Search This Blog

Monday, August 07, 2006

What's Going On?

I've heard of the concept of the "fog of war" and I'm no expert and not very knowledgeable about the execution of wars, but I'm bewildered at how hard it is to get a reading that I can have any confidence about regarding the current conflict between Israel and Hezbollah (primarily) and Hamas (secondarily). According to the various information sources that I've been reading, there is a huge range of possibilities in what's going on. Israel's military is either performing incompetently or is making good progress. Hezbollah is standing firm or is hurting. The Israelis are deliberately targeting civilians or they are carefully minimizing damage to the civilian population and infrastructure. Qana was a massacre or it was a hoax. A cease fire is imminent or the fighting will continue.

I fully understand why it's so difficult to get information. Events in the middle east seem to always elicit a tremendously emotional response from just about everybody which tends to limit objective viewpoints. As a result, journalists from both sides publish intensely biased stuff. As an example, Reuters is now facing a bit of a scandal because a number of their headline photographs turned out to have been doctored in an anti-Israel fashion. Even if journalists wanted to be perfectly objective, it would still be difficult since both Israel and Hezbollah are, understandably, putting out fake news as part of disinformation and psy-ops campaigns. As a result, the amount of real, verifiable, non-contested information is extremely limited.

With the available information sources providing what is essentially random information (basically covering all possibilities), I decided to try and find an objective proxy that might reflect the overall status of the conflict. Conveniently, Tigerhawk posts a comparison of the Tel Aviv Stock Exchange 100 (TA100) versus the Dow over the last few months.

Tigerhawk's analysis of the graph is that the TA100 "sold off broadly at the start of the crisis, but the progress has been impressive since Israel began its campaign to disarm Hezbollah. If you believe in the distributive wisdom of the financial markets in assessing geopolitical risk, Israel is improving its position." He further asks, "The two indices traded essentially in tandem, but started to diverge significantly in mid-June, a month before Hezbollah made its move and almost two weeks before Hamas kidnapped Gilad Shalit. Did the market "know" that Israel was on the brink of some security crisis ... ?"

I personally don't think these markets are anywhere nearly strongly correlated enough to make such strong statements or put forth such questions. On the other hand, the fact the the TA100 isn't plunging does, I think, support rather more modest assertions. For example, I do think the market is saying that the near to mid term consequences of this war for Israel's economy will be at most marginally negative. The market is therefore saying that all factors, including world opinion (plus resulting embargoes against Israel, if any), infrastructure damage, and the security of Israel (including the results of inflaming its Arab neighbors), will likely not have all that big of an impact.

Israel looks likely to survive the next few years, anyway.


Oroborous said...

If the Israelis are deliberately targeting civilians, then the IDF is indeed incompetent, for fewer than 600 people have been reported killed in Lebanon.

Part of the confusion is that Hezbollah and Israel are being graded on completely separate scales, such as that it's possible for Hezbollah to be both standing firm and hurting.
The IDF is held in such awe that merely surviving their initial assault is a "victory" in the Arab world.

Bret said...

Yes, I agree regarding Israelis targeting civilians. But then, I'm biased in the pro-Israel direction and I was trying to write something with limited bias.

Oroborous said...

It's hard for any intelligent person to be biased in a pro-Arab direction, given that examples of dynamic and well-functioning societies are so hard to come by in the Arab world.

For example, Israel had no more advantages than Egypt and Syria have, rather fewer in fact, and yet Israel is rich, and produces world-class innovations in medical and technical fields - Egypt and Syria are poor and backwards.

Hatred of Israel generally falls into either the antisemitic category, or "crabs-in-a-bucket" syndrome.

Bret said...

Oroborous wrote: "It's hard for any intelligent person to be biased in a pro-Arab direction..."

I suppose that depends on your definition of "intelligent". Certainly, there are intelligent Arabs who are pro-Arab (in this conflict). There's lots of folks in Universities in the western world who pretty likely have relatively high IQs who are pro-Arab.

Ideology often trumps rationality and intelligence in my experience.