Will Israel and the U.S. Break Up over Iran?

Israel begins 2014 facing a truly Dickensian moment -- enjoying the best of times while staring at the worst of times.

Since Jewish DNA tends to accentuate the negative, let's first focus on the positive: the amazing resilience Israel has shown in the face of global economic adversity and the remarkable calm with which Israel has faced the regional chaos swirling around it.

First, the economy: If your early memories of Israel, like mine, included exasperating trips to Soviet-style banks to buy just enough shekels to get through the night, fearing the investment would lose half its value by sunrise, it is mind-boggling to think that Israel today has one of the strongest currencies in the world. That is a reflection of Israel's economic miracle. As former ambassador to the U.S. Michael Oren was fond of recalling, this miracle extends to such feats of technological and entrepreneurial chutzpah as exporting wine to France and caviar to Russia. Last summer, Israel achieved the highest cultural status in Western civilization when an Israeli brand of hummus was named the official dip of the National Football League.

Second, stability. Israel didn't completely escape the street protests that have engulfed the Middle East and much of the rest of the world over the past two years. Tens of thousands have camped out in Israeli cities, too. But there is a real difference: Protests that were about fundamental issues of life, death and freedom in Cairo, Aleppo, Tunis and Kiev were, in Israel, about real estate prices and the high cost of cottage cheese.

Indeed, just as Israel now has a physical barrier helping prevent terrorist attacks, it seems to have a sort of political barrier against external uncertainty. Although chaos has become the new normal in the two largest states on Israel's border, Egypt and Syria, it hasn't affected the stability in Israel's "near abroad" -- the inner circle of Israel, the West Bank and Jordan. Even a hardened skeptic should note that the prospects for progress in Israeli-Palestinian negotiations are higher today than at any time in a decade, though the obstacles to a real breakthrough remain entrenched. There are many scenarios in which this relatively rosy picture could turn dark, of course, but it hasn't yet. This calm at the heart of the Middle East storm is striking.

The good news, then, is really good. The bad news, however, is really, really bad -- at least, it could be. Ultimately, it all comes down to Iran and America.

Advocates of the "first-step" nuclear agreement reached between Iran and the U.S.-led coalition of nations say it has stopped the clock on Iran's nuclear progress to give diplomacy a chance to roll back the program altogether, thereby denying Iran the ability to become a state on the threshold of achieving a nuclear weapon. The agreement's detractors say that the Obama administration has squandered maximum leverage for minimal result, leaving the international coalition with less leverage to compel a comprehensive agreement that truly shuts the door on Iran's bomb-making potential. Though administration spokespeople have -- disgracefully, in my view -- attacked the bona fides of critics, reasonable people can disagree on this. I hope the deal's advocates are right; I have my doubts. What is incontestable, however, is that Iran's march to regional influence continues apace -- in Syria, where it is winning a stunning victory in partnership with Hezbollah and Bashar "the Butcher" al-Assad; in Iraq, where its influence is growing in the wake of America's departure; and even in the Gulf, where some local leaders see the writing on the wall and may be hedging their bets. Israel, however, can't hedge its bets -- its relationship with America is too important.

To offer the obligatory reminder: Washington and Jerusalem have always had their differences, some truly profound. From 1948 to 1967, America opposed Israel's expansion beyond the borders envisioned in the UN partition resolution. And America has never recognized Jerusalem as Israel's capital, despite Israel's repeated requests. At times, the two nations even disagree on the reason for the lack of progress toward peace -- is it Israel's occupation of Palestinian territories or the Arabs' refusal to recognize the legitimacy of the Jewish state? Despite all this, America and Israel have found a way to build a partnership that is the envy of countries around the world.

But given the depths of U.S.-Israeli division over Iran, this partnership may face its most severe test ever in 2014. It has been decades (1982) since an Israeli prime minister so directly opposed a diplomatic initiative of the American president. It has been even longer (1956) since an American president stated publicly and emphatically that he, not Israel's prime minister, knew what was in Israel's best interests.

Looking forward, even President Obama gave no more than 50/50 odds that U.S. diplomats will reach a comprehensive agreement with Iran. The alternative would likely be to extend the temporary deal, triggering a deeper crisis with Israel. That could heighten the potential for a unilateral Israeli military attack on Iran's nuclear sites, with U.S.-Israel ties suffering massive collateral damage. Since Israel needs American support when the dust clears, that might not qualify as the worst of times, but it comes close.

So let's hope 2014 sees U.S. diplomats pulling a nuclear rabbit out of the hat with a final Iran deal that meets Israel's concerns, consigning this moment of crisis to a chapter in some future history book. Otherwise, Israelis will have a lot more on their minds than the price of cottage cheese.

Robert Satloff is executive director of The Washington Institute.