that he had to say which was a surprise to me, was his perspective on U.S./Israeli relations, that they are good,
and that they have significantly improved. And the comment there, I think, was really that with any new administration it takes
some time to figure out how to work together, but the fact that they have begun to work together was positive.
Kevin, it was an interesting conversation because there was definitely some reserve in what could be shared, lest it be construed
as an official statement from the government or from Netanyahu's office, but unequivocally, he said that the issue of the day is
radical Islam and access to nuclear weapons. That is the issue of the day in the Middle East.
Iran is the primary concern, and they are considered and respected to be an amazing opponent, clever beyond belief. There is a
mistake, I think, often made, in America – this is my opinion – that assumes that the radical or fundamental language used by the
leadership, Ahmadinejad, implies that they are non-rational actors, implies that they are, somehow unpredictable, and that is not
the case. Remember, these are the chessmasters of the world. And I don't mean that metaphorically. They invented the game.
Persians understand the complexity of international relations and are more clever than I think we give them credit for.

Kevin: So they may act like radical terrorists, or talk almost like they are insane, but in reality, there is a rational plan behind it, and
they are willing to use it.

David: Exactly. The classic strawman. Pakistan is the second on the list of concerns, and was much more of a concern a few
months ago, less of a present tense concern with the current administration, although this is an area where the U.S. has a shared
interest, going back to that first point made by Ettinger, this is a shared concern with Pakistan. The U.S. is very involved already,
and Israel feels like it is being handled well.
On a different note, it was interesting, Russia plays more largely in the picture globally, and here locally, every day – very ambiguous.
In front of the U.N. Security Council, and publicly, Russia is talking about Israel, and it is very ambiguous what their position is.
It is very ambiguous what their position on Iran is. Behind closed doors they are less cagey and more direct about their position,
which is that Iran will not end up with weapons of mass destruction, or nuclear weapons.
This is interesting, Kevin, because here we have world geopolitics being remade in a post cold war era. This is something that
came up with another gentleman we had breakfast with, I won't mention him by name, but that Israel, at a popular level, is considering
all options. Not necessarily at a political level or an administrative level, but at a popular level people are saying, "If America
won't support us, who will?" Russia comes right to the fore.
That may be because there is a new million-plus population from Russia, and certainly familiarity with the culture, language, etc.
But I think to assume that in a post cold war era, all alliances remain just as they were 20 years ago, would be a mistake, and naïve.
The world is going to get more complex when it comes to geopolitics, and less black and white, perhaps more pragmatic. So we
will see.
Kevin: They are very forward-thinking as far as the length of time, or the timespan that they use. You had mentioned to me, your
meeting with Yuval Steinmetz, the finance minister, and he typically, from what you were telling me, doesn't focus on the now. He
focuses on the later. Can you explain a little bit about that meeting that you had with Yuval Steinmetz?

David: Yes. I started the preamble to the conversation with Yuval, with breakfast with Mark Regev. Mark is a very bright guy, and
if you have watched CNBC, or the BBC, or any of the international news networks, you have seen his face before. He is the statesman
for the State of Israel, for the embassy in Washington or Bejing, the state department, now for the prime minister. He is a very
public figure. At the end of breakfast he said, "Dave, I think you would really enjoy meeting with Yuval."
Yuval was a philosophy professor and is now the finance minister. He was once asked what bearing philosophy has on his work
at the finance minister. His response was, "It brings perspective." What we have, Kevin, with Yuval Steinmetz, is something that is
diametrically opposite to everything that we saw during the crisis of 2008-2009 on a global basis. He is operating with a different
set of ideas, and they are working.
I just want to look at that in brief. The universal response to addressing the financial and economic crisis was just like the U.S.
Fed has done time and time again, introduce oxygen to the dying body, keep it alive a little bit longer. We have used the word
over and over again – liquidity. Introduce liquidity into the system. The Fed is notorious for this, going back to 1913, to various
degrees, and most successfully, in the last 10-15 years, when they have created serial bubbles as the result of creating too much
liquidity to the system. But it is engrained in their Keynesian model.
Yuval Steinmetz took on a very different attitude and looked at a very different model. Instead of what happened here in the
United States between reducing taxes and saving failing companies with government money, running the printing presses, enlarging
government investments and infrastructure, save America type stuff, he did something very different. Guess who he drew
upon for his protocol or his plan?

Kevin: I would imagine it was a philosopher, if that was his start.

David: And near and dear to my heart – Aristotle. Aristotle's two ideas of causality are – first, that you have a cause in an early time
frame, and the effect follows. That's pretty normal.

Kevin: That's how we think, yes.

David: That's the way we think. The second view of causation is what Aristotle would call backward causation, where something
hypothetically happening in the future – that future event can have an effect in the present in terms of behavior.
This is exactly what he did, believe it or not, Kevin. He basically said, far more important than the current tense crisis, is where
we will be seven years from now, eight years from now. If we put into place that which is successful and is useful, and is vital
eight years from now, then the problems, even if they get more intense in the immediate, will ultimately solve themselves. That
is what he has done, Kevin, he has focused on the longer-term plans. He transitioned the national budget to a two-year budget.
He focused on a five-year deficit reduction plan, bringing it back to pre-crisis levels. He increased the VAT from 15-1/2 to 16-1/2
percent, actually a tax increase, and he is basically putting on the heat in terms of taxes up front, and is on an eight-year plan to
reduce those taxes back to pre-crisis levels. So between now and 2016, as the economy recovers, tax breaks are actually reintroduced,
or the tax increase is absolved.
What is interesting, Kevin, is that within one month the economy was moving back into balance. Within two months, there was no
more negative growth. They are now on a path, very quickly, to unemployment being solved. Basically, they are 1% above precrisis
levels and next year they will be below.
Kevin: In reality, by long-term thinking, they were solving short-term problems, whereas around the world, the reactions right
now, the panic reactions of printing money and bailout money being thrown into the system, ultimately just causes more longterm
damage, and this strategy seems like it is a way of not focusing on that, not being forced into a panic reaction.

David: Kevin, it is a difference in philosophy, that's really what it is. On the one hand, you assume that government will solve all
the problems. On the other, you have Yuval Steinmetz, who at one time was far left and is now on the other side of the spectrum
and working as a philosophy professor, as the finance minister. He is solving the problem, largely allowing the market to do so,
with some help from the government.
So, Kevin, that was refreshing to meet Aristotle in an interesting place, but also to see someone with a philosophical background
applying that in realtime. Because at the end of the day, ideas are about life well lived and lived skillfully, as opposed to esoteric
pontification. It has much more to do with results, which is what Yuval Steinmetz is putting in place and getting – results from
good ideas.
As we mentioned, Yehuda Avner was a fantastic dinner guest, and I had a chance to visit with him at length. He gave a speech
which was, on a scale of 1 to 10, I would say, somewhere between 10 and 12. It was one of the best speeches I have ever heard
given, in eloquent prose, one that literally brought grown men to tears. In terms of the style and content, it was absolutely fantastic.
We are in an age where I don't know that there are that many more communicators who can think and speak that clearly.

Kevin: David, I was amazed at how many calls we received after interviewing him two weeks ago, wanting the book early, trying
to find a way that they could get the Israeli copy. We talked about his book not coming out until September here in the United
States, the book, The Prime Ministers, and you and I had talked about that, too. This was a man who had a sense of history and
was able to convey the depth of the Jewish people.
Before we finish, David, I would really like to have you tell the listeners about your tunnel tour today and the impressions that you
had, because you have been to Israel many times, but the depth of the impression that you are bringing back this time – I think
there is a real word picture or metaphor that can give the nature of what Israel really is today.

David: Kevin, we had as a guest several months ago, a historian from Princeton, Harold James, and one of his comments was that
we need to find and explore a deeper history. I've been here five times before, this is my sixth trip to Israel. I've seen the old city
before and I've traveled the countryside before. Having a sense of place and of the power of what has happened in this place, the
seat of Western culture, largely, and in the seat of all three monotheistic religions.
This is an immensely important place in the world. And yet, when I look at the old city tonight, Kevin, the sun has just set, and
what I realize is that there are onion layers of complexity at every level – politically, religiously, socially, archeologically. What
you look at on the surface, in terms of archeology, is from the 18th century, and you can go to certain parts of the city, and it is
from the 14th century. If you dig a little deeper, there is stuff from the 12th century. And then dig a little deeper, and there is the
reconstructed city under the Muslim, in between the 7th and 8th century. And dig deeper, still, and today we had a tunnel tour
adjacent to the Western Wall. These are the building blocks of Jerusalem, going back 2,000 years. Some of the areas, they would
argue, go back to the first temple period, which would have been 2,800 years ago, Kevin.
What it did was shatter my perspective in time. From a distinctively American perspective, old buildings date back to the 1700s.
But here is a place that is decidedly and historically Jewish, going back 3,000 years. To touch the stones which the Romans could
not destroy – there is one stone in this tunnel, Kevin, that was 40 feet long, roughly 12 feet high, and 15 feet deep. This was a
massive stone, Kevin, moved by Herod over 2,000 years ago. The Romans leveled this city – they leveled it – and this was all that
remained. But the city has been rebuilt and destroyed, and rebuilt and destroyed, and rebuilt and destroyed. And with every destruction,
and with every rebuilding, comes a new complexity in terms of the sociological dimensions, the ownership entitlement,
the political complexity, the religious nuance and sacredness of space. So it really is, Kevin, to me, a great picture for us, thinkers in
the modern world, the need for a deeper history – digging deeper.
This is my sixth time, and I had never seen history this deep. I had never touched the stones that went down to, literally, the bedrock
of this place. I think if we did that, whatever the issue is, Kevin, digging down deeper and touching the bedrock, we would
find ourselves perhaps a more enlightened people, perhaps a more peaceful people, perhaps a more patient people, perhaps a
more understanding people. We would hope for our listeners all of those things and more, as we continue to try to understand
the world in which we live and how we make decisions in it.

Kevin: David, I know it has been a fascinating and enlightening trip. I appreciate you sharing your views and thoughts of some of
the people that you have talked to there. I know we are going to be interviewing some of those people over the next few months,
and we can go into greater detail at that time.