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Prof. Sam Lehman-Wilzig: Not Just Hezbollah: The Beeper Syndrome is Everywhere
As the title of this article suggests, the campaign of exploding Beepers will have a far greater impact on the world’s economy and even the global international order. How so?
On the face of it, this appears to be a very “boring” subject: the supply-chain system. Your iPhone, Corolla, or any other relatively sophisticated item that you might buy is a product not of “American” Apple or “Japanese” Toyota, but rather of a vast, interconnected system of materials that were researched, mined, manufactured, assembled, and shipped from many different countries. Indeed, one would be hard-pressed today to find any sophisticated product anywhere that was completely built in any one country.
Clearly, the economic advantage of spreading the process among many suppliers is huge: if companies can outsource different parts and stages of production, each to the cheapest or best producer, then we all benefit from low prices and superior quality. Competition on a global scale is a win-win for everyone concerned. Except that…
Once a company or country loses total control of the production process, there are negative elements that can enter the picture. Before the Hezbollah Beeper mega-event, the biggest worry was cyber-spying i.e., virtual mischief. The cellphone might be researched and designed by Apple – “made in America” – but if some of the electronics are actually manufactured in China, there’s always the possibility that it contains a “backdoor” recording or transmitting the ostensibly “private” messages sent from the phone. Indeed, the Biden Administration recently proposed banning Chinese-developed software from internet-connected cars, precisely for national security reasons. But why just cars? Even your bedroom alarm clock could be a spy machine, or worse (Pornhub uploads…). Even “apps” are suspect: for example, TikTok is under U.S. Government attack.
The Beeper episode took this one step further. If until now the threat was “virtual” i.e., the use of malicious software, the problem now entered the “real” world as well: stuff actually blowing up and causing physical harm! And according to news reports, this was enabled by not real (straw) companies masquerading as bona fide suppliers of Beeper parts. In other words, even if Apple (or any company) did due diligence on a supplier and found it to be on the up and up, there would still exist the possibility that the supplier’s own suppliers (remember, this is a supply-CHAIN system) were bogus or intent on some sort of malice.
To be sure, the overall problem did not come to light with the Beepers. The issue has been festering for a while. The U.S. has invested tens of billions of dollars in American chipmaking companies on the condition that the entire manufacturing process be brought closer to home (Mexico or Canada seem to be close enough). This, not only for greater supervision but also to prevent a future situation in which China invaded Taiwan – the world’s most advanced chipmaker nation – leading to the collapse of American high-tech companies who wouldn’t be able to continue producing economically-critical products.
Unfortunately, there’s a potentially serious downside to such supply-chain reorganization. One of the main reasons that the world has not been witness to war breaking out between the major powers (America, China, Russia, Japan et al) is that their economies are too intertwined. In other words, such a war would be economically suicidal for all sides concerned: China buys many American products; Russia supplies China with much-needed gas; without exports, Japan’s economy would collapse, etc. Thus, a serious retrenchment of what is called economic globalization would significantly increase the chances of eventual catastrophic war.
Where does this leave Israel? Whereas the Beeper escapade certainly reinforced its reputation as a high-tech leader (assuming that Israel indeed was behind the ploy), potential customers might start asking themselves whether buying from Israel might involve them getting “more” than they pay for.
Moreover, this past year’s ongoing war with Hamas and Hezbollah has shown Israel to be particularly vulnerable regarding armaments; without massive American arms shipments over the past year the war would have ground to a halt – or at least would have been far less effective. Israel cannot rely on total assuredness on continued American arms largesse in the future – especially with the Republican Party (Trump in the fore) becoming more isolationist, looking to cut down on all foreign aid.
There is little doubt that the IDF faces a tough dilemma: whether to continue fully supporting its world-class high-tech military-industrial complex or to divert a large part of its budget to more mundane armaments: tanks, bullets, shells, infantry paraphernalia and so on, because of the possibility that the world’s general supply-chain retrenchment would entail Israel losing some suppliers, if only because those suppliers would need to leave such arms at home (e.g., NATO in case of a Russian attack). A first answer appeared last week: Israel signed a 1.5 billion shekel deal with its local contractor Elbit to build a new plant for the manufacture and provision of large bombs (like the ones used to assassinate Nasrallah) for the country’s Air Force.
In short, the Beeper attack was a wake-up call to the world economy: putting eggs in many baskets might not be such a good idea after all. But placing all one’s eggs in a single basket isn’t a winning idea either. Finding the right supply-chain balance will be one of the world’s (and Israel’s) main challenges in the coming years, and probably beyond as well. Exploding Beepers were a wake-up call for the entire world.
