We knew it will come to this. Barack Obama is criticized by the left for not being tough enough on Israel, so his special envoy to the Middle East George Mitchel threatens Israel with cutting aid if it fails to"to advance peace talks with the Palestinians and a two-state solution."

Apparently, taken to task he"clarified in an interview to the PBS network that the United States would use incentives or sanctions against both sides."

Last time America so threatened Israel was George H. Bush's presidency when the Jewish homeland was much more vulnerable economically. Israeli finance minister Yuval Steinitz said as much:

We don’t need to use these guarantees, we're getting along fine. . .

Only a few months ago, we reached an agreement with the US Department of the Treasury and Department of State on the loan guarantees for 2010 and 2011. There were no conditions attached. Israel has made, and continues to make, every effort, including difficult gestures, to renew the negotiations. We haven’t received any indication that the guarantees will be used to pressure us.

Yes, economic health translates into strategic health and Israel is doing very well indeed. It is a Start Up Nation, From Publishers Weekly:

Hampered by an Arab nation boycott that makes regional trade impossible and endowed with precious little by way of natural resources, Israel has beaten the odds to become a major player in the global business world, especially in the technology sector. With the highest number of startups per capita of any nation in the world and massive venture capital investment, Israel is one of the world's entrepreneurship hubs.

Senor, senior fellow at the Council on Foreign Relations, and Singer (Confronting Jihad) track Israel's economic prowess using a number of factors, including the social networks and leadership training provided by Israel's mandatory military and reserve service, a culture of critique fostered by centuries of Jewish tradition and an open immigration policy for Jews that continually restocks Israel's population with motivated people from around the world—all of which foster a business climate in which risk is embraced and good ideas are given a chance to grow.

The authors ground their analysis in case studies and interviews with some of Israel's most brilliant innovators to make this a rich and insightful read not just for business leaders and policy makers but for anyone curious about contemporary Israeli culture. (Nov.)

On the issue of Israeli Palestinian negotiations, see Barry Rubin, The"Why Can't Everyone Just Be Friends" Narrative of the Israel-Palestinian Conflict, Evenhandedness Gone Mad

For all those who argue that Israel is a strategic burden, remember those drones you like so much: Israeli Robots Remake Battlefield

The Pentagon set aside its long-held skepticism about the advantages of unmanned aircraft and, in the early 1980s, bought a prototype designed by former Israeli Air Force engineer Abraham Karem. That prototype morphed into the modern-day Predator, which is made by General Dynamics Corp.

That was just the beginning.