Israel Diary: Day 2

The day started with breakfast at our hotel with the British Ambassador to Israel, Tom Phillips. It's his second tour of duty here and he gave us an overview of the situation as he saw it. I asked him about Tony Blair's role here, which I hadn't realised was purely related to economic development in Gaza and the West Bank. For some reason I had thought he had a role in the peace process.

We then spent the morning at the rather impressive University of Tel Aviv. The campus is incredibly well kept, possibly due to the fact that the students haven't returned yet.

Our first meeting of the day was with Professor Asher Susser, the former Director of the Dayan Centre for Middle Eastern Research. He taught me more about the Middle East in half an hour than I thought possible. He believes that for the first time since 1967 Israel now suffers from an existential threat. He said Egypt has declined in importance and influence, especially with regard to Gaza and the Sudan. He believes there are now only three important players in the Middle East peace process, none of which is an Arab state. Arabs are not calling the shots any longer, he maintained. The three states are Israel itself, Turkey and Iran. I questioned him about this and asked why he failed to mention Syria or Jordan. He said Syria was now just the front man for Iran and played second fiddle. Iran had replaced the Soviet Union as the main influence on the Syrian regime.

Professor Susser maintains that the future of Lebanon is up for grabs between the Sunnis and the Shias, but because the centre of gravity in middle east politics has shifted from Cairo to the Persian Gulf and Iran is now establishing a Mediterranean presence through Lebanon. There is a retreat of secular politics and that Islamists are shaping discourse and politics in the area.

He does, however, believe that Iranian expansion may well be contained in 2009 because of the dramatic fall in the price of oil. Every $ fall in the oil price means $1 billion fewer dollars in revenue for Iran. This may well provide the opportunity to open a proper dialogue with Iran. He says you cannot boycott Iran out of existence. Pressure must be ratcheted up on the Iranian regime as a precursor to negotiation. He says Israel should prepare for a US-Iranian dialogue because it is surely coming. The US should concede Iranian pre-eminence in the gulf in return for full western recognition - but that's where a line should be drawn. The US must make clear that the Iranians cannot be allowed to interfere in the Mediterranean.

He likened the Iranian nuclear situation to that of Japan, which has the capability to make a bomb, but hasn't actually done so. He said it was up to the four great powers, plus maybe Russia, to supervise and verify any Iranian nuclear programme.

Later in the morning we had an economic briefing from Professor Dan Ben-David from the university's Department of Public Policy. He is a leading Kadima supporter and had been set on a political career, but next week he is starting a new job as head of the Israeli equivalent of the Brookings Institution. He started off by giving us a set of very impressive figures about the Israeli economy. Foreign investment has gone up from $600 million in 1993 to $13,500 in 2006. He was keen to stress that Israelis are some of the most innovative people in the world, with patent applications on a level with those of America. But then the good news stopped. Living standards were not as high as other nations with equivalent economies, poverty was higher and so was inequality. All have been getting worse since the 1970s. Labour productivity is a quarter lower than in the USA, with only 71% of males in employment (UK figure is 81%). Professor Be-David clearly believes Israel has the potential to become a thriving market economy, but is not quite there yet.

Our third session of the morning was spent at the Aerodynamic Lab, where we received a talk about, well, aerodynamics. Quite honestly it might as well have been in Hebrew, as I didn't understand a word of it. I got ungraded Physics O Level, so I wasn't entirely surprised.

The last engagement of the morning was an hour long tour of the Israeli Diaspora Museum. The museum explains how Jews have come to move to various countries throughout the world.

We spent the afternoon at the Institute for Counter Terrorism. I'm going to come over all Jack Bauer now and say that I would love to tell you what we talked about, but then I would have to kill you. There were some fairly bleak messages about the rise of radical islamic terrorism and what the West, and mainstream muslims, will need to do to counter it.

Tonight we're off for dinner at a private house, and tomorrow we're spending the day in Jerusalem. Later.

UPDATE: Due to being extremely tired I wasn't particularly looking forward to going out tonight, but it really was an evening to remember. They say you can't really get to know a country until you get to know its people. Well tonight we were invited to dinner at a private house in Tel Aviv by a lovely lady called Evelyn. There were about 15 of us altogether, including a journalist from the Haaretz newspaper and a senior official from the Foreign Ministry. We talked about all sorts of things, but I was keen to learn what they all thought of Benjamin Netanyahu. He seems to me like a politician who talks tough in opposition but is then rather more liberal in power.