A Disproportionate Response?

By Mark Alexander · Friday, July 21, 2006

In economics, "transaction costs" are defined as the non-monetary expense associated with a trade in goods or services. For example, when the corner grocer sells an apple, he has to consider not only his direct cost per unit for apples, but also the associated costs he incurred in transporting his apples to market, stocking his apples, maintaining a store to conduct the transaction, and so on. Then there's the additional cost of unmarketable product -- bad apples. If our friendly neighborhood grocer is to stay in the black, all of these factors -- these transaction costs -- are factored into the price paid for the apple.

The concept of transaction costs (and of bad apples, for that matter) is not limited to economics. There are plenty of both in politics too.

Nowhere is this reality seen more clearly than in the Middle East. Here, for nearly sixty years, the democratic state of Israel has been pressed to barter with Sunni Arabs, Palestinians and most recently Shi'ite Persians -- their would-be "trading partners" -- for a solution to the "Middle East Conflict." Among the other morally enigmatic names we're told to use for this trade, we might add "Land for Peace," "the Roadmap to Peace" and, of course, "the Dayton Accords."

Regardless of the blame-free nom de paix, the economic pattern behind Middle East violence is markedly similar: Israel is attacked or threatened with attack by those intent on annexing Israeli territory. Israel raises the transaction costs by retaliating in proportion to the threat (what's currently known in international parlance as a "disproportionate response") and, backed with a nuclear arsenal it's prepared to use, unceremoniously cuts the camel out from under the would-be Pan-Arabist, Ba'athist or Jihadist aggressor. Backed into a corner, the aggressor appeals to the United Nations, the Carter Center, Bill Clinton, France or the Presbyterian Church USA to "urge calm and restraint" on "all sides." That's the pattern every time. Wash, rinse, repeat.

When the international community leverages sufficient pressure on Israel, negotiations commence and the aggressor may get some of what he wants: Israeli withdrawal from the Sinai, the Golan Heights, or lawless southern Lebanon, or self-rule in the West Bank and Gaza. From these new strongholds, the same aggressors -- in the latest case Hizballah and Hamas, supported by the rogue regimes of Iran and Syria -- then mount new campaigns of aggression against Israel, hoping to get a little more out of their "partners in peace" each time.

At other times, thanks in no small part to U.S. support for Israel, the international community can't leverage sufficient pressure to curtail Israeli retaliation. Under these circumstances, particularly the present situation, transaction costs continue to rise for Hizballah, Hamas and their state sponsors. If the costs of the transaction exceed real or imagined gains, state sponsors will retract their resources, and terrorist aggressors will be forced to employ other methods for effecting the transaction.

This is why Israel's response to this crisis is anything but "disproportionate." When international pressure limits Israel's response to aggression, the terrorists win. They're encouraged to elevate the level of the trade, targeting civilians and generally operating at will in the belief that a truly proportional response -- disabling the threat -- will not ensue. However, when the costs of attacking Israel are raised beyond what the terrorists can tolerate, then we're really giving peace a chance.

Take the case of Egyptian President Anwar Sadat. Egypt fought Israel at its founding in 1948, again in the 1967 Six Day War, and finally in the 1973 invasion of the Sinai Peninsula, which had been occupied by Israel since 1967. In each instance, the Israeli military response was increasingly overwhelming. A mere four years after the last war, November 1977, Sadat visited Israel, addressed the Knesset, and formally recognized Israel with a peace treaty in 1978. In exchange, resource-poor Israel returned the oil-rich Sinai to Egypt. Though Sadat would pay for this "betrayal" with his life, Egypt has not been invaded or lost a war since. Israel's upping the ante on aggressors pays off.

From the standpoint of U.S. security interests, the IDF's raising the transaction costs accomplishes several things. For starters, it's a bit more than a slap on the wrist to Syria and Iran. Both countries continue to harbor and support terrorists, using these groups to conduct proxy wars against the U.S. in Iraq and elsewhere.

In fact, the current conflict might well be considered Iran's much-anticipated response to the West's nuclear olive branch, and Israel's strategy of raising the costs provides a template for action. Such a strategy is one form of the doctrine of preemptive warfare, and that strategy will keep Israel safe and free as it engages one front in the Long War between Jihadistan and the West. It's wise to keep preemption in mind, because when Tehran decides to wed its newfound nuclear prowess to its support of terrorist proxies, lacking an SDI, it's the only alternative.