The political analysis below is going to have serious economic and market impacts. This can lead to the crash of the stock markets, real estate values and eventually crash of the US dollar. Recession around the corner? Israel's Way Out: Hezbollah and Hamas attacks have backed it into a corner. Hezbollah and Hamas attacks have backed it into a corner. Escalation against Iran and Syria might be the best hope. By Daniel Jonah Goldhagen August 8, 2006 FOR THE SECOND TIME in the long history of the Middle East conflict, an enemy of Israel has effectively said: We do not care what you do. Hezbollah â in choosing not to return the two soldiers it seized on July 12, and in its bombardment of Israel â has declared that it does not care if its war-making leads Israel to attack Lebanon's cities, ruin that country's economy and kill its people. What matters most is inflicting damage on Israel, weakening its morale and goading it to a level of destruction that will incite the world's wrath. The Palestinians said as much with their second intifada and their suicide bombings. But this is different because Hezbollah's daily rainfall of rockets in Israel portends an intolerable military assault without end. What can Israel do â what could any country do? â with such an enemy? Except for a desperate Saddam Hussein during the Persian Gulf War, other countries and armies that would have liked to destroy Israel did not target Israeli cities because they knew that Israel would intensely bomb Cairo, Amman or Damascus. Israel had deterrence. Had an enemy dared such an attack, Israel could have compelled it to stop by inflicting massive damage. With Hezbollah â and with Hamas as well â Israel's ability to deter attacks or to compel them to stop has been lost. The third strategic means of dealing with an enemy â making a genuine peace â has not been possible because Hezbollah and Hamas are expressly committed to Israel's destruction. They see any cessation of hostilities as an interlude before further attack. So Israel has adopted the fourth strategic possibility: to devastate its dangerous foe, which also would restore deterrence. Yet Israel has discovered that against combatants who look like civilians and whose rockets are hidden everywhere, it must fight longer and occupy and destroy much more of Lebanon than it may deem moral, wise or feasible. Even a future international force in southern Lebanon â the possibility of which is highly uncertain â may be incapable of thwarting Hezbollah and would still leave northern Israel in Hezbollah's rocket range. What strategies remain? No. 5 is intolerable: living with ongoing, and probably increasing, rocket attacks into northern Israel and beyond. Hezbollah's leader, Sheik Hassan Nasrallah, promises that "there are many cities in the center [of Israel] which will be targeted in the phase of 'beyond Haifa.' " The sixth option is to compel Hezbollah's suppliers and patrons â Syria and Iran â to end the terror. Neither country wishes a war with militarily superior Israel (Syria's saber rattling notwithstanding). If every Hezbollah missile into Israel produced Israeli retaliation against Syria, and possibly Iran (including its nuclear production sites), Syria and Iran would be forced to make Hezbollah stop. Obviously, this is a last-ditch option. It would escalate the conflict and increase international pressure on Israel to desist. All of Israel's strategic choices are bad or ineffective or undesirable. And yet this last option would be the most likely to reestablish the deterrence critical to Israel's long-term survival â and to peace in the region â by demonstrating Israel's enduring power to compel an end of attacks. And it might prevent still more massive devastation of Lebanon. Make no mistake: Israel is fighting for its life. It faces a historically new kind of fanatical foe, political Islam, which combines three characteristics: a political-religious ideology calling for its enemies' annihilation; indifference to, even the celebration of, its own people's death (because martyrs are rewarded with a place in heaven); and virtually unstoppable technology (missiles) and techniques (suicide bombing) of terror. The political Islamists are emboldened by their newfound power. As Nasrallah has boasted, "When were 2 million Israelis forced to become displaced, or to stay in bomb shelters for more than 18 days?" And the danger will escalate a thousandfold if Iran, the epicenter of political Islam and Hezbollah's master, achieves its own invulnerability with nuclear weapons, so that it too can launch rocket and other attacks against its many targets. Iran's former president and current power broker, Hashemi Rafsanjani, spoke candidly in 2001: "The use of even one nuclear bomb inside Israel will destroy everything," he said, although it would harm the Islamic world. "It is not irrational," he went on, "to contemplate such an eventuality." A nuclear Iran, sharing Hezbollah's and Hamas' enmity for Israel's very existence, is a foe with a million times the wealth and destructive might to found, fund and supply many more Hezbollahs against many more enemies, including the hated West. Israel's political Islamic enemies are studying and rejoicing over the new geostrategic situation. These totalitarians' ultimate targets â all "infidels," especially here and in Europe â should study it as well, be sobered and realize that Israel, in fighting this war in its self-defense, to reestablish a geostrategic balance, and for its long-term survival, is ultimately fighting for them as well.