Transcript [00:00] Israel has yet to experience what [00:02] American financial warfare looks like. [00:05] And I'm saying, let's conduct a stress [00:07] test on a computer before someone [00:09] conducts it on the Israeli economy. What [00:11] would happen if you designate a [00:12] hypothetical major Israeli corporation? [00:14] I mean, pick a major Israeli tech [00:16] company, including one that you've [00:17] mentioned, and then designate a bank. [00:19] And then what happens to those [00:20] correspondent banking relationships and [00:22] dollar clearing and insurance? What [00:24] happens to the foreign venture capital [00:25] firms who say you know what incredible [00:28] technology in Israel but there lots of [00:29] good jurisdictions and I don't want to [00:31] take the risk and then what happens to [00:32] the shekele run that exercise and maybe [00:36] I hope to God we discover Israel is much [00:38] more resilient than I'm warning and that [00:40] would be excellent news but again [00:42] national security planning isn't about [00:44] necessarily proving the worst case [00:46] scenario correct. It's about discovering [00:49] what are your vulnerabilities before [00:51] your allies or your adversaries discover [00:54] them for you. [01:10] In the United States, if there's an [01:11] emergency, you're dealing with several [01:13] different systems. One organization runs [01:15] the ambulances. Another handles disaster [01:17] relief. A third manages the blood [01:19] supply. In Israel, it's one [01:22] organization. Men Davided Adom. MDA is [01:25] Israel's national emergency services [01:28] system. It's mandated by the government, [01:30] but it's not a government agency, which [01:32] means it runs on philanthropy. Most of [01:34] Israel's ambulances were paid for by [01:36] generous donors from around the world. [01:39] Something else worth knowing, MDA's [01:40] medics are Jewish, Muslim, Christian, [01:43] and Jews. serving Israel's entire [01:45] population, regardless of religion, [01:47] nationality, or ethnic background. In a [01:49] country that argues about almost [01:51] everything, that diversity is sacred. [01:54] You can support their important work at [01:56] afmda.org/callmeack [02:01] or follow the link in the episode [02:03] description. [02:06] >> Mark Dubowitz, welcome back to Call Me [02:08] Back. [02:09] >> Honored to be back with you, Dan. Thank [02:11] you. Uh Mark, we we have a lot to get [02:13] into here. I cited this report that you [02:16] and your colleagues at FTD just [02:18] published. I we're going to link to it [02:20] in the show notes. I do encourage our [02:22] our listeners and viewers to read the [02:24] report in its entirety, but I just want [02:27] to summarize it to some degree. You open [02:29] your report noting that Israel is the [02:32] point of a red, green, brown [02:34] convergence. [02:36] What is it? What is this convergence and [02:38] what does it signal for you? So Dan, [02:40] what worries me is not that these groups [02:42] suddenly agree with each other. I I [02:44] don't think they agree with each other [02:45] on many things. Um, [02:47] >> and say tell me who the groups are, [02:49] right? Like when you say [02:50] >> the red would be kind of the radical [02:51] left. The green are the Islamist [02:53] movements and the brown are are elements [02:56] of the far right kind of the Reich [02:59] rightight that have all of them had sort [03:01] of fundamentally different world views [03:03] but they they are really converging [03:04] around a hostility towards Israel and [03:07] increasingly around policies designed to [03:11] isolate Israel economically and [03:12] politically. But I think there's a much [03:14] bigger story here because if this were [03:17] confined to these ideological extremes, [03:19] I' I'd be considerably less worried and [03:21] I don't think it is. And you certainly [03:23] have had on previous episodes discussion [03:26] about the generational data, right? So [03:28] even looking at the Pew's March survey, [03:30] 60% of Americans had an unfavorable view [03:33] of Israel. Uh amongst Republicans under [03:36] 50, about 57% view Israel unfavorably. [03:40] And that's obviously extraordinary [03:41] because certainly Dan in our lifetime [03:44] the Republican party has been Israel's [03:45] strongest political constituency. So my [03:48] concern isn't simply red, green, and [03:50] brown. It's that the ideas that have [03:52] originated at these political margins [03:54] are finding a real receptive audience [03:57] amongst younger Americans. And arguably [04:01] Israel's greatest strategic asset for [04:02] decades wasn't just its military [04:04] superiority or its intelligence prowess [04:07] or American weapons. it was bipartisan [04:09] American support. And if that is [04:12] diminishing, um if that's become sort of [04:14] generationally fragile, then policies [04:17] that were inconceivable even 5 10 years [04:20] ago could be politically imaginable in 2 [04:24] years from now. Not predicting that [04:26] polling can change, wars end, [04:28] governments change, public attitudes [04:30] change. But if you're going to be [04:31] engaged in serious national security [04:33] planning, you should be identifying [04:35] vulnerabilities before they become [04:37] crises. Um, and I think it'd be a big [04:39] mistake just to look at today's [04:41] administration and even today's Congress [04:43] and assume that's the America Israel is [04:45] going to be dealing with in 2029. And [04:48] how does this shift in public opinion [04:51] actually turn into policy? So, I I agree [04:53] with you. These trends are alarming and [04:57] and we can talk more about that and what [04:59] they what they actually are speaking to [05:00] because I think there's a big leap from [05:02] a shift in public opinion to actually [05:04] concrete policies. So, talk about how [05:07] that's done. [05:08] >> Yeah, I think the shift happens slowly [05:09] and then I think potentially it happens [05:11] very quickly. Now, I think people [05:13] wrongly imagine that sanctions one day a [05:16] president is going to wake up in 2029 [05:18] and announce one morning, you know, [05:20] we're sanctioning Israel. And that's not [05:22] how this normally develops. You know, [05:24] I've I've spent Dan decades, as you [05:27] said, studying and helping build [05:28] financial pressure against Iran. And the [05:31] way you do this is you really construct [05:32] an architecture, right? You first [05:34] establish the political predicate. Then [05:37] you uh pass legal authorities. Then you [05:40] start designating individuals. Then [05:42] perhaps organizations, then companies. [05:44] And then financial institutions that [05:46] service those companies become very [05:48] concerned about their exposure and they [05:50] begin to derisk. Um and at that point [05:53] something important happens is that the [05:55] market takes over. So banks don't only [05:57] ask okay what is technically illegal. [06:01] Their compliance officers are [06:02] increasingly asking what could become [06:05] illegal in the future. What could expose [06:07] us to regulators and fines and [06:10] potentially criminal prosecution? What [06:12] could jeopardize our access to the US [06:13] financial system? And that's where [06:15] financial warfare becomes [06:17] extraordinarily powerful. So I'd sort of [06:19] put it this way. If governments are [06:22] defining the target, the market is [06:24] defining the blast radius. And that's [06:26] really what happened with Iran. And my [06:28] concern is we're starting to see pieces, [06:31] not the whole architecture, but pieces [06:33] develop around Israel. And that's why [06:35] public opinion matters um because it [06:37] changes the political cost of of using [06:39] these instruments. [06:41] >> So So that's interesting. So these these [06:45] sanctions and other tools of economic [06:47] isolation don't actually have to be [06:49] concrete or binding. But you're you're [06:52] basically saying, Mark, the the [06:54] environment, the atmosphere, the [06:55] surround sound of of a country under [06:59] growing economic isolation could just [07:01] give various private sector actors pause [07:04] in doing business with that particular [07:06] country because they fear what may be [07:09] coming or they fear what they may [07:11] inadvertently be in violation of. So [07:13] they so the inclination is to just kind [07:15] of pull back and that has its own [07:17] effect. [07:17] >> Yeah, Dan, that's right. I mean there's [07:19] a Chinese expression, you kill a chicken [07:21] to scare the monkeys. Um, so in a sense, [07:23] you know, even one designation of one [07:25] Israeli entity or individual then can [07:28] scare compliance officers and financial [07:32] institutions and investors around the [07:33] world. So you don't have to go sanction [07:35] everybody in the West Bank in order to [07:37] to scare the monkeys. You just have to [07:39] have a important symbolic sanction that [07:42] then has these cascading effects leading [07:44] to market de-risisking and this sort of [07:46] blast radius that uh that extends much [07:49] further than the the actual technical [07:51] and legal sanctions. [07:54] >> Okay. So 24 hours after Prime Minister [07:56] Netanyahu spoke at the UN and I [07:59] mentioned this in the introduction, the [08:00] UN expanded its settlement uh business [08:02] blacklist to 214 companies. Again, just [08:05] to reiterate it, the these were these [08:07] are non-binding, but reports about [08:10] sanctions have been trickling in as [08:12] you're as you're saying over the past [08:13] few months. So, this environment [08:15] you're talking about is is there. Can [08:18] you just summarize for us what actual [08:20] financial sanctions have already been [08:21] triggered against Israel? Like not just [08:24] the like threat of it, not just the [08:26] atmosphere of it, but what what [08:28] concretely is out there? [08:29] >> Yeah. So Dan, let me walk uh listeners [08:32] through the the the history, but let's [08:33] be very precise because I don't want to [08:34] exaggerate this. This this this is not [08:36] an Iran style sanctions regime against [08:39] Israel today. What mostly we're talking [08:40] about is targeted violent settlers or [08:43] settlement activity or economic activity [08:45] connected to settlements, but I think [08:47] there's several developments that that [08:49] Israelis should take seriously. Now the [08:52] first step was in December 2016. Dan, [08:55] you remember in the waning uh weeks of [08:57] the Obama administration, the UN [08:59] Security Council passes resolution 2334 [09:03] by a vote of 14 to0 because President [09:06] Obama decided to abstain rather than [09:09] veto it as the United States had [09:11] commonly done. [09:12] >> Right? This was considered a very [09:14] unprecedented move that that this was [09:16] like Obama's last act I think as [09:18] president and it was symbolically [09:21] considered a big deal that he that he [09:23] took that action that he didn't veto the [09:24] resolution. [09:25] >> Right. And and what it did is it [09:27] declared settlements beyond the 1967 [09:29] lines including in East Jerusalem to [09:32] have no legal validity and calls on [09:34] countries to distinguish in their [09:36] dealings between Israel and the [09:38] territories. So, it wasn't a sanctions [09:40] resolution per se, but it set the target [09:43] that all of the West Bank and East [09:44] Jerusalem, by the way, including the old [09:46] city, including the hotel, were deemed [09:48] to be illegally occupied. [09:51] Then, fast forward um 8 years later, [09:54] Biden's executive order, which was [09:56] 14115, [09:59] it created a US emergency sanctions [10:01] authority concerning quote destabilizing [10:04] activity in the West Bank. And it began [10:06] with individuals. It expand its [10:08] organizations. [10:09] And note, Dan, this was the first time [10:11] in US history that I'm aware of that an [10:13] American administration set up a [10:15] separate sanctions regime targeting an [10:18] American ally. So, President Trump comes [10:20] in, I think on his first couple days in [10:22] office, he revokes that executive order [10:25] and he lifts all those designations. So, [10:27] why do I care about something that's [10:28] been revoked? Well, because we got a [10:31] proof of concept and Washington had [10:34] designated individuals and Israeli banks [10:36] reacted almost immediately despite [10:39] demands from finance minister Smartrich [10:41] not to close the bank accounts of those [10:43] designated individuals and entities. So [10:45] what had happened is that the financial [10:47] system effectively transmitted [10:49] Washington's decision into Israel. And [10:52] this really tells you something I think [10:54] enormously important about about [10:56] American financial power. And now, you [10:59] know, just to sort of continue what what [11:01] else has happened, we're seeing these [11:02] European and allied measures. So [11:04] Norway's uh I think it's about a $2 [11:06] trillion sovereign wealth fund is one of [11:08] the world's largest has already excluded [11:11] Israeli companies and banks over links [11:13] to settlement activity. And so there you [11:15] know political pressures moving from [11:17] government policy to the decisions of [11:19] major institutional investors. And on [11:22] September 8th, 12 Western governments [11:24] led by the UK introduced national [11:27] restrictions supporting European [11:29] restrictions or considering measures on [11:32] trade and settlement goods. And they [11:35] described these as settlement measures, [11:37] not sanctions on Israel. [11:38] >> But but wasn't the UK measure though, [11:40] just to be clear, the UK announcement, [11:42] they haven't implemented it, right? They [11:44] announced it, but they said it's going [11:45] to take them something like 6 to 8 [11:47] months to actually implement it. [11:48] >> Yeah, sure. And often with these [11:50] sanctions there there's an [11:51] implementation lag. Um but I think the [11:54] important thing is that you know you [11:56] start today or in 6 months with a [11:58] violent settler and then it's an [12:01] organization and then as a company doing [12:02] business in a settlement and then the [12:04] bank financing that company. So does it [12:07] stop there? Maybe. But my argument is [12:09] that Israel has an enormous national [12:11] security interest in making sure that it [12:13] does. And because we're talking about [12:16] action against settlements or [12:18] settlements being the catalyst for the [12:21] these economic actions against Israel at [12:24] large, I also want to be clear about [12:26] what we're talking about when the [12:27] international community quote unquote [12:28] talks about illegal settlements that [12:31] they're taking action against illegal [12:32] settlements and and settler violence. [12:35] Israel's definition of illegal [12:36] settlement activity and the [12:38] international communities are two [12:39] different things. I think this is an [12:41] important point you're that you're [12:42] implying here, right? So, so there are [12:44] many settlements that are considered [12:46] legal and authorized by the Israeli [12:48] government, not just by this Israeli [12:50] government, by previous Israeli [12:51] governments, by left of center Israeli [12:53] government, settlements in places, you [12:54] know, like Ariel and and Malaya Dumim [12:57] and Ephraat and the communities in in [13:00] Guetion. Those are I mean, our listeners [13:02] can look those up. Those are considered [13:04] authorized settlements. what the what [13:06] the Israeli government both this one and [13:08] previous governments would consider [13:10] unauthorized illegal settlements are are [13:13] those that don't have the approval of [13:14] the government. So there is this [13:16] distinction there are these like [13:17] outposts these hilltop outposts and [13:19] whatnot. But I think this is what you're [13:20] saying here. They don't sit there saying [13:22] oh what the Israeli government considers [13:24] authorized and unauthorized. What the [13:25] Israeli government considers legal and [13:27] illegal means nothing to us. If a [13:29] settlement is created in the West Bank [13:31] or there's a community in East Jerusalem [13:34] which is recognized by the Israeli [13:36] government and by the US government as [13:38] part of the capital of Israel, those [13:41] communities and those areas are [13:43] considered illegal. [13:44] >> That's right, Dan. Yeah. And my concern [13:46] of course is that if you're a compliance [13:47] officer for a major international bank, [13:49] you know, are you really going to spend [13:51] time making the distinction between [13:52] Mallayim and Ramadan? Right. as as far [13:55] as you're concerned, to spend the money [13:57] and the time and take the risk to make [13:59] those fine distinctions between what's [14:01] inside the Green Line and what's outside [14:02] the Green Line is not something you're [14:04] likely to do. And so this this the the [14:07] idea that these sanctions are only about [14:09] the West Bank and East Jerusalem and [14:12] about these settlements, I think when [14:14] when the market interprets the [14:16] sanctions, I'm worried that it's going [14:18] to interpret it much more broadly and [14:20] it's really going to affect all Israelis [14:23] individuals and entities regardless of [14:24] where they're located. I mean, I [14:26] actually remember December 2016. I was [14:28] walking through the old city with my [14:30] nephew for his bar mitzvah at the hotel [14:33] at the at the Whailing Wall as some [14:35] people know it as. And as we were [14:37] working through the hotel, I turned to [14:39] him and I said, you know, shalom. I just [14:41] want you to realize that as of today, we [14:43] are now in illegally occupied [14:46] Palestinian territory. So, this is [14:48] Judaism's most holy site has been deemed [14:51] by the United Nations as being illegally [14:53] occupied. Yeah. Okay. So, in your [14:56] report, you lay out the Iran timeline, [14:59] your experience, your firsthand [15:00] experience with the economic isolation [15:02] of Iran, and you look at basically 1979 [15:05] to 2019, four decades of cut offs from [15:10] the international Swift uh uh system. [15:14] You look at secondary sanctions and sort [15:17] of each step is building on the last. [15:20] And then you write and I'm quoting here [15:21] that what took three decades to assemble [15:23] against Iran has been assembled against [15:26] Israel at a smaller scale in under three [15:28] years. Okay. Now walk me through the [15:31] machine that was built to sanction Iran [15:33] and how you expect it to be applied [15:35] against Israel. [15:36] >> Yeah. So I mean first I want to reject [15:38] you know this moral equivalence [15:39] unfortunately which is being established [15:41] which is clearly Israel is not the [15:43] Islamic Republic of Iran, right? that [15:45] the regime in Iran is is an adversarial [15:48] revolutionary government that has killed [15:50] and maimed and kidnapped and tortured [15:53] thousands of American has been at war [15:54] with the United States since 1979. [15:57] And Israel is a democratic American ally [16:01] with extraordinarily deep economic and [16:03] military and intel and technological [16:06] relationships with the United States, [16:09] which which makes the sanctions against [16:11] Israel that much more egregious that [16:13] it's being applied to a close ally [16:16] rather than a an enemy. But when I when [16:18] I'm talking about Israel and Iran, I'm [16:21] I'm not comparing countries. I'm [16:22] comparing mechanisms. And with Iran, [16:25] that architecture was really built brick [16:27] by brick over over decades. And what you [16:30] do is you establish the legal [16:31] authorities, you designate individuals [16:33] and entities, you move to critical [16:34] sectors, um you internationalize the [16:37] pressure, and then comes this [16:39] extraordinarily powerful American [16:41] weapon, which is secondary sanctions. [16:43] And that really puts European or Asian [16:46] banks effectively to a choice. You can [16:48] do business with Iran or you can [16:50] maintain access to the world's most [16:52] important financial system and to the US [16:55] dollar. And of course, that's not much [16:56] of a choice. Banks don't want to spend [16:58] millions of dollars determining which [17:00] Iranian transaction is technically [17:02] permissible. So they say, why take the [17:04] risk? And that's really where Iran [17:07] becomes in a sense financially toxic [17:10] beyond the literal boundaries of the [17:12] sanctions. Now I just want to emphasize [17:14] that my concern is not that Israel is at [17:16] that point. It isn't remotely at that [17:18] point. My concern is that sort of some [17:21] of these bricks are now lying on the [17:23] ground and you've got American and [17:26] international brick layers who are [17:29] starting to construct this offensive [17:32] sanctions wall. And we have, you know, [17:35] we have sanctions authorities as [17:37] president. We have public databases [17:38] mapping corporate relationships. We have [17:40] these European and Canadian measures. We [17:43] have institutional investors making [17:44] exclusion decisions. And we've [17:47] demonstrated already that Israeli banks [17:48] are going to react rapidly to American [17:51] designations. So none of these [17:53] individually constitutes full-blown [17:56] financial warfare against Israel, but [17:58] you know, when you've spent your career [18:00] watching sanctions architectures [18:03] develop, you you pay attention when [18:05] those pieces begin accumulating. And [18:07] that's and that's why I'm I'm I'm [18:10] concerned. [18:11] >> Do you actually believe the US would go [18:13] for this? [18:15] >> I do. I mean, the Bid administration [18:17] did. The B administration, as I said, [18:19] issued this executive order, established [18:21] the sanctions regime against Israel for [18:23] the first time against an American ally. [18:26] And I'm worried that in 2029, an [18:28] American president, most likely a [18:30] Democratic president. I'd be hardressed [18:32] to see a Republican president doing [18:33] this, but you never know. uh would would [18:35] bring back that Biden administration [18:37] executive order and then would [18:39] essentially set up a sanctions regime. [18:41] The US Treasury Department and the [18:43] Office of Foreign Assets Control, which [18:45] is the body responsible for the [18:46] implementation of sanctions, would begin [18:48] to work against Israel in the way that [18:52] I've described, depending on who [18:54] controls Congress, you might see [18:55] statutory sanctions being passed and [18:57] supported by an American president. And [18:59] then, of course, they would [19:00] internationalize it. and the [19:01] internationalization of the sanctions is [19:03] already taking place with these [19:05] countries moving forward on their own [19:07] sanctions regimes um with UN cover. So [19:11] the there's it's absolutely possible. [19:14] I'm not saying it's entirely inevitable, [19:17] but it's absolutely possible that in two [19:19] short years we could see this starting [19:21] to get implemented. [19:22] >> And there's already legislation at least [19:25] being not really advancing because [19:27] advancing is too strong a word, but [19:28] there are members of Congress that are [19:30] already in the Senate. I think Senator [19:32] Van Gal and others are have been [19:34] introducing legislation that that start [19:36] to try to move the ball here. Now again, [19:38] it's not really advancing, but if if the [19:41] Democrats take control of of the House [19:44] or the House and the Senate, you could [19:46] start to see real movement. I guess [19:47] maybe talk a little bit of what Congress [19:49] can do, even if there's even if there's [19:51] a Republican president, even in the last [19:52] two years of a Trump administration. [19:55] Last week, I saw something that really [19:57] concerned me. And Senator Chris Coons, [20:00] the senator from Delaware, who's been a [20:02] long-standing supporter of Israel, one [20:04] of the strongest supporters of Israel on [20:06] the Democratic side of the aisle, [20:08] introduce legislation [20:10] uh to sanction Israel for settlement [20:12] activity in in what's called E1. And E1 [20:15] is uh territory that's basically between [20:18] East Jerusalem and the large Israeli [20:21] settlement of Malay. And there's been a [20:24] lot of sensitivity around settlement [20:25] building in E1 because the allegation [20:28] from those who support a Palestinian [20:31] state is that Palestinian state wouldn't [20:33] be contiguous if there are large Israeli [20:36] settlements in that E1 territory. So [20:39] Chris Coons introducing legislation, you [20:42] know, that's not Van Holland or Sanders [20:43] that that's a pro-Israel stalwart. the [20:46] arms embargo resolution that was [20:48] introduced, I think it got over 40 [20:50] Democratic senators supporting a full [20:52] arms embargo on Israel. So you're [20:56] starting to see, even though obviously [20:58] President Trump would veto it, you're [21:00] starting to see them move this, lay the [21:02] groundwork, establish the predicate so [21:04] that when they take Congress and they [21:06] have a Democratic president in the White [21:08] House in two years time, those bills [21:10] then become law and now you have [21:13] statutory sanctions to strengthen the [21:16] executive branch designations that a a [21:19] Democratic president would would then [21:20] impose. many of these Israeli banks are [21:23] the institutions that would have to [21:25] enforce enforce these sanctions inside [21:27] Israel. What does it mean for Israeli [21:30] banks? [21:30] >> So, we saw Israeli banks um as I said [21:33] when the designations were imposed by [21:35] the Biden administration, they they [21:37] immediately began to close the accounts [21:39] of designated individuals and [21:42] organizations because for an Israeli [21:43] bank, like any international bank, their [21:45] absolute financial lifeline is access to [21:49] the global financial system. but most [21:51] importantly access to their [21:52] correspondent banking relationships in [21:55] New York that allowed them to clear US [21:58] dollar transactions. And so this was [22:00] always the most powerful instrument that [22:02] we could use against Iran by warning [22:05] international banks that if they [22:07] continued to do business with the [22:08] Islamic Republic of Iran, they would [22:10] lose access to the US financial system [22:12] and to the US dollar. And the mere [22:15] threat of that, even if you didn't [22:16] impose secondary sanctions on those [22:18] banks, was sufficient to to really deter [22:22] the vast majority of these banks from [22:23] doing business with Iran. And you could [22:26] see something similar with the Israeli [22:28] financial system. Um, now the [22:30] designations may be different kinds of [22:33] companies in the West Bank that have a [22:35] settlement nexus. So, construction, [22:37] infrastructure, real estate, uh, telecom [22:41] and but particularly the financial [22:42] services companies. And I think that's [22:44] where people misunderstand the power of [22:46] financial sanctions. That the company on [22:48] the list isn't necessarily the most [22:50] important company. The question is who's [22:52] banking it? Who's financing it? Who's [22:55] insuring it? Who's processing the [22:57] payments? Who's providing cloud [22:59] services? Who are its investors? Again, [23:02] what are the correspondent banking [23:03] relationships? And once you start [23:04] mapping those relationships, you can [23:06] start to see how a designation can have [23:09] really powerful second and third order [23:11] effects. And that's precisely why in the [23:14] report I'm telling Israelis map this [23:16] now. You know, you got to know where [23:17] your vulnerabilities are in foreign [23:19] venture capital and dollar clearing and [23:21] insurance and shipping um in cloud [23:24] infrastructure and export licenses and [23:26] capital markets. You got to do this now [23:28] before there is a crisis. [23:29] >> Okay. So when I hear you lay this out, [23:32] Mark, not just about Iran, but other [23:34] countries that have been subjected to [23:36] the kind of isolation architecture that [23:39] you're worried about, including [23:40] obviously um South Africa, aparttheid [23:43] South Africa, not not that I'm comparing [23:45] South Africa's uh apartheid government [23:47] to Israel's, but but it's the but you [23:49] know, you you have you have familiarity [23:52] with what was done to South Africa, so [23:53] that's like you know, obviously hanging [23:55] in in in the background there. Um, and [23:58] when I hear these comparisons, whether [23:59] it's to South Africa or to Iran, I [24:02] believe that Israel has two inocul [24:03] points of inoculation, two layers of [24:05] inoculation that those governments don't [24:07] have or those regimes um did not have. [24:10] One is potentially [24:14] uh different political leadership in [24:16] Israel, but I'm not sure it will make a [24:19] huge difference, but I want to get into [24:20] that. And the second is Israel's own [24:23] economic integration into the global [24:25] economy which is not so easy to flatten [24:28] out or to push out. I want to hit both [24:30] of those. So do you think that any [24:32] difference any change in Israel's [24:34] leadership that which presumably could [24:36] happen obviously after the elections [24:38] could change the storm that's brewing or [24:41] or limit the the um the strength of the [24:45] storm that that you fear is brewing? [24:47] Yeah, I think there's two different [24:49] questions here and let's not confuse [24:50] them. I think one is structural. You [24:52] know, looking at those generational [24:54] numbers in America, I mean, negative [24:56] views of Israel aren't confined to [24:58] attitudes towards any single one Israeli [25:00] prime minister, right? Younger Americans [25:03] significantly more negative towards [25:05] Israel itself. That deterioration [25:07] extends into younger Republicans. Now, [25:09] changing a prime minister doesn't [25:11] magically reverse that. But certainly [25:13] you've seen the collapse in support for [25:15] Israel over the past let's say decade [25:19] and for most of that decade you know [25:21] there's been one Israeli prime minister [25:23] who has become an international brand is [25:26] very well recognized um and for many is [25:29] toxic so I I think that that that [25:33] certainly plays into it but of course [25:34] the second question is not necessarily [25:36] personality it's also Israeli policy and [25:39] Israeli decisions matter and if Israeli [25:42] leaders tolerate unlawful settler [25:45] violence. If they expand policies that [25:47] alienate allies, if they make it harder, [25:50] you know, for Israel's good friends to [25:51] defend it, that's going to have [25:52] consequences. [25:54] But if there's a coalition government [25:55] that's going to take this violence [25:58] seriously in the West Bank, if they're [26:00] going to demonstrate credible Israeli [26:02] accountability, if they're going to try [26:04] to reduce sources of friction, then [26:06] they're going to start to remove [26:07] predicates that foreign governments use [26:09] to justify targeted measures. So, you [26:11] know, I'm going to go out on a limb [26:13] here, Dan. I'm not going to tell the [26:14] Israelis how to vote. Um, but I would [26:17] tell every Israeli government, left, [26:18] right, or center, that you can either [26:20] strengthen or weaken the bipartisan [26:21] coalition that that protects you [26:23] internationally. If the current [26:24] coalition returns to power, I think it's [26:27] going to supercharge this economic and [26:29] financial warfare campaign. Now, if it [26:31] doesn't, and there's a new coalition, I [26:33] think the new coalition is going to get [26:35] a temporary reprieve. And how long that [26:38] reprieve lasts, I I can't say. The [26:40] underlying forces are not going to [26:42] disappear. The haters are going to keep [26:44] hating. Those determined to isolate [26:46] Israel economically and financially will [26:49] continue to organize and mobilize. But a [26:52] change in leadership could, I'll [26:54] emphasize, could alter that political [26:56] coalition array against Israel because [26:59] Dan, I think there are Democrats who are [27:01] strongly pro- Israel. Um, but they're [27:03] deeply opposed to the current coalition [27:05] and its policies. And maybe a change of [27:08] government could give some of them [27:09] reason to reassess, recalibrate, and [27:12] potentially they could become part of [27:13] the bricks and the firewall against this [27:15] full-blown financial and economic [27:18] warfare campaign against Israel. And we [27:20] talked about the warning signs from [27:22] Senator Coons to um Hakee Jeff to even [27:26] Rahm Emanuel who was in Tel Aviv a few [27:28] weeks ago gave a a public speech and he [27:31] committed to further sanctions measures [27:35] against Israel. So I think the [27:36] leadership question matters. I don't [27:39] think Israel is going to get a very long [27:41] honeymoon if there's a change in [27:43] government. But I do think you can [27:45] change the political environment. You [27:47] can split off people who might otherwise [27:49] join it. You might rebuild parts of the [27:51] bipartisan firewall. You can buy Israel [27:53] some time, but the return of the current [27:55] coalition, I have no doubt, just from a [27:57] sanctions point of view, um, is going to [28:00] erode that firewall, and it's certainly [28:02] going to accelerate the economic and [28:03] financial pressure that's already [28:05] building. [28:06] >> So, I want to read you something, Mark, [28:08] from the UN Human Rights Office, and I'm [28:11] quoting here. Human UN human rights [28:14] experts have expressed alarm at the [28:16] rising rate of violence directed by [28:18] Israeli settlers towards Palestinians in [28:21] the occupied Palestinian territory. [28:24] Settler violence has always been an [28:26] extremely disturbing feature of the [28:28] Israeli occupation, said the experts. We [28:30] are witnessing the highest record levels [28:32] of violence in recent years and more [28:35] severe incidents. Close quote. That is [28:37] the United Nations Human Rights Office. [28:40] Now when you hear that you assume they [28:42] are referring to what's happening under [28:45] the current government but what I just [28:46] read to you is dated November 10th 2021. [28:51] Navtali Bennett is the prime minister an [28:53] Arab Muslim party is in the governing [28:55] coalition and that was the drum beatat [28:58] of the UN human rights crowd that the [29:02] Navtali Bennett potentially an Arab [29:04] party potentially not. These are the [29:05] characters, the leaders that could [29:07] populate a new Israeli government after [29:09] the end of October. And you could [29:12] already see this in 2021 when they were [29:15] in charge. The excoriation of Israel, [29:18] the charges against Israel, the exact [29:20] same charges that we're seeing the drum [29:22] beat of now were already taking place. [29:24] Only then it was before the charges of [29:27] genocide had like made it into the [29:29] lexicon. So, you know, obviously things [29:31] are turbocharged now. But I just I I [29:34] think it's important to underline and [29:35] again neither you nor I are are [29:38] suggesting to Israelis how to vote nor [29:40] should we. But I do I do wonder and I [29:43] talked to a lot of friends friends [29:45] inside Israel friends who are supportive [29:47] of Israel who don't live in Israel. They [29:50] have this notion that if there is a [29:53] change in government then suddenly [29:55] things are going to change dramatically. [29:58] I if that is the case I hope they are [30:00] right. I'm highly skeptical. What I'm [30:03] concerned about is the United States and [30:06] I'm concerned about the Democratic Party [30:08] and the Republican party and I'm [30:10] concerned about where otherwise [30:13] sensible centrist [30:16] Democrats are going. Right. Again, when [30:19] I see Chris Coons introducing [30:21] legislation, when I see 44, 45, I think [30:25] it was Democratic senators calling for a [30:27] full full arms embargo, and it wasn't [30:29] just the Van Hollands and Warren and [30:31] Sanders of the world, but it was [30:33] senators, Dan, that you and I know and [30:35] have worked with and have followed for [30:36] many years who've been strongly [30:38] pro-Israel. [30:39] That's what I worry about. Um, I don't [30:42] worry about the UN. I worry about the [30:44] United States. I worry about the erosion [30:47] of support for Israel. And I'm not [30:49] suggesting at all that a new coalition [30:52] government is all of a sudden going to [30:53] supercharge bipartisan support for [30:55] Israel in the United States. I am [30:58] predicting that the current coalition [31:00] coming into power [31:01] >> mean if the current coalition comes back [31:03] comes back and returns to power [31:05] >> returns to power. Yeah. Then then I [31:07] think it's you know it's a political [31:08] gift to the haters. Because every time [31:11] Akhmed would open his mouth or Columbia [31:13] University would invite him for a speech [31:15] and he would come and talk about the [31:18] Holocaust never happening or [31:20] exterminating Israel or there no gays in [31:22] Iran and would make headlines. you know, [31:25] it would create the kind of political [31:27] environment that made it very easy for [31:28] us to get 98 or 100 US senators on a [31:33] resolution or on a bill to sanction Iran [31:36] and sanction Iran in systemic serious [31:40] ways. And so when you've got that kind [31:42] of political environment with leaders [31:45] saying things that are beyond the pale, [31:48] if you're building a sanctions dream, [31:50] that's very helpful. And I think people [31:51] like Ben Smodrich and others in this [31:53] coalition provide a lot of fuel to those [31:57] who are trying to build a financial and [32:00] economic warfare campaign against [32:01] Israel. If you remove them, it becomes [32:06] more difficult for them to generate the [32:08] kind of political support. [32:11] Obviously, not on the margins or on the [32:13] extremes, but the sort of left of Senate [32:15] Democrats who otherwise are going to be [32:17] critical to this question of whether a [32:19] new administration really goes after [32:20] Israel in the way that I'm worried [32:22] about. [32:23] >> We'll be right back with Mark Dubowitz [32:25] after this message. [32:27] I want to tell you about the [32:28] organization sponsoring this episode, [32:30] Menda Vida Dome, Israel's National [32:33] Emergency Services System, which runs [32:36] Israel's entire national blood supply. [32:38] Years ago, they realized that a national [32:41] service needs a central infrastructure, [32:43] and Israel's blood supply must be kept [32:45] safe no matter what. So, they built an [32:47] underground facility. The Marcus [32:49] National Blood Services Center in Ramla [32:52] was designed to keep working through [32:53] missile chemical and biological attacks [32:56] and through natural disasters. It was [32:58] completed before October 7th at a time [33:01] when three stories underground struck a [33:04] lot of people as more than anyone would [33:06] ever need. Nobody knew what was coming. [33:08] MDA built it anyway. During the war with [33:11] Iran, MDA moved its entire command and [33:14] dispatch operation underground. Every [33:16] ambulance in the country was being [33:18] directed from inside a facility somebody [33:20] decided to build years earlier. That [33:23] decision was made possible by donors. [33:26] Help fund emergency response at [33:28] afmda.org/callme. [33:34] And we're back with Mark Duboitz. Okay. [33:37] I want to talk about the the what I [33:39] would argue that a layer of of um [33:43] protection that that Israel has which is [33:45] the strength of its economy which [33:46] against all odds predictions forecasts [33:48] and now sanctions or threat of sanctions [33:51] has held strong including after 3 years [33:54] of war multiffront war I mean the Tel [33:57] Aviv stock exchange has been on a tear [33:59] more and more Israeli companies are are [34:02] being funded not by only the usual [34:04] suspects but major US venture capital [34:08] firms that actually weren't doing [34:09] business in Israel before October 7th [34:11] and now have made the decision to make [34:13] very big bets on Israel. I'm surprised [34:15] by some of these Silicon Valley firms [34:16] that are now showing up in Israel. You [34:18] know, record setting exits. You take the [34:21] one that got a lot of attention was [34:22] Whiz, this cloud security company that [34:24] sold for something like $ 32 billion to [34:27] Google in the middle of the post October [34:29] 7th war. Largest private acquisition by [34:32] Google in its history. not just largest [34:34] Israeli but largest acquisition anywhere [34:37] story after story after story of this [34:39] happening. So doesn't that momentum and [34:43] that reality and the degree to which [34:46] Israel which has hundreds and hundreds [34:48] of multinationals that that have set up [34:50] operations in Israel and are dependent [34:52] on Israel for their innovation and for [34:53] their R&D. Doesn't that contradict your [34:55] report? [34:56] >> Yeah, Dan, it's a very important [34:57] counterargument. And if my argument were [35:00] that Israel is already being [35:02] economically isolated, then yes, it [35:04] would contradict it. But that's that's [35:06] not my argument. My argument is Israel's [35:08] demonstrated really remarkable economic [35:11] resilience under extraordinary [35:13] circumstances throughout its history. [35:15] But what it's never experienced is [35:18] comprehensive financial warfare from the [35:20] United States and its major allies. [35:23] Right? And so yes, what I recommended in [35:26] the piece is that we need to build a [35:29] firewall against what could be coming. [35:32] And the deeper the level of [35:35] technological military intelligence and [35:37] economic integration between the United [35:39] States and Israel, the more the [35:43] relationship, the bilateral relationship [35:45] will be important to both countries and [35:47] more the costs would also be imposed on [35:50] not only Israel but on the United States [35:52] if there were a hostile administration [35:54] and Congress targeting Israel. But [35:57] Israel has yet to experience what [35:59] American financial warfare looks like. [36:02] And I'm saying like let's conduct a [36:04] stress test right on a computer before [36:06] someone conducts it on the Israeli [36:08] economy, right? What what would happen [36:10] if you designate a hypothetical major [36:11] Israeli corporation? I mean, pick a [36:14] major Israeli tech company, including [36:15] one that you've mentioned, and then [36:17] designate a bank and then what happens [36:19] to those correspondent banking [36:20] relationships and dollar clearing and [36:22] insurance. What happens to the foreign [36:24] venture capital firms who say, you know [36:25] what, incredible technology in Israel, [36:27] but there lots of good jurisdictions and [36:29] I don't want to take the risk. And then [36:31] what happens to the shekele? Like run [36:33] that exercise and maybe I hope to God we [36:36] discover Israel is much more resilient [36:38] than I'm warning. And that would be [36:39] excellent news. But again, national [36:42] security planning isn't about [36:44] necessarily proving the worst case [36:45] scenario. Correct. It's about [36:47] discovering what are your [36:49] vulnerabilities before your allies or [36:52] your adversaries discover them for you. [36:54] So, if you wanted our people listening [36:57] to this to focus on a on a trigger date, [36:59] like where you enter the danger zone, [37:02] what is that? Is it the 2026 midterms? [37:04] Is it the 2028 presidential election? [37:06] Like, where are you focused? [37:08] >> Yeah. So, I don't think there's a [37:09] trigger date. I think there's a trigger [37:11] event. Um, and I think that's what [37:13] Israelis should watch for. So, obviously [37:14] the Israeli elections matter, as I [37:16] suggested, the midterms matter, [37:18] presidential elections matter, [37:19] congressional votes matter. Um, but I'm [37:22] more interested in the moment when [37:24] targeted political measures become kind [37:27] of systemic financial behavior. So, if [37:30] the future American administration [37:32] restores sanctions authorities, that's [37:34] an indicator. If those authorities move [37:37] from individuals and organizations to [37:39] major Israeli companies, then that's a [37:42] bigger indicator. If a major [37:44] international bank begins reducing its [37:46] exposure um again not because [37:49] transactions are prohibited but because [37:51] Israel's become a compliance problem [37:53] then that's obviously a very serious [37:54] indicator um because that's when the [37:57] market is beginning to kind of frontr [37:58] run government policy. And so that's the [38:01] transition I'm warning about. So I [38:03] wouldn't necessarily circle October 27th [38:05] or November 2026 or November 2028 on [38:08] your calendar. What I'd watch is kind of [38:10] this escalation ladder from individual [38:13] to organization to company to bank to [38:15] sector and then ask whether financial [38:18] institutions are beginning to treat [38:20] those categories [38:22] not as a West Bank risk but as a [38:25] generalized Israel risk. And Dan, I I [38:28] just want to say one other thing about [38:30] sort of the Israeli position because we [38:32] we've talked a lot about interests, [38:35] right? Israel is a powerful country and [38:38] the United States and Israel share many [38:41] common interests. And I think a number [38:44] of Israeli politicians and American [38:46] politicians have have been over the [38:47] years making this argument that what [38:49] matters to countries is only interests [38:52] and really not values. And I I think [38:54] that's incomplete. I I think shared [38:56] values matter a lot. I think that the [38:59] the basis of the bipartisan support for [39:01] Israel over all these decades has been [39:03] shared interests and shared values. And [39:06] I think the shared values are now under [39:09] attack. And because of that, you've [39:12] seeing that effect in public opinion. [39:14] Public opinion then provides the [39:16] political context for policy action. And [39:20] that's when it makes it much easier for [39:22] a hostile administration or Congress to [39:24] go after Israel with growing public [39:28] support um that provides a tailwind [39:31] rather than a than a headwind. [39:33] >> You built a lot of the architecture [39:35] we're talking about here. Mark, you you [39:38] help build your strategist for you [39:41] envisioned [39:42] um in building against Iran. How do you [39:45] feel about these exact tools that you [39:48] designed now being aimed at an ally of [39:51] the United States? [39:52] >> Look, it's certainly an irony. Um, and I [39:55] think it's uh it's of deep concern that [39:59] all for the first time the B [40:01] administration used these tools against [40:03] an American ally. And Dan, let me let me [40:05] be clear because I'm getting a little [40:06] technical here. We've always gone after [40:08] bad actors around the world, including [40:11] bad actors that are located in American [40:14] allies, right? We've used [40:15] counterterrorism authorities or counterp [40:17] proliferation authorities. We've gone [40:19] after money laundering. We've gone after [40:21] human rights abusers. Uh, and those [40:24] people are in the UK, they're in Europe, [40:26] they're in Asia, they're in many of our [40:28] allies, treaty allies, NATO allies, [40:30] major non-NATO allies. But this is the [40:32] first time they were used against a [40:36] an ally where it was a separate [40:37] sanctions regime. I I never thought I [40:40] would ever see the day where the United [40:41] States would set up a separate sanctions [40:43] regime at the US Treasury Department to [40:45] go after an ally. And I spent, you know, [40:48] much of my career, as you alluded to, [40:49] arguing that the United States had this [40:51] extraordinary non-military weapon [40:53] against Iran, the the centrality of the [40:55] US dollar and America's financial [40:57] system. And I and it worked precisely [40:59] because America didn't need every [41:01] government in the world to agree with [41:02] us. You know, if you're a major [41:04] international bank, as I said, access to [41:06] New York matters, access to dollars [41:08] matters. So, you could use American [41:10] financial power to change behavior [41:12] thousands of miles away. And that power [41:15] doesn't disappear when the original [41:17] target changes from an adversary to an [41:19] ally. So this same financial system that [41:22] the US has that gives us enormous [41:24] leverage against our adversaries like [41:26] Iran or Russia or China um and certainly [41:30] non-state terrorist organizations is now [41:33] going to give theoretically a future [41:34] American administration enormous [41:36] leverage against our ally Israel and and [41:39] I think that's the lesson I want [41:40] Israelis to understand. So this is not [41:43] an argument for Israelis to decouple [41:46] from America and it's exactly the [41:48] opposite. It's what you said earlier. I [41:49] mean, you got to make the relationship [41:50] deeper. Integrate our defense [41:52] industries, integrate technology, [41:54] intelligence, finance, research, supply [41:57] chains. You got to make Israel so [42:00] valuable that American strategic [42:02] interests. [42:03] Um, that weaponizing that financial [42:06] relationship against Israel is going to [42:07] impose costs on the United States [42:09] itself. The answer isn't an Israel that [42:12] can live without America. It's it's [42:14] again it's an America Israel [42:15] relationship so deeply integrated, so [42:17] mutually beneficial that both countries [42:20] have an enormous stake in it. I'm I'm [42:23] optimistic, Dan, that we can mitigate [42:25] the damage, we can build a firewall, we [42:28] can protect Israel against um these [42:30] hostile actions, but uh it's going to [42:33] require us to begin that work today with [42:36] sort of two years left in the Trump [42:38] administration rather than waking up on [42:40] January 20th, 2029 and discovering that [42:43] we have the beginnings of a full-blown [42:45] financial warfare campaign against the [42:47] Jewish state. [42:49] >> Okay, Mark, thank you for this. We will [42:50] leave it there. Uh the picture you're [42:53] painting is alarming. So I'm I'm glad we [42:55] had this discussion. It's it's an [42:56] important conversation. I hope more and [42:58] more folks are reading your report and [43:00] having versions of this conversation. Uh [43:03] so thanks for doing this. [43:04] >> Thanks for having me, Dan. Appreciate [43:05] it. [43:15] One thing about Megan Devidita Dome, the [43:17] sponsor of this episode. MDA has roughly [43:20] 39,000 personnel. About 90% of them are [43:24] volunteers. More than 30,000 Israelis [43:26] who respond to emergency calls and are [43:29] paid nothing for it. I keep thinking [43:31] about what that means for a donor. These [43:33] are people who are not asking anyone for [43:35] money. They're asking to be trained, to [43:37] be equipped, to be sent. So the staff is [43:40] already taken care of. What they need is [43:42] somebody to fund that training, gear, [43:44] and ambulance. That's a good trade. [43:47] Support McInna Dome at afmda.org/callme [43:53] back. If CallMe Back is where you come [43:55] for honest conversations about Israel [43:57] and the Jewish world, please hit [43:59] subscribe and also share it with a [44:01] friend. And if you missed our last [44:03] episode, it's worth going back for. See [44:06] you next time.
