srael should be integrated into an Islamic Caliphate, and Hamas and Hizbullah should be respected as legitimate political movements, according to Israeli-Arab MK Masoud Ganaim in an interview with the weekly paper Kul al-Arab, which is published in Israel. The interview was translated by the Middle East Media Research Institute (MEMRI).

Ganaim explicitly said that he is opposed to Jewish statehood, stating that his Ra’am Ta’al party is “against the Zionist movement and its racist ideas.” If Israel is absorbed into an Islamic Caliphate, he said, Jews will be allowed to remain in the region.

Ganaim (in left side of picture) is a member of the southern branch of the Islamic Movement, a branch of the Muslim Brotherhood.  

Regarding Jerusalem, which Ganaim referred to as “occupied,” the MK said that Arabs must be prepared to fight. “Jerusalem and Al-Aksa [Mosque] are both in danger,” he declared. He backed extremist Muslim leaders in saying that Israel is threatening the Al-Aksa Mosque and plans to rebuild the Temple.

When asked if the struggle for Al-Aksa should be peaceful, the MK said Muslims “must not relinquish any means.”

Ganaim expressed support for Hamas and Hizbullah, which both strive to destroy Israel. “The Iran-Syria-Hizbullah axis represents the policy of resistance and non-capitulation, so naturally I am with this axis,” he said when asked which side he would support in a battle between Iran and a handful of Arab nations.

Hizbullah is “a model for a political party that assigns a special place to religious discourse,” he continued.

The world, Israeli included, should accept Hamas, Ganaim said. Hamas was voted into power in democratic elections, and Israel should “respect the will of the Palestinian people,” he explained.

Ganaim’s interview comes on the heels of a dispute involving six other MKs from Israeli-Arab parties. MKs Ahmed Tibi, Mohammed Barakei, Taleb a-Sana, Haneen Zoabi, Jamal Zahalka and Afo Agbaria visited Libya. Following the visit, members of the coalition suggested that the Knesset strip the six of their parliamentary immunity.

Mervyn King, Governor of the Bank of England, fears that America shares many of the same fiscal problems currently haunting Europe. He also believes that European Union must become a federalized fiscal union (in other words with central power to tax and spend) if it is to survive. Just two of the nuggets from one of the most extraordinary press conferences I have been to at the Bank.

What with all the excitement yesterday over our new Government, I never had time to remark on the Inflation Report press conference. Most of our attention was on what King said about the Government’s fiscal plans (a ringing endorsement). But, as Jeremy Warner has written in today’s paper, it was as if King had suddenly been unleashed. Bear in mind King is usually one of the most guarded policymakers in both British and central banking circles. Not yesterday.

It isn’t often one has the opportunity to get such a blunt and straightforward insight into the thoughts of one of the world’s leading economic players. Most of this stuff usually stays behind closed doors, so it’s worth taking note of. And I suspect that while George Osborne will have been happy to hear his endorsement of the new Government’s policies, Barack Obama and the European leaders will have been far less pleased with his frank comments on their predicament.
The transcript and video are online at the Bank’s website, but below are the extended highlights, all emphasis mine. Well worth checking out.

America, and many other large economies including the UK, share some of the same problems as Greece with its public finances:

Every country around the world is in a similar position, even the United States; the world’s largest economy has a very large fiscal deficit. And one of the concerns in financial markets is clearly – how will this enormous stock of public debt be reduced over the next few years? And it’s very important that governments, both here and elsewhere, get to grips with this problem, have a clear approach and a very clear and credible approach to reducing the size of those deficits over, in our case, the lifetime of this parliament, in order to convince markets that they should be willing to continue to finance the very large sums of money that will be needed to be raised from financial markets over the next few years, at reasonable interest rates.

On why Europe will have to become a federalized fiscal union:

I do not want to comment on a particular measure by a particular country, but I do want to suggest that within the Euro Area it’s become very clear that there is a need for a fiscal union to make the Monetary Union work. But if that is to happen there needs to be also a mechanism to enable other countries that have lost competitiveness to regain competitiveness. That requires actions, probably structural reforms, changes in wages and prices, in the countries that need to regain competitiveness. But it also needs a solid and expansionary state of domestic demand in the stronger economies in Europe.

On the deficit:

The most important thing now is for the new government to deal with the challenge of the fiscal deficit. It is the single most pressing problem facing the United Kingdom; it will take a full parliament to deal with, and it is very important that measures are taken straight away to demonstrate the seriousness and the credibility of the commitment to dealing with that deficit.

Why it is right that the Government wants to cut spending as soon as this year:

We see the recovery beginning to take place, and we expect that the pace of that recovery will pick up. But we’ve also seen the market response in the past two weeks, where major investors around the world are asking themselves questions about the interest rate at which they are prepared to finance trillions of pounds of money that will need to be raised on financial markets in the next two to three years, to finance government requirements around the world. And that I think has been a sobering reflection of what can happen if you don’t make very clear at the outset – I think markets were not expecting any action before the election. After the election they need and they want a very clear, strong signal and evidence of the determination to make it work.

And I think that it’s quite difficult to make credible a commitment to fiscal consolidation if all the measures are somehow in the future. You need to start and get on with it….

I don’t believe that the scale of those measures, the £6bn cuts, is likely to be such as to dramatically change the outlook for growth this year. And as I said earlier in response to answers, I think it does reduce some of the downside risks by taking away some of the market risk that might have occurred if there’d been a sharp upward movement in yields.

On Greece:

I think the lesson from Greece is that, if the problem had been dealt with three months ago, it would not have become as serious as it subsequently became. And I think the important thing now is that Greece has been dealt with a major IMF and European Union package…

But those measures provide only a window of opportunity. They do not affect the total amount of debt, in themselves which countries around the world have to repay. The markets, which some of our European partners like to describe as speculators causing difficulty, are the very same markets where the public sector is looking to provide trillions of pounds of support to finance public debt around the major countries in the world over the next few years.

What matters is that those investors are prepared to buy government debt at interest rates which make it tolerable for the countries concerned. And that is why it is important for each and every country to demonstrate that they are on top of a program for their country to reduce the fiscal deficit to a sustainable path.

That has been the big message, but within the international community I think there is a very clear understanding that the package of financial support which was made available at the weekend is not an underlying solution to the problem. It provides a window of opportunity which gives governments the chance to put their house in order; and it gives the international economic community a chance to talk about what I think – and have always said for some considerable time – to be one of the major issues facing us, which is the need to rebalance demand around the world economy.

On how worried international leaders are about the economy and Europe’s fiscal problems:

As you know international conversations proceed very slowly – too slowly usually. In 2008 there was an exception.
I think the mood and manner of the G7 meetings at the IMF in October 2008 was very different, and that people did come together and recognize that, unless they worked together, we would all be facing an extraordinarily serious position. That’s pretty well documented in Hank Paulson’s memoirs of the period.

But I think what I heard on the telephone conversations that I was part of at the weekend, it was slightly reminiscent of that: a recognition that the problems are far too serious for countries not to work together. After all, dealing with a banking crisis was difficult enough, but at least there were public sector balance sheets onto which the problems could be moved.

Once you move into the sphere of concerns about sovereign debt, there is no answer; there’s no backstop. And it is very important therefore that we hit these problems on the head now, put in place credible solutions to prevent the problems becoming worse.

And I detected at the weekend, in the conversations that I spent hours listening to on the telephone, that this sense of the need to work together was there again….

It is absolutely vital, absolutely vital, for governments to get on top of this problem. We cannot afford to allow concerns about sovereign debt to spread into a wider crisis dealing with sovereign debt. Dealing with a banking crisis was bad enough. This would be worse.

Why it’s too early to start raising UK interest rates, but not too early to be worried about inflation:

If you mean a tightening of monetary policy, then at some point it certainly will come. And when it comes it will be very welcome because it will be a sign of the strength of the UK economy, and the fact that we feel we will need to tighten monetary policy because we think the prospect for inflation is that it will not be to fall below the target as a result of so much spare capacity. So I think we would look forward to that time when it will come, because it will be a reflection of strength of the economy.

We’re not at that point now; I don’t know when it will come; that’s something we will judge month by month.
I can assure you the MPC is very concerned about what’s been happening to inflation. I do think that we have seen a sequence of shocks, price level shocks, which have inevitably raised inflation. We have also seen in the past three years two episodes now in which inflation did go up quite significantly and then came down quite sharply. And I think our judgment is that next year we will see a repeat of that. If these effects are not repeated, if we don’t see further increases in indirect taxes, or oil prices, then those shocks will not be there and inflation will start to come back and reflect the extent of spare capacity.

Fond words on former Chancellor Alistair Darling:

Perhaps I could take the opportunity of thanking Alistair Darling, and saying that I think that – for someone who became Chancellor and after only a few weeks the world’s greatest financial crisis took place – he has brought, not just domestically but internationally, a sense of calm and good humor which has made it much easier to deal with the problems that arose. And indeed, I think we had some rocky times, but we ended up with a very strong working relationship and in large part that’s because of the way he handled himself in the job.

Rather less fond words on former PM Gordon Brown:

I worked very closely with him late at night, weekends, to deal with the financial crisis. And I think when we both look back on our careers in many years to come, not now, many years to come, we will reflect that we probably had few opportunities to do something as important as the recapitalization of the banking system in October 2008. It led, I think, the reaction of the rest of the world to that crisis. We worked incredibly closely on that. And I think that will seem a high point. And I very much valued the opportunity to work closely with Gordon Brown over many years as Chancellor and then Prime Minister. He had a remarkable period in office. And I wish him well in what I suspect is a career of which we may yet see more to come.

* In honor of Jerusalem Day, MKs get to dig into past Land of Israel Lobby members spend a day sifting through more than 2,000 years of history at the Temple Mount.

* N. Korea, Syria, Iran new axis of evil In Japan, FM says Pyongyang plotting to run arms to Hamas, Hizbullah.

* Medvedev: Include Hamas in talks In Turkey, Russian president says Gaza on brink of human tragedy.

* Fight for Jerusalem – fight for truth PM defends Jews’ connection to capital on eve of Jerusalem Day.

* New air refueling system gives Israel capacity for strike on Iran Israel has developed the advanced air refueling systems that could facilitate a strike on Iran.

* EU wants member countries to co-ordinate budgets The European Commission wants EU countries to co-ordinate plans for national budgets in a move to strengthen financial co-operation.

* US President Obama backs Afghanistan’s Taliban effort President Obama has backed Afghan efforts to “open the door” to Taliban militants who renounce violence and cut ties with the al-Qaeda.

* Black hole hurled out of galaxy A supermassive black hole may have been observed in the process of being hurled from its parent galaxy at high speed.

* Archaeologist: Stop Muslim Temple Mount Denial, Barbaric Digs Dr. Gabi Barkai, senior lecturer at Bar Ilan University and recipient of the Jerusalem Prize for Archaeology, says Israelis must demand that Israeli antiquities law be enforced at Israel’s most important archaeological site– the Temple Mount.

* Jerusalem Day is Day of Remembrance for Ethiopian Jews Jerusalem Unification Day is the day Ethiopian immigrants memorialize the thousands who died or were killed on the their trek through the Sudan to reach the planes that would bring them to Israel in Operation Moses, the first aliyah from Ethiopia.

Part of the ancient aqueduct that brought water to the Temple Mount has been exposed near the Sultan’s Pool across from Mt. Zion. The Israel Antiquities Authority (IAA) says it found a “spectacular arched bridge” that marked part of Jerusalem’s ancient water system while conducting archaeological rescue excavations prior to work on the city’s modern water system.

Two of the bridge’s original nine arches have now been excavated to their full height of about three meters.

In actuality, the newly-discovered bridge was built in 1320 C.E. by the sultan Nasser al-Din Muhammed Ibn Qalawun, as evidenced by its dedicatory inscription. However, it was apparently constructed to replace an earlier bridge dating to the time of the Second Temple period that was part of the original aqueduct.

Yechiel Zelinger, excavation director on behalf of the Israel Antiquities Authority, said, “The bridge, which could still be seen at the end of the 19th century and appears in old photographs, was covered over during the 20th century. We were thrilled when it suddenly reappeared in all its grandeur during the course of the archaeological excavations.”

“The route of the Low Level aqueduct from the time of the Second Temple, beginning at Solomon’s Pools near Bethlehem and ending at the Temple Mount, is well known to scholars,” Zelinger said. “Substantial parts of it have been documented along the edge of Yemin Moshe neighborhood and on the slope adjacent to the Old City’s western wall. In order to maintain the elevation of the path along which the water flowed, a bridge was erected above the ravine.”

The Israel Antiquities Authority, in cooperation with the Nature and Parks Authority, is working to expose the entire length of the arched bridge. It plans to conserve and integrate it in the framework of the overall development of the Sultan’s Pool, as part of underscoring the importance of the water supply to Jerusalem in ancient times. 
The Gihon Corporation, whose name preserves that of Jerusalem’s ancient source of water and which is conducting work on the modern water system in the area, is assisting in funding excavations that uncover Jerusalem’s ancient water systems.

It has been another busy week in the ongoing war of words waged by Iran and its allies against Israel.

Last Friday Iranian Vice President Mohammad Rida Rahimi responded to ongoing rumors of an impending attack on Syria and/or Lebanon by swearing that Iran would “cut off Israel’s feet” if it dared strike Syria. Rahimi, who was addressing a press conference in Damascus when he made his threat to Israel’s physiognomy, described Syria as “ready to confront any threat.” He promised that Iran would back Syria with “all its means and strength.”

Iranian President Mahmoud Ahmedinejad then took up the theme, at a press conference on the sidelines of the Non-Proliferation Treaty review conference in New York. Ahmedinejad said that Israel would be crushed if it attacked Lebanon or Syria, and he vowed that such a war would be the “last war launched by the Zionists.”

What lies behind the flurry of threats and vows emanating from the mouths of senior Iranian officials, and do they presage imminent conflict? The dynamic whereby Iran takes upon itself the role of “big brother” and protector to local enemies of Israel should be noted, as it is evidence of an emerging strategic picture which is transforming the Middle East. Conflict between Israel and the Iran-led regional bloc may not be right around the corner – but past history indicates it is probably eventually inevitable.

The Syrian and Lebanese media and public discussion have been gripped in recent weeks by a fear of an impending Israeli attack. This fear evidently derives from warning messages passed by Israel to Syria regarding the ongoing arming of Hizbullah across the Lebanese-Syrian border.

The Syrian and Lebanese fears are overblown. Israel has no territorial ambitions to its north. For as long as something resembling deterrence appears to pertain, it is highly unlikely that the current quiet will be broken by Israel.

Even with Syria breaking red lines with regards to illegal arms transfers – the evidence, in particular, of the supplying of M-600 missiles to the Shi’ite terror group – are unlikely to provoke Israeli retaliation at the present time. Washington’s still vivid commitment to the idea of diplomatic engagement with regional enemies, and the current American administration’s cool attitude towards Israel makes it unlikely that Israel will ignite the quiet northern border – no matter what future perils may be building up there.

The parallel threat of a Hizbullah or Syrian strike against Israel also deserves close attention. The ideological preferences of Syrian President Bashar Assad and his Lebanese Shi’ite allies incline them toward aggression against the Jewish state. But the real balance of power between the sides – and the preference of their Iranian patron for a long-term strategy – may well be sufficient to deter them for now from any imminent reckless adventures.

YET IT would be entirely wrong to be complacent. The emergence of Iran as a powerful state sponsor of forces committed to Israel’s destruction is transforming the region’s strategic balance. As it does so, Israel’s enemies in the Arab world are shifting their sights accordingly. The seeming estrangement of Israel from its US ally is further strengthening the wind in the sails of these regional elements.

An indication of the thinking in such circles was recently offered in an editorial in the Lebanese Al-Akhbar newspaper, which spoke of a “new equation vis-à-vis Israel.” The editorial was written by the paper’s chairman, Ibrahim al-Amin

 Al-Akhbar is pro-Syrian, and Amin himself is reported to have good contacts with the Hizbullah leadership. Some in Lebanon consider Amin’s writings to reflect the thinking at the top of the movement.

Amin described what he referred to as “threats of war” against Syria designed to make it abandon its alliance with Iran. However, Amin continued, ultimately it was “Iran that conveyed a message to the US and the West in general, and to Israel in particular – by means of Ahmadinejad’s visit to Damascus – to the effect that it was willing to supply Syria with all the support it needed to withstand any war against it.”

The effect of the visit, according to the Al-Akhbar chairman, was to “create a new equation vis-à-vis Israel, the essence of which is that the resistance forces will no longer agree to any war waged according to Israel’s perception.”

This means, according to Amin, that goals and notions which had to be abandoned in the mid-1970s by the Arabs, after the strongest Arab country – Egypt – left the arena of conflict, are now once more becoming feasible.

“Iran compensates for Egypt’s absence, both politically and militarily,” he says, and concludes that “the future of the Arab-Israeli conflict thus no longer depends upon one of the dangerous deviations in Arab history, namely the Camp David Accords.”

With this statement, Amin sums up the atmosphere to be found among Iran’s Arab supporters and allies. It is one of great strategic confidence. It is based on a profound lack of knowledge of Israeli society, and it resembles similar moments of hubris familiar to students of the region.

One such hallucinatory moment took place in the months following Saddam Hussein’s entry into Kuwait in 1990. Saddam threatened to burn half of Israel, and for a moment, he was lauded as the man on horseback that the Arab world had been waiting for. In the late 1950s and 1960s, the Egypt of Gamal Abdel Nasser played this role in a far more serious and consequential way.

In both these historic cases, two things should be borne in mind. Firstly, the man on horseback turned out to be a paper messiah. Secondly, this matter was settled not through debate, but on the battlefield.

It is not possible, of course, to predict the precise spark which may eventually set in motion a collision between Israel and the new alliance committed to its demise. But the trajectories of similar phenomena in the region’s past suggest that it would be foolhardy to assume that the laws of deterrence will trump the will to conflict indefinitely.

* Ya’alon: Israel capable of attacking Iran Former IDF chief says technology has improved range, aerial refuelling, accuracy, and intelligence

* WWII Allies march in Moscow to mark 65 years since Nazi defeat President Peres among leaders from over 24 countries marking Victory Day in Moscow’s Red Square.

* Demographic Revolution: Jewish, Arab Growth Equal in Jerusalem The Central Bureau of Statistics released data on Jerusalem’s population Monday in honor of Jerusalem Day which begins Wednesday night.

* Medvedev, Assad to discuss Mideast peace Russian president expected to hand over message from Israel during visit in Damascus

* J’lem Day eve: Rabbis flock to Temple Mount Dozens of rabbis from Religious Zionism movement pray at Western Wall, then visit Temple Mount under police protection.

* EU risks ‘marginalisation’ in the next 20 years A new report has listed a bleak catalogue of the problems the EU is likely to face over the next 20 years.

* PM celebrates Israel’s OECD accession Netanyahu: 31 states’ support proves isolation claims “exaggerated.”

* Construction in East Jerusalem will push on Meridor: Israel will not accept a “discriminatory” policy.

* Gordon Brown stepping down as Labour leader Gordon Brown has said he is stepping down as Labour Party leader – as his party opens formal talks with the Lib Dems about forming a government.

* Markets Join Rush in Response to European Plan After weeks of uncertainty over the European debt crisis, Wall Street got some clarity on Monday and joined the rally in equity markets.