Subtext: The Palestinian-Israeli Conflict

As the U.S. seeks to keep Arab public opinion from turning violent, we've promised to see a Palestinian state into existence as part of our Grand Scheme for the Middle East or whatever they call it.

Our promises of fairness and peaceful intentions are belied by our actions. The BBC reports that the U.S. is offering $1,000,000,000 in military aid and $9,000,000,000 in loan guarantees to Israel as part of an economic package. In the last 30 months, Israel's economy (along with much of its moral and social fabric) has disintegrated in the face of the Palestinian uprising. In fact, the recession is very much a victory for Palestinians, who are forcing Israelis to suffer (as well as forcing their own people to suffer).

Ending the recession is a worthy cause, and Israel is an important U.S. ally thereby deserving of aid. However, this recession will not be ended by normal Keynesian means. At least some semblance of long-term structural security must be returned to the country before Israeli investors will have the confidence to put money back into their own economy.

This economic problem demands a political solution. The U.S. stands in a unique position to force a peace on two reluctant parties, but the American administration is basically unwilling to spend a dime of political capital to accomplish this, and the administration's pro-Palestinian rhetoric is not convincing anyone.