Financial Times Compares Davos to Herzliya: Assume a Can-Opener

The Financial Times has a report from their chief foreign affairs columnist Gideon Rachman comparing Davos and Herzliya. The result is a fascinating piece of optimisitc (mis)reading by someone coming from and speaking to an audience of globalizing capitalists. Not surprising that Rachman spent 15 years at the Economist. This one has the same shakey grasp on reality that the Economist’s take on Eurabia displayed.

The clash of globalisations that spells trouble for Davos man

By Gideon Rachman
Published: January 30 2007 02:00 | Last updated: January 30 2007 02:00
I went to two international conferences last week. The Herzliya security conference took place on the Israeli coast and the World Economic Forum was held in the Swiss mountains. It felt as if they were taking place on different planets.

Herzliya gathered together Israel’s political and military leaders. The guest speakers included the number twos at the Pentagon and the State department, as well as a clutch of American presidential candidates. The mood was dark and dominated by the increasing likelihood of a military conflict between Iran and either Israel or the US. Other blood-curdling possibilities discussed at Herzliya were a nuclear arms race in the Middle East, renewed civil war in Lebanon and American defeat in Iraq, leading to a broader regional war.

Davos is a bigger and glitzier affair than Herzliya, with a much broader agenda. It too had sessions on the Middle East. But the dominant tone at the WEF was set by the exuberant optimism of international businessmen, enjoying the opportunities brought about by globalisation, new technologies and a world economy that is expanding at its fastest pace for decades.

By the end of the week I was left wondering whether these two worlds – Davos and Herzliya – can continue running in parallel. Are they fated to collide? If so, which will prove the more powerful – conflict or capitalism?

Davos man does not seem to be particularly worried by the business implications of chaos in the Middle East. There were 17 sessions at the forum devoted to climate change – and just one to global political risk. A debate on “globalisation at the crossroads” considered three main threats to the world economy – failed trade talks, financial regulation and global economic imbalances. Nobody mentioned the war.

And apparently, no one mentioned global Jihad, which puts “real war” in the shade for its wide range of fronts and tactics.

Perhaps Davos man is right not to worry. Even in Israel, war and globalisation have managed to coexist. The Israeli economy grew at 4.8 per cent last year, in spite of the country’s involvement in a war in Lebanon during the summer. Israel is very much part of the global high-tech economy. There are almost 100 Israeli technology companies listed on New York stock exchanges.

But the Israelis are also acutely aware that conflict threatens their prosperity. At the most basic level, many are genuinely frightened that if Iran develops nuclear weapons, it might actually use them on Israel. But there is also a subtler version of the “existential threat” that the development of an Iranian bomb is said to pose to Israel. The Israelis know that their most talented technology workers could get jobs anywhere in the world. They worry that if 20,000 decided to emigrate, rather than live under the shadow of an Iranian bomb, the damage to Israel’s economy would be irreparable. At that point, security really would have trumped globalisation.

Or vice-versa: the dynamics of globalization would have trumped Israel’s security needs.

Israel is a special case. It is much less clear why a businessman in California – let alone Bangalore or Shanghai – should worry about the threat to his business from bloodshed in the Middle East. The confidence at Davos was underpinned by an unarticulated feeling that, while big business is globalised, war in the Middle East is localised. International business can just step around the conflict. But that seems too sanguine. There are at least two obvious ways in which war in the Middle East could yet disrupt the world economy – through the oil price and through the knock-on effects of an act of international terrorism.

The description of the mindset of this unarticulated feeling — big business (us) globalized, war in ME (them) localised — is breathtakingly short-sighted. I know that those of us who suggest it are ahead of the curve, but shouldn’t some forward-thinking folks in, say, France, ask themselves whether their own ZUS might night become the European equivalent of Hamastan and Hizbullastan? As La Fontaine said about the goat: “celui-ci ne voyait pas plus loin que son nez” [this one couldn’t see farther than his nose]. Nothing quite like misreading the situation to make one feel better.

At Davos there was quiet satisfaction that the world oil price has fallen back to about $50 a barrel from almost $80 a few months ago. But a conflict with Iran could send the oil price soaring again to $100 or more. The Iranians could well respond to an attack on their nuclear facilities by blocking or mining the Strait of Hormuz, through which 20 per cent of the world’s oil exports have to travel.

So… if Israel moves to defend herself, she could screw it up for everyone.

It is also demonstrably wrong to assume that the bloodshed and hatred created in the Middle East will always be confined to the region. Satellite television and the internet have led to a globalisation of grievance. The suicide bombers who hit London last year were British – but had been radicalised by news of far-off conflicts in Palestine, Kashmir and Iraq. With their connections to radicals in Pakistan, their absorption of news and propaganda from around the world and their sense of being part of an oppressed global community, the London bombers were as much a product of globalisation as an international banker on a flight from New York to London.

Not bad. Except that the radicalization has taken place not merely (or even primarily) through satellite TV and internet, but from the MSM. As one Tunisian cabdriver told me in Paris: “I wasn’t anti-Semitic in Tunisia. It wasn’t until I came to France and saw what the Jews are doing to the Palestinians.” And when I asked him if these were images on Arabic satellite news, he responded, “No, French TV. French news.”

These two manifestations of globalisation – the capitalist and the terrorist – would come into direct conflict if another big terror attack in the US or Europe provoked a new security clampdown. Last August the discovery of an alleged terror plot in London led to a tightening of airport security, which grossly disrupted the easy international travel that Davos man relies on. Just imagine what a successful attack could do.

A further tightening of immigration and entry procedures to the US would also be a blow. At Davos, there was plenty of muttering about the difficulty American companies are having hiring foreign talent – and the problems that foreigners can experience getting into America.

In any clash of globalisations, globalised conflict might initially disrupt globalised capitalism. In the long run, however, there is reason to hope that capitalism will prove the more powerful force. Even in the Middle East, far more people aspire to be rich than to be martyred.

Oh good grief. First of all, it doesn’t take even a large minority of terrorists to disrupt a world. And second, how does Rachman know this? Projections of a western cognitive egocentrist?

In Herzliya, one of the few optimistic voices I heard was that of Sir Ronald Cohen, a British businessman, who is trying to help businesses in the Palestinian territories, in particular through the provision of micro-finance. Sir Ronald insists that he sees enormous economic potential in Palestine, similar to the potential that he saw in Israel in the early 1990s, before the country’s high-tech boom got going.

Well, if the man’s optimistic, he must be right. And I’m not even questioning his data. My guess is that the Palestinian territories are teeming with entrepreneurial folks, men and women. But the real question is, can they break the deathlock of an authoritarian political culture that cannot tolerate the implications of their success (loss of control, restraint on recourse to violence, renunciation of basic community demands for honor-shame)?

But in Davos I met a prominent Palestinian businessman who pointed out that Israeli security measures meant that it had taken him four hours to complete the short trip from his home on the West Bank to Jerusalem. There are some conditions in which it is just too difficult for businessmen to do their work.

Okay… and the fact that this Palestinian businessman’s “national culture” produces more suicide bombers than entrepreneurs, and that the voice of those who produce these bombers is much louder in the Palestinian public sphere than his, and that the Israeli “security measures” are a direct response to the cult of death that dominates his world, don’t even get a mention?

It may be a long time before capitalism can ride to the rescue of the most troubled parts of the Middle East. In the meantime, the capitalists will just have to hope that conflict in the Middle East continues to leave them largely unmolested.

This is the kind of ending one gets from undergraduates who have tackled a topic they can’t really handle, so they conclude hastily with a vague, superficial line that tries to at least mention the main themes of the paper. Having flirted with the real problem — the globalization of Jihad and its exceptional success in the 21st century — we land with a thud in the world of PCP. The Middle East is a problem, could metastasize, especially if the Israelis, in their security obsession, bomb Iran. But when all is said and done, “they” just want to be like us, and the most likely outcome is everyone will do fine except the Palestinians who will remain the victim of the Israeli obsession with security.


I guess one cannot ask a financial analyst, speaking to a community of businessmen who need optimism the way fish need water, to go much farther. Were he to credit the warnings coming from Israel, were he to lay out the extensive ways in which Israel’s problems prefigure those of the West, and Europe in particular, were he to analyze the growing momentum and rapidly mutating aggression of the Jihadis, again especially in Europe, were he to look into the ways in which globalizing capital, with its intrusive penetration into cultures the world over, produces the kind of apocalyptic abreactions that characterize global Jihad, then he might disturb the calculations of these businessmen. Too complicated. Mental chaos. But isn’t the job of the analyst to think ahead of the curve, not cheerlead?

There was a particularly powerful panel at the Herzliya conference that discussed new paradigms — The Changing Paradigm of Israeli-Palestinian Relations in the Shadow of Iran and the War Against the Hizballah with Dore Gold, James Woolsey, Bernard Lewis, and Moshe Yaalon. It was remorseless in its rejection of the PCP and the illusory notion that if we just create a Palestinian state, all will go well. And it was followed by first Amir Peretz (Minister of Defense, head of the Labor Pary), then Shimon Peres (Vice Prime Minister, former head of Labor Party). They both carried on about how close Israel is to renewed negotiations towards the two-state solution.

And I kept thinking about the joke of the physicist, the chemist, and the economist stranded on an island with nothing but a can of beans. Growing hungry, they began to discuss how to open it.
“Place a rock on it,” said the physicist, “and if we increase the pressure sufficiently, it will crack open the can.”
“But it would ruin the beans,” said the others.
“I know,” said the chemist, “we’ll light a fire under it, causing the gases inside to increase the pressure until the can bursts.”
“But then we’ll spend the next month retrieving the beans from all over the island,” said the other two.
“I have a solution,” said the economist, “assume a can-opener.”

Assume a world fundamentally at peace, supported by a world population committed to getting rich, and a relatively unimpeded spread of modern technology and you get the victory of capitalism the world over. As for those pesky regional wars, what, me worry?

Ultimately the difference between Herzliya (where I was) and Davos (where I can only imagine), is the difference between people coming from the Politically Correct Paradigm, based on liberal cognitive egocentrism, and the Honor-Jihad Paradigm, based on a sobering analysis of how others process, understand and react to such obviously wonderful things as the globalization of western technology, capital and culture. The problem with assessing the relative merits of these paradigms — regardless of whether they are optimistic or pessimistic — is that the HJP not only disagrees with the PCP, but suggests that the PCP, in pursuing its dogmatic denial of reality, actually makes things worse. We need not only to ask, “Am I right?” but also, “What if I’m wrong?”

The PCP way of processing the material looks for the easy explanatory out: seen in this essay in the subtle suggestion that Israel is a problem, both as a target, and as someone defending themselves from being targeted, and that if only we didn’t have this regional war, the world would more or less be at peace, and the Palestinians thriving economically along with everyone else, including the Israelis. But the very processing of the problem in this way encourages the forces of Jihad, both by pushing forward the program for global capital with no sense of the resistances — everyone wants to be rich, no? — and the failure to understand that Israel’s battle today is Europe’s battle tomorrow and the US’s battle the next day. Just as the French-led European community is sacrificing the Lebanese Christians to Hizbullah’s Jihadi demands because it keeps the illusion of “peace” going a little longer, so the world community contemplates — with the help of bien-pensant progressive Jews — the thought that by dismantling the state of Israel they will solve their problems.

The challenge of the Honor-Jihad Paradigm is to figure out what to do so that we both deflate the forces feeding Jihad (including such media scandals as Pallywood, and the Arab world’s profound attachment to avenging its humiliations), and strengthen the forces of civil society (including learning to distinguish demopaths from democrats). And one of the basic elements of that effort to figure this out, involves the courageous act of recognizing that Israel is a key to the victory of civil society.

For the West to imagine that somehow what Israel is dealing with is different (“she” is the colonialist a century after “we” gave it up), and that by edging away from her and letting the fury of Arab and Muslim indignation rain down upon her, the rest of the democratic modern world will somehow mollify the forces of enraged entitlement, is folly. Until the proponents of a peaceful, civil, and prosperous world understand that defending Israel is the key to making the fundamental demands of the Muslim world that will permit that world to enter such a global community as participants rather than as conquerors/destroyers, there will be no peace.

Obviously Israel alone is an Israeli nightmare, just as America alone is an American nightmare. But so is a world without Israel a nightmare to a democratic world which will rapidly shrink in the wake of Israel’s loss. Israel is not only America’s natural (and best) ally, she is Europe’s, and any other nation on this troubled planet that wants to live free and dignified.

Are we waking up yet? To compare this Financial Times piece with that of the Economist of last June (written after the summer’s war had begun), I’d say that, among the economic and political elite, hardly. Of course, maybe making money hand over fist while tottering on the edge of the cliff has its own attractions. Keeps the adrenalin going… “keep you going till supper.”

One Response to Financial Times Compares Davos to Herzliya: Assume a Can-Opener

  1. The Link Between Our Soldiers & the Price of Oil

    .הקשר בין החטופים למחיר הנפט

    Since the Abduction of our Soldiers the Iranian Oil Has Lost a Third of Its Price.

    That Steep Decline of Oil Market Price Was Caused by Economic Decisions, Consequence of the War That Followed.

    On July 11th at the close Oil was worth $76.35. On July 14th two days after the attack from Hezbollah
    oil price peaked at $80.64, its all time high.

    Today West Texas Intermediate for march delivery is worth $56.88 after $51.03.
    The price of oil has lost 33% in 6 months.

    That Brisk Decline of Oil Price Is The Economic Consequence of the War.

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