Is the Iran-Sanctions Playbook Coming for Israel? - with Mark Dubowitz

Quick note before we start, big things are coming to ArcMedia. Somewhere in the small gaps of time between putting out three episodes each week, we've been secretly working on something we think all our listeners are going to be really excited about. We're announcing everything live on October 5th. If you want to be the first to hear about it, RSVP to our virtual announcement event. You can find the sign-up link in the show notes. See you there. You are listening to an ArcMedia podcast. Israel has yet to experience what American financial warfare looks like, and I'm saying, let's conduct a stress test on a computer before someone conducts it on the Israeli economy. What would happen if you designate a hypothetical major Israeli corporation? I mean, pick a major Israeli tech company, including one that you've mentioned, and then designate a bank, and then what happens to those correspond to banking relationships and dollar clearing and insurance. What happens to the foreign venture capital firms to say, you know what, incredible technology in Israel, but there are lots of good jurisdictions that I don't want to take the risk. And then what happens to the Shekel? Run that exercise. And maybe, I hope, to God, we discover Israel is much more resilient than I'm warning. And that would be excellent news. But again, national security planning isn't about necessarily proving the worst-case scenario correct. It's about discovering what are your vulnerabilities before your allies or your adversaries discover them for you. It's 9 a.m. on Sunday, September 27th here in New York City. It's 4 p.m. on Sunday, September 27th in Israel, as Israelis celebrate the Sukkot holiday. Last week, Prime Minister Netanyahu stood at the UN General Assembly. Twenty four hours later, the UN did something that got almost no attention outside of the Israeli press. It expanded its settlement business blacklist from 158 companies to 215 companies, including companies like Tanuva, a dairy products Israeli company, headquartered in Ramatgan, listed on the Tel Aviv Stock Exchange, and which is the largest exporter and supplier of kosher dairy products around the world. Also, companies like Electra, which is an Israeli construction company, dozens of others. It's not a sanction, it's not binding. But it is, as my next guest predicts, exactly how things start. Mark Gubuets, a frequent guest on the comedy back, runs FDD, the foundation for defensive democracies, a Washington-based think tank. A Ron sanctions architecture is basically his life's work. He helped build the case for the "maximum pressure" campaign, what we call the E3 snapback, the swift cutoff, the whole 30-year machine that isolated Tehran's economy before a single shot was fired. Now, FDD has published a report, the one we are going to discuss today, arguing that almost the exact same machine, the same designations, the same escalation logic, could be assembled against Israel. Not by enemies, but by allies, or at least by "neutral parties and neutral governments" by sovereign wealth funds in the West that manage trillions of dollars by the EU, stating that the reason has been Israel's conduct in Gaza and the West Bank. And now this is the part that should make Jerusalem very nervous. This same architecture could be built by Democrats, by mainstream Democrats, something to ponder on the eve of Democrats, potentially taking majority control of one or both houses of Congress. So today's conversation, is this alarmism or is it just describing what's already happening in slow motion? What did a Ron's 30-year isolation teach us about how fast this can move once it starts? And if the man who helped design the playbook against Tehran is now warning, it's going to be aimed at Jerusalem, what if anything can actually stop it? By conversation with Mark Dubwitz, right after this short message. In the United States, if there's an emergency, you're dealing with several different systems. One organization runs the ambulances and other handles disaster relief, a third manages the blood supply. In Israel, it's one organization, McGand David Adome. MDA is Israel's national emergency services system. It's mandated by the government, but it is not a government agency, which means it runs on philanthropy. Most of Israel's ambulances were paid for by generous donors from around the world. Something else worth knowing, MDA's medics are Jewish, Muslim, Christian, and Jews, serving Israel's entire population, regardless of religion, nationality, or ethnic background. In a country that argues about almost everything, that diversity is sacred. You can support their important work at afmda.org/chomibac, or follow the link in the episode description. Mark Dubwitz, welcome back to Call Me Back. Honours to be back with you, Dan. Thank you. Mark, we have a lot to get into here. I cited this report that you and your colleagues at FTD just published. We're going to link to it in the show notes. I do encourage our listeners and viewers to read the report in its entirety, but I just want to summarize it to some degree. You open your report noting that Israel is the point of a red, green, brown convergence. What is this convergence, and what is its signal for you? So, Dan, what worries me is not that these groups suddenly agree with each other. I don't think they agree with each other on many things. And say, tell me who the groups are. The red would be kind of the radical left, the green or the Islamist movements, and the brown are elements of the far right, kind of the right right. All of them had sort of fundamentally different world views, but they are really converging around a hostility towards Israel, and increasingly around policies designed to isolate Israel economically and politically. But I think there's a much bigger story here, because if this were confined to these ideological extremes, I'd be considerably less worried. And I don't think it is. And you certainly have had on previous episodes discussion about the generational data, right? So even looking at the Pew's March survey, 60% of Americans had an unfavorable view of Israel. Much Republicans under 50, about 57% view Israel unfavorably. And that's obviously extraordinary because certainly, Dan, in our lifetime, the Republican party has been Israel's strongest political constituency. So my concern is in simply red, green, and brown, it's that the ideas that have originated at these political margins are finding a real receptive audience amongst younger Americans. And arguably Israel's greatest strategic asset for decades wasn't just its military superiority or its intelligence prowess or American weapons. It was bipartisan American support. And if that is diminishing, if that's become sort of generationally fragile, then policies that were inconceivable even five, 10 years ago could be politically imaginable in two years from now, not predicting that polling can change wars and governments change, public attitudes change. But if you're going to be engaged in serious national security planning, you should be identifying vulnerabilities before they become crises. And I think there'd be a big mistake just to look at today's administration and even today's Congress and assume that's the America Israel's going to be dealing with in 2029. And how does this shift in public opinion actually turn into policy? So I agree with you, these trends are alarming and we can talk more about that and what they actually are speaking to. So I think there's a big leap from a shift in public opinion to actually concrete policies. So talk about how that's done. Yeah, I think the shift happens slowly. And then I think potentially it happens very quickly. Now I think people wrongly imagine that sanctions one day, a president is going to wake up in 2029 and announce one morning, we're sanctioning Israel. And that's not how this normally develops. And I've spent 10 decades, as you said, studying and helping build financial pressure against Iran. And the way you do this is you really construct an architecture, right? You first establish the political predicate, then you pass legal authorities, then you start designated individuals, then perhaps organizations, then companies, and then financial institutions that service those companies become very concerned about their exposure and they begin to de-risk. And at that point, something important happens is that the market takes over. So banks don't only ask, okay, what is technically illegal? Their compliance officers are increasingly asking what could become illegal in the future? What could expose us to regulators and fines and potentially criminal prosecution? What could jeopardize our access to the US financial system? And that's where financial warfare becomes extraordinarily powerful. So I sort of put it this way, if governments are defining the target, the market is defining the blast radius. And that's really what happened with Iran. And my concern is we're starting to see pieces, not the whole architecture, but pieces develop around Israel. And that's why public opinion matters because it changes the political costs of using these instruments. So that's interesting. So these sanctions and other tools of economic isolation don't actually have to be concrete or binding. You're basically saying, Mark, the environment, the atmosphere, the surround sound of a country under growing economic isolation could just give various private sector actors pause in doing business with that particular country because they fear what may be coming or they fear what they may inadvertently be in violation of. So the inclination is to just kind of pull back. And that has its own effect. Yeah, Dan, that's right. I mean, there's a Chinese expression you have kill the chicken to scare the monkeys. So in a sense, you know, even one designation of one Israeli entity or individual, then can scare compliance officers and financial institutions and investors around the world. So you don't have to go sanction everybody in the West Bank in order to scare the monkeys. You just have to have an important symbolic sanction that then has these cascading effects leading to market de-risking and this sort of blast radius that extends much further than the actual technical and legal sanctions. Okay, so 24 hours after Prime Minister Nethaniyah who spoke at the UN and I mentioned this in the introduction, the UN expanded its settlement business blacklist to 214 companies again just to reiterate it. These are non-binding, but reports about sanctions have been trickling in as you're saying over the past few months. So this environment you're talking about is there. Can you just summarize for us what actual financial sanctions have already been triggered against Israel? Not just the threat of it, not just the atmosphere of it, but what concretely is out there? Yeah, so Dan, let me walk, listen to the history, but let's be very precise because I want to exaggerate this. This is not an Iran style sanctions regime against Israel today. What mostly we're talking about is targeted violence settlers or settlement activity or economic activity connected to settlements, but I think there's several developments that Israelis should take seriously. Now, the first step was in December 2016, Dan, you remember in the waning weeks of the Obama administration, the UN Security Council passes resolution 2334 by a vote of 14-0 because President Obama decided to abstain rather than veto it as the United States had commonly died. Right, this was ever considered a very unprecedented move that this was like Obama's last act I think is present and it was symbolically considered a big deal that he took that action. They didn't veto the resolution. Right, and what it did is it declared settlements beyond the 1967 lines, including in East Jerusalem, to have no legal validity and calls on countries to distinguish inner dealings between Israel and the territories. So it wasn't a sanctions resolution per se, but it set the target that all of the West Bank and East Jerusalem, by the way, including the old city, including the Kotel, were deemed to be illegally occupied. Then fast forward eight years later, Biden's executive order, which was 14-1-1-5, it created a U.S. emergency sanctions authority concerning, quote, destabilizing activity in the West Bank, and it began with individuals, it expanded its organizations. And note, Dan, this was the first time in U.S. history that I'm aware of that an American administration set up a separate sanctions regime targeting an American ally. So President Trump comes in, I think on these first couple days in office, he revokes that executive order, and he lifts all those destinations. So why do I care about something that's been revoked? Well, because we got a proof of concept, and Washington had designated individuals, and Israeli banks reacted almost immediately, despite demands from finance minister smart rich, not to close the bank accounts of those designated individuals and entities. So what that happened is that the financial system effectively transmitted Washington's decision into Israel, and this really tells you something I think enormously important about American financial power. And now, just to sort of continue what else has happened, we're seeing these European and allied measures. So Norway's, I think it's about a $2 trillion sovereign well fund is one of the world's largest, has already excluded Israeli companies and banks over links to settlement activity. And so there you know, political pressures moving from government policy to the decisions of major institutional investors. And on September 8th, 12 Western governments led by the UK introduced national restrictions supporting European restrictions or considering measures on trade and settlement goods. And they described these as settlement measures, not sanctions on Israel. But it wasn't the UK measure, though, just to be clear, the UK announcement, they haven't implemented it, right? They announced it, but they said it's going to take them something like six day months to actually implement it. Yeah, sure. And often with these sanctions, there's an implementation lag. But I think the important thing is that you start today or in six months with a violent settler, and then it's an organization, and then as a company doing business in a settlement, and then the bank financing that company. So does it stop there? Maybe. But my argument is that Israel has an enormous national security interest in making sure that it does. Because we're talking about action against settlements or settlements being the catalyst for these economic actions against Israel at large. I also want to be clear, but we'll talk about when the international community, quote unquote, talks about illegal settlements that are taking action against illegal settlements and settler violence. Israel's definition of illegal settlement activity and the international communities are two different things. I think this is an important point you're applying here, right? So there are many settlements that are considered legal and authorized by the Israeli government. Not just by this Israeli government, by previous Israeli governments, by left of center Israeli government settlements in places like R.E.L., and Malea Dumim, and Efrat, and the communities in Guchetzeon. Those are, I mean our listeners can look those up. Those are considered authorized settlements. What the Israeli government, both this one and previous governments, would consider unauthorized illegal settlements are those that don't have the approval of the government. So there is this distinction. There are these like outposts, these hilltop outposts and whatnot, but I think this is what you're saying here. They don't sit there saying, oh, what these Israeli government considers authorized and unauthorized, what these Israeli government considers legal and illegal means nothing to us. If a settlement is created in the West Bank or there's a community in East Jerusalem, which is recognized by the Israeli government and by the U.S. government as part of the capital of Israel, those communities and those areas are considered illegal. That's right, Dan. Yeah. And my concern, of course, is that if you're a compliance officer for a major international bank, you know, are you really going to spend time making the distinction between Mala and Dumim and Ramat Ghan as far as you're concerned to spend the money in the time and take the risk to make those fine distinctions between what's inside the green line and what's outside the green line is not something you're likely to do. And so this, the idea that these sanctions are only about the West Bank and East Jerusalem and about these settlements. I think when the market interprets the sanctions, I'm worried that it's going to interpret it much more broadly and it's really going to affect all Israelis, individuals and entities regardless of whether they're located. I mean, I actually remember December 2016, I was walking through the old city with my nephew for his bar mitzvah at the Kotel at the Wailing Wall. There's some people know it as. And as we're working through the Kotel, I turned to him and I said, you know, Shalom, I just want you to realize that as of today, we are now in illegally occupied Palestinian territory. Right. So this is Judaism's most holy site has been deemed by the United Nations as being illegally occupied. Yeah. Okay. So in your report, you lay out the Iran timeline, your experience, your first-hand experience with the economic isolation of Iran and you look at basically 1979 to 2019, four decades of cutoff from the international swift system. You look at secondary sanctions and sort of each step is building on the last. And then you write, and I'm quoting here, that what took three decades to assemble against Iran has been assembled against Israel at a smaller scale in under three years. Okay. Now walk me through the machine that was built to sanction Iran and how you expect it to be applied against Israel. Yeah. So I mean, first, I want to reject, you know, this moral equivalence, unfortunately, which is being established, which is clearly Israel is not the Islamic Republic of Iran, right? That the regime in Iran is an adversarial revolutionary government that has killed and maimed and kidnapped and tortured thousands of Americans has been warned the United States since 1979. And Israel is a democratic American ally with extraordinarily deep economic and military and intel and technological relationships with the United States, which makes the sanctions against Israel that much more egregious that is being applied to a close ally rather than an enemy. But when I, when I'm talking about Israel and Iran, I'm not comparing countries, I'm comparing mechanisms. And with Iran, that architecture was really built brick by brick over decades. And what you do is you establish illegal authorities, you designate individuals and entities, you move to critical sectors, you internationalize the pressure, and then comes this extraordinarily powerful American weapon, which is secondary sanctions. And that really puts European or Asian banks effectively to a choice. You can do business with Iran or you can maintain access to the world's most important financial system and to the US dollar. And of course, that's not much of a choice. Banks don't want to spend millions of dollars determining which your radiant transaction is technically permissible. So they say, why take the risk? And that's really where Iran becomes in a sense financially toxic beyond the literal boundaries of the sanctions. Now, I just want to have this identity. My concern is not that Israel is at that point. It isn't remotely at that point. My concern is that sort of some of these bricks are now lying on the ground. And you've got American and international brick layers who are starting to construct this offensive sanctions wall. And we have sanctions authorities as precedent. We have public databases, mapping corporate relationships. We have these European and Canadian measures. We have institutional investors making exclusion decisions. And we've demonstrated already that Israeli banks are going to react rapidly to American designations. So none of these individually constitutes full-blown financial warfare against Israel. But when you've spent your career watching sanctions, architectures develop, you pay attention when those pieces begin accumulating. And that's why I'm concerned. Do you actually believe the US would go for this? I do. I mean, the Biden administration did. The Biden administration, as I said, issued this executive order established the sanctions regime against Israel for the first time against an American ally. And I'm worried that in 2029, an American president, most likely a Democratic president would be hard pressed to see a Republican president doing this. But you never know, would bring back that Biden administration executive order and then would essentially set up a sanctions regime in the US treasure department in the office of foreign assets control, which is the body responsible for the implementation of sanctions would begin to work against Israel in the way that I've described depending on who controls Congress. You might see statutory sanctions being passed and supported by an American president and then, of course, they would internationalize it and the internationalization of the sanctions is already taking place with these countries moving forward on their own sanctions regimes with you and cover. So it's absolutely possible. I'm not saying it's entirely inevitable, but it's absolutely possible that in two short years, we could see this starting to get implemented. And there's already legislation, at least not really advancing because advancing is too strong word, but there are members of Congress that are already in the Senate. I think Senator Van Hall and others are been introducing legislation that start to try to move the ball here. Now again, it's not really advancing, but if the Democrats take control of the House or the House in the Senate, you could start to see real move me. I guess maybe talk a little bit of what Congress can do, even if there's a Republican president, even in the last two years of a Trump administration. Last week, I saw something that really concerned me and Senator Chris Coons, the Senator from Delaware, who's been a long-standing supporter of Israel, one of the strongest supporters of Israel on the Democratic side of the aisle, introduced legislation to sanction Israel for settlement activity and what's called E1. And E1 is a territory that's basically between East Jerusalem and the largest really settlement of Malaya Domingue. And there's been a lot of sensitivity around settlement building in E1 because the allegation from those who support a Palestinian state is that Palestinian state wouldn't be contiguous if there are large Israeli settlements in that E1 territory. So Chris Coons introducing legislation, that's not Van Hall and the Sanders, that's a pro-Israel's stalwart. The arms embargo resolution that was introduced, I think it got over 40 Democratic senators supporting a full arms embargo on Israel. So you're starting to see, even though obviously President Trump would veto it, you're starting to see them move this lay the groundwork, establish the predicate so that when they take Congress and they have a Democratic president in the lighthouse in two years time, those bills then become law. And now you have statutory sanctions to strengthen the executive branch designations that a Democratic president would then impose. Many of these Israeli banks are the institutions that would have to enforce these sanctions inside Israel. What does it mean for Israeli banks? So we saw Israeli banks, as I said, when the designations were imposed by the Biden administration, they immediately began to close the accounts of designated individuals and organizations because when Israeli bank, like any international bank, their absolute financial lifeline is access to the global financial system. But most importantly, access to their correspondent banking relationships in New York that allowed them to clear US dollar transactions. And so this was always the most powerful instrument that we could use against Iran by warning international banks that if they continue to do business with Islamic Republic of Iran, they would lose access to the US financial system into the US dollar. And the mere threat of that, even if you didn't impose second resinctions on those banks, was sufficient to really deter the vast majority of these banks from doing business with Iran. And you could see something similar with the Israeli financial system. Now that the designations may be different kinds of companies in the West Bank that have a settlement nexus, so construction, infrastructure, real estate, telecom, but particularly the financial services companies. And I think that's where people misunderstand the power of financial sanctions, that the company on the list isn't necessarily the most important company. The question is, who's banking it, who's financing it, who's ensuring it, who's processing the payments, who's providing cloud services, who are its investors. Again, what are the correspond in banking relationships? And once you start mapping those relationships, you can start to see how a designation can have really powerful second and third order effects. And that's precisely why in the report, I'm telling Israelis, map this now. You got to know where your vulnerabilities are in foreign venture capital, and dollar clearing, and insurance, and shipping, and cloud infrastructure, and export licenses, and capital markets. You got to do this now before there's a crisis. Okay, so when I hear you lay this out, Mark, not just about Iran, but other countries that have been subjected to the kind of isolation architecture that you're worried about, including obviously South Africa, part time South Africa, not that I'm comparing South Africa as a part time government to Israel's, but you have familiarity with what was done to South Africa. So that's like, you know, obviously hanging in the background there. And when I hear these comparisons, whether it's to South Africa or to Iran, I believe that Israel has two layers of inoculation that those governments don't have or those regimes did not have. One is potentially different political leadership in Israel, but I'm not sure it will make a huge difference, but I want to get into that. The second is Israel's own economic integration into the global economy, which is not so easy to flatten out or to push out. I want to hit both of those. So do you think that any difference, any change in Israel's leadership, which presumably could happen, obviously after the elections could change the storm that's brewing, or limit the strength of the storm that you fears brewing? Yeah, I think there's two different questions here, and let's not confuse them. I think one is structural. Looking at those generational numbers in America, I mean, negative views of Israel aren't confined to attitudes towards any single one Israeli Prime Minister. The younger American, significantly more negative towards Israel itself that deterioration extends into younger Republicans. Now, changing a Prime Minister doesn't magically reverse that, but certainly you've seen the collapse and support for Israel over the past, let's say decade. And for most of that decade, there's been one Israeli Prime Minister who has become an international brand is very well recognized, and for many is toxic. So I think that that certainly plays into it. But of course, the second question is not necessary personality. It's also Israeli policy and Israeli decisions matter. And if Israeli leaders tolerate unlawful, settler violence, if they expand policies that alienate allies, if they make it harder for Israel's good friends to defend it, that's going to have consequences. But if there's a coalition government that's going to take this violence seriously in the West Bank, if they're going to demonstrate credible Israeli accountability, if they're going to try to reduce sources of friction, then they're going to start to remove predicates that foreign governments use to justify targeted measures. So, you know, I'm going to go out on a limb here, Dan. I'm not going to tell Israelis how to vote, but I would tell every Israeli government left right or center that you can either strengthen or weaken the bipartisan coalition that protects you internationally. If the current coalition returns to power, I think it's going to supercharge this economic and financial warfare campaign. Now, if it doesn't, and there's a new coalition, I think the new coalition is going to get a temporary reprieve. And how long that reprieve lasts, I can't say, the underlying forces are not going to disappear. The haters are going to keep hating those determined to isolate Israel economically and financially will continue to organize and mobilize. But a change in leadership could, I'll emphasize could alter that political coalition array against Israel. Because, Dan, I think there are Democrats who are strongly pro-Israel, but they're deeply opposed to the current coalition as policies. And maybe a change of government could give some of them reason to reassess, recalibrate, and potentially they could become part of the bricks in the firewall against this full-blown financial and economic warfare campaign against Israel. And we talked about the warning signs from Senator Coons to Hakeem Jeffries, Stephen Roman Annual, who was in Tel Aviv a few weeks ago, gave a public speech, and he committed to further sanctions measures against Israel. So, I think the leadership question matters. I don't think Israel is going to get a very long honeymoon if there's a change in government, but I do think you can change the political environment. You can split off people who might otherwise join it. You might rebuild parts of the bipartisan firewall. You can buy Israel some time, but a return of the current coalition, I have no doubt, just from a sanctions point of view, is going to erode that firewall, and it's certainly going to accelerate the economic and financial pressure that's already building. So, I want to read you something, Mark, from the UN Human Rights Office. And I'm quoting here, UN Human Rights experts have expressed alarm at the rising rate of violence directed by Israeli settlers towards Palestinians in the occupied Palestinian territory. Settler violence has always been an extremely disturbing feature of the Israeli occupation, said the experts. We are witnessing the highest record levels of violence in recent years, and more severe incidents, close quote. That is the United Nations Human Rights Office. Now, when you hear that, you assume they are referring to what's happening under the current government. But what I just read to you is dated November 10, 2021. Now, Tali Bennett is the Prime Minister, and the Arab Muslim Party is in the governing coalition, and that was the drumbeat of the UN Human Rights crowd. Now, Tali Bennett, potentially an Arab Party, potentially not, these are the characters, the leaders that could populate a new Israeli government after the end of October. And you could already see this in 2021, when they were in charge, the excoration of Israel, the charges against Israel, the exact same charges that we're seeing the drumbeat of now were already taking place. Only then it was before the charges of genocide. side had like made it into the lexicon. So, you know, obviously things are turbocharged now. But I just, I think it's important to underline. And again, now that you nor I are suggesting to Israelis how to vote, nor should we. But I do wonder, and I talk to a lot of friends inside Israel, friends who are supportive of Israel, who don't live in Israel, they have this notion that if there is a change in government, then suddenly things are going to change dramatically. If that is the case, I hope they are right. I'm highly skeptical. What I'm concerned about is the United States, and I'm concerned about the Democratic Party and the Republican Party, and I'm concerned about where otherwise sensible, centrist Democrats are going. Again, when I see Chris Coons introducing legislation, when I see 44, 45, I think it was Democratic senators calling full arms embargo, and it wasn't just the Van Hollins and Warrens and Sanders of the world, but it was senators dang that you and I know and have worked with and have followed for many years, who've been strongly pro-Israel. That's what I worry about. I don't worry about the UN. I worry about the United States. I worry about the erosion of support for Israel, and I'm not suggesting at all that new coalition government is all aside, I'm going to supercharge bipartisan support for Israel. In the United States, I am predicting that the current coalition coming into power. I mean, if the current coalition comes back and it returns to power. Returns to power, yeah. Then I think it's a political gift to the haters, because every time Ahmadinejad would open his mouth, or Columbia University would invite him for a speech, and he would come and talk about a Holocaust never happening, or exterminating Israel, or there are no gays in Iran, and would make headlines. It would create a kind of political environment that made it very easy for us to get 98 or 100 U.S. senators on a resolution or on a bill to sanction Iran and sanction Iran in systemic, serious ways. When you've got that kind of political environment with leaders saying things that are beyond the pale, if you're building a sanctions ring that's very helpful. I think people like Ben Vier, Smart Rich, and others in this coalition, provide a lot of fuel to those who are trying to build a financial and economic warfare campaign against Israel. If you remove them, it becomes more difficult for them to generate the kind of political support, obviously not on the margins or on the extremes, but the sort of left of Senate Democrats who otherwise are going to be critical to this question of whether a new administration really goes after Israel and the way that I'm worried about. We'll be right back with Mark Dubowicz after this message. I want to tell you about the organization sponsoring this episode, McGand David Adome, Israel's national emergency services system, which runs Israel's entire national blood supply. Years ago, they realized that a national service needs a central infrastructure, and Israel's blood supply must be kept safe no matter what, so they built an underground facility. The Marcus National Blood Services Center in Romla was designed to keep working through misochemical and biological attacks and through natural disasters. It was completed before October 7th, at a time when three stories underground struck a lot of people as more than anyone would ever need. Nobody knew what was coming. MDA built it anyway. During the War with Iran, MDA moved its entire command and dispatch operation underground. Every ambulance in the country was being directed from inside a facility somebody decided to build years earlier. That decision was made possible by donors. Help fund emergency response at afmda.org/callmeback and we're back with Mark Dubowicz. Okay, I want to talk about what I would argue that a layer of protection that Israel has, which is the strength of its economy, which against all odds, predictions, forecasts, and now sanctions, or threat of sanctions, has held strong, including after three years of war, multi-front war. I mean, the Tel Aviv stock exchange has been on the terror. More and more Israeli companies are being funded not by only the usual suspects, but major U.S. venture capital firms that actually weren't doing business in Israel before October 7th, and now have made the decision to make very big bets on Israel. I'm surprised by some of the Silicon Valley firms that are now showing up in Israel, you know, record-setting exits. You take the one that got a lot of attention was Wiz, this cloud security company that sold for something like $32 billion to Google in the middle of the post-October 7th War, largest private acquisition by Google in its history, not just largest Israeli, but largest acquisition anywhere. A story after story, after story, of this happening. So, doesn't that momentum and that reality and the degree to which Israel, which has hundreds and hundreds of multinationals that have set up operations in Israel and are dependent on Israel for their innovation and for their R&D? Doesn't that contradict your report? Yeah, Dan, it's a very important counterargument. And if my argument where that Israel is already being economically isolated, then yes, it would contradict it, but that's not my argument. My argument is Israel's demonstrated really remarkable economic resilience under extraordinary circumstances throughout its history, but what it's never experienced is comprehensive financial warfare from the United States and its major allies. And so, yes, what I recommended in the piece is that we need to build a firewall against what could be coming and the deeper the level of technological, military, intelligence, and economic integration between the United States and Israel. The more the relationship, the bilateral relationship will be important to both countries and more the costs would also be imposed on not only Israel, but on the United States if there were a hostile administration and Congress targeting Israel. But Israel has yet to experience what American financial warfare looks like. And I'm saying, let's conduct a stress test on a computer before someone conducts it on the Israeli economy. I mean, pick a major Israeli tech company, including one that you've mentioned, and then designate a bank. And then what happens to those correspondent banking relationships and dollar clearing and insurance? What happens to the foreign venture capital firms to say, you know what, incredible technology in Israel, but lots of good jurisdictions that I don't want to take the risk. And then what happens to the shekel run that exercise? And maybe I hope to God we discover Israel is much more resilient than I'm warning. But again, national security planning isn't about necessarily proving the worst case scenario. Correct. So if you wanted our people listen to this to focus on a trigger date, like where you enter the danger zone. What is that? Is it the 2026 midterms? Is it the 2028 presidential election? Like where are you focused? Yeah, so I don't think there's a trigger date. I think there's a trigger event. And I think that's what Israeli should watch for. So obviously, these really elections matter as I suggested, the midterms matter, presidential elections matter, congressional votes matter. But I'm more interested in the moment when targeted political measures become kind of systemic financial behavior. So if the future American administration restores sanctions authorities, that's an indicator. If those authorities move from individuals and organizations to major Israeli companies, then that's a bigger indicator. If a major international bank begins reducing its exposure, again, not because transactions are prohibited, but because Israel has become a compliance problem, then that's obviously a very serious indicator because that's when the market is beginning to kind of front run government policy. And so that's the transition I'm warning about. So I wouldn't necessarily circle October 27th or November 2026 or November 2028 on your calendar. What I'd watch is kind of this escalation ladder from individual organization to company, to bank, to sector, and then ask whether financial institutions are beginning to treat those categories not as a West Bank risk, but as a generalized Israel risk. Israel is a powerful country, and the United States and Israel share many common interests. And I think a number of Israeli politicians and American politicians have been over the years making this argument that what matters to countries is only interests and really not values. And I think that's incomplete. I think shared values matter a lot. I think that the basis of the bipartisan support for Israel over all these decades has been shared interests and shared values. And I think the shared values are now under attack. And because of that, you've seen that effect in public opinion. Public opinion then provides the political context for policy action. And that's what it makes and much easier for a hostile administration or Congress to go after Israel with growing public support that provides a tailwind rather than a headwind. You built a lot of the architecture we're talking about here, Mark. You helped build your strategies for you envisioned in building against Iran. How do you feel about these exact tools that you designed now being aimed at an ally of the United States? Look, it's certainly an irony. And I think it's of deep concern that for the first time, the Biden administration used these tools against an American ally. And then let me be clear, could I'm getting a little technical here? We've always gone after bad actors around the world, including bad actors that are located in American allies, right? We've used counterterrorism authorities or counter-proliferation authorities. We've gone after money laundering. We've gone after human rights abusers. And those people are in the UK. They're in Europe. They're in Asia. They're in many of our allies, treaty allies, NATO allies, major non-NATO allies, but this is the first time they were used against an ally. It was a separate sanctions regime. I never thought I would ever see the day where the United States would set up a separate sanctions regime at the U.S. Treasury Department to go after an ally. And I spent much of my career as you alluded to arguing that the United States had this extraordinary non-military weapon against Iran, the centrality of the U.S. dollar and America's financial system. And it worked precisely because America didn't need every government in the world to agree with us. If you're major international bank, as I said, access to New York matters, access to dollars matters. So you could use American financial power to change behavior a thousand miles away. And that power doesn't disappear when the original target changes from an adversary to an ally. So this same financial system that the U.S. has that gives us enormous leverage against our adversaries like Iran, Russia, China, and certainly non-state terrorist organizations is now going to give theoretically a future American administration enormous leverage against our ally Israel. And I think that's the less than I want Israelis to understand. So this is not an argument for Israelis to decouple from America. And it's exactly the opposite. It's what you said earlier. I mean, you've got to make the relationship deeper, integrate our defense industries, integrate technology, intelligence, finance, research, supply chains. You've got to make Israel so valuable that American strategic interests that weaponizing that financial relationship against Israel is going to impose costs on the United States itself. The answer isn't an Israel they can live without America. It's again, it's an America's relationship so deeply integrated, so mutually beneficial that both countries have an enormous stake in it. I'm optimistic, Dan, that we can mitigate the damage, we can build the firewall, we can protect Israel against these hostile actions, but it's going to require us to begin that work today with sort of two years left of the Trump administration rather than waking up on January 20th, 2029 and discovering that we have the beginnings of a full-blown financial warfare campaign against the Jewish state. Okay, Mark, thank you for this. We will leave it there. The picture painting is alarming, so I'm glad we had this discussion. It's an important conversation. I hope more and more folks are reading your report and having versions of this conversation. So thanks for doing this. Thanks for having me, Dan. Appreciate it. One thing about McGin DeVita Dome, the sponsor of this episode. MDA has roughly 39,000 personnel, about 90% of them are volunteers, more than 30,000 Israelis who respond to emergency calls and are paid nothing for it. I keep thinking about what that means for a donor. These are people who are not asking anyone for money. They're asking to be trained, to be equipped, to be sent. So the staff is already taking care of what they need is somebody to fund that training, gear, and ambulance. That's a good trade. Support McGin DeVita Dome at afmda.org/callmeback.