Monthly Brief: Terror Attack, Israel-Iran & The Economy

By Yaakov Lappin

Israel mourned four of its civilians on June 20 after they were murdered in a Palestinian shooting terror attack at a gas station near the settlement of Eli in Samaria. Armed with M-16s, two Palestinian gunmen affiliated with Hamas, but not official members of it, conducted the attack.

An armed Israeli bystander killed one of the terrorists at the scene, while the other escaped and two hour later was located and killed by a team of Israeli special forces and Shin Bet agents.

The attack is the latest escalation in what has been a long-standing deterioration of the security situation in the northern West Bank, prompting growing calls for a larger security operation.

The first signs of a new Israeli approach to security in the region emerged on June 21, when an Israeli unmanned aerial vehicle struck a vehicle carrying Palestinian gunmen on the way to carry out a terrorist attack, according to the IDF and Shin Bet.

Two days earlier, the Israel Defense Forces had to call in air assistance in the form of an Apache helicopter strike to assist stranded ground forces in Jenin on June 19

The use of air support reflects the worsening nature of the fighting in Samaria, where a routine security operation to arrest two terror suspects, one from Hamas and one from Palestinian Islamic Jihad, became entangled.

IDF and Border Police forces raided Jenin camp and engaged in intense exchanges of fire that resulted in the deaths of four to five Palestinian combatants. They, in turn, detonated powerful IEDs that caused a number of Israeli Panther armored vehicles to become stranded. Eight Israeli security personnel were injured in the incident.

When an IDF helicopter sent in to evacuate the wounded personnel came under fire, IDF commanders sent in air reinforcements, to enable the evacuation to proceed.

Looking at the bigger picture, it is clear that Jenin is out of control and that the likelihood of a large-scale IDF operation there is growing with time.

The Palestinian Authority in practice has no presence there, and it has become a major base of operations for terrorists, not only locally, but also from across the West Bank, who view it as a refuge. It seems that both terrorists and arms are flowing into the city.

The linkage between political instability and Israeli economic performance

After Israeli Prime Minister Benjamin Netanyahu said on June 18 that his coalition administration would go ahead with parts of its controversial judicial reform program, the shekel lost value, and Israeli shares were trading between losses and gains.

On June 19, a day after Netanyahu’s statement, the shekel fell as low as 3.61 to the dollar and was trading at 3.60 at the close of trade.

The blue-chip TA-35 index on the Tel Aviv Stock Exchange was flat, while the benchmark TA-125 index fell 0.1%, the Times of Israel reported. The TA-5 Bank Index was down 0.4%, and the TA-Finance Index was down 0.6%.

The report cited Sabina Levy, head of research at Leader Capital Markets, as stating that volatility around trading in the exchange rate was mainly influenced by comments from Israeli government officials and reports around the plans for the judicial reform.

This is the latest unmistakable sign that Israel’s economy needs political stability and consensus politics if it is to continue to perform well, and that political instability threatens Israel’s economic future in a strategic manner.

The Israeli – Iranian arms race

On June 14th, Israeli defense company Rafael revealed that it is working on a new missile interceptor dubbed "Sky Sonic," which is specifically intended to counter the new threat of hypersonic missiles. The announcement came days after Iran announced that it is working on its first hypersonic missile, which it said is highly maneuverable and unpredictable.

Hypersonic missiles travel at high speeds like ballistic missiles do, but unlike ballistic missiles, employ high maneuverability to take unpredictable courses to their targets.

Ahead of the globally important Paris Air Show, Rafael released a statement calling its new interceptor a groundbreaking defensive response to the growing threat of hypersonic missiles.

A "major technological leap" with "exceptional maneuverability and high-speed capabilities," Sky Sonic "neutralizes hypersonic missiles, which travel at ten times the speed of sound, with unmatched precision and stealth," the company stated.

The interceptor operates above the 20-kilometer mark and below the 100-kilometer level, where hypersonic threats are active, and where current air defense systems are not.

According to the sources, the interceptor is programmed to intercept at an altitude and location that allows air defenders to avoid needing to know the precise onward trajectory of the threat, representing a breakthrough in air defenses.

A reliable source stated, "At that altitude, it doesn't matter where it [the threat] is going."

 When the system detects a hypersonic threat, the kill vehicle splits from the booster body and rapidly travels to a designated interception point.

Rafael sources further explained that the three-year development of Sky Sonic has been funded by the firm’s own research and development funds,  

According to the sources, the kill vehicle is equipped with its own sensors, but they would not elaborate on what those sensors are. The system will rely on a completely integrated "sky picture" provided by several radars, they added.

The system was presented to the US Missile Defense Agency.


Yaakov Lappin is an Israel-based military affairs correspondent and analyst. He provides insight and analysis for a number of media outlets, including Jane's Defense Weekly, a leading global military affairs magazine, and JNS.org, a news agency with wide distribution among Jewish communities in the U.S. Read full bio here.