According to reliable sources contacted by MEIB, the annual report of Israel's military intelligence service (AMAN) included the following points:

Negotiated settlements with the Palestinians and Syria will result in a dramatic surge of terrorism by those who oppose the peace process. However, this is not likely to have a serious impact upon implementation of the agreements.

Israel's strategic environment is relatively comfortable due to divisions in the Arab world, the decline of extremist pan-Arab ideology and Islamic fundamentalism, the absence of great power backing for Arab militaries, and the perceived military strength of Israel.

Public opinion in Arab states is focused primarily on economic problems rather than the conflict with Israel. However, the economic stagnation of Arab states is generating discontent that could, in the future, be channeled by government elites against Israel--where the standard of living will continue to far outshine that in neighboring countries. Even in Egypt, the idea of peaceful coexistence with Israel "has not taken root" despite the absence of conflict for over two decades.

The greatest potential threat faced by Israel in the future will be the development of nuclear weapons by hostile states in the region. Iran's nuclear weapons project may result in "operational capability" in as little as five years. Iraq, which is no longer subject to international inspections, may reactivate its nuclear program.