IS THE glass half empty or is it half full? That is the question one is left asking after reading the National Intelligence Estimate (NIE) for 2016. Depending on one’s point of view, or even bias, Israel’s situation can be viewed in different ways. Objective analysis shows there are risks out there, but also opportunities.

The NIE was drafted by the research department of Military Intelligence with input from the research departments of Mossad (the external espionage agency) and the Israel Security Agency (the domestic service – Shin Bet).

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The most important part of the new report is the assessment that the probability of war this year is low. Senior military sources tell The Jerusalem Report that this applies on all fronts from Gaza in the south to Lebanon and Syria in the north. Neither Hezbollah nor Hamas have plans or any interest to initiate a war against Israel.

Hezbollah is bleeding in the killing fields of Syria. Five years since the outbreak of the civil war there, Hezbollah has become ever more deeply embroiled in the conflict and has a permanent contingent of as many as 7,000 troops, nearly half its conscripts, fighting alongside Iran and, most recently, the Russian Air Force, to defend the regime of Bashar Assad.

The Lebanese Shi’ite organization also has 15,000 reservists who are called to duty for training or field missions for up to 40 days a year – similar to the IDF reserve system. So far, Hezbollah has lost nearly 1,500 soldiers, killed in action – many of whom belonged to its elite units – and more than 6,000 have been wounded. Hezbollah’s losses are a heavy blow to its military capabilities and have dented its morale to go to war with Israel.

FURTHERMORE, HEZBOLLAH is suffering from a serious economic crisis. Its annual budget is estimated at around $1 billion, 70 percent of which comes from Iran and the rest from taxes, levies and trade, mainly in drugs and contraband cigarettes, and electronic appliances. Due to the sanctions regime imposed on Iran (soon to be lifted), Tehran in recent years has had difficulties meeting its financial commitments to its Lebanese proxy.

In the south, Hamas has not recovered yet from the war in the summer of 2014, which inflicted heavy casualties on its military forces and capabilities and, even more importantly, caused severe damage to the civilian population.

Since the end of that conflict, two dozen rockets have been fired from Gaza into southern Israel. But they all landed in open areas and caused no casualties or damage.

None of them were launched by Hamas. All were fired by small renegade groups, either inspired by or identifying with the Islamic State (ISIS), which oppose the Hamas regime and try to provoke Israel into attacking Hamas.

In other words, deterrence is working both vis-à-vis Hezbollah, since the 2006 war in Lebanon, and Hamas, following Operation Protective Edge in 2014. Yet, senior military sources tell The Report there is a clear understanding that “deterrence is not forever” and that is an elusive concept.

Indeed, the NIE takes into account the potential for escalation deriving from a minor incident along the border with either Hamas or Hezbollah that could get out of hand and escalate into a major confrontation.

These scenarios take into consideration, for example, that a rocket fired from Gaza could kill several Israeli citizens. Israel then would retaliate forcefully against Hamas, which it holds responsible for the situation in Gaza. Hamas would not be able to stand idly by and would respond, and a vicious cycle of rockets and Israel Air Force bombings would roll into another major war.

A similar scenario could apply along the northern border if Israel took advantage of the war in Syria – as it reportedly has done on several occasions – and would bomb another convoy of weapons being delivered to Hezbollah or would kill another of its commanders near the Golan Heights, and Hezbollah would retaliate with a salvo of rockets.

Both Hamas and Hezbollah are preparing for these scenarios.

Despite its financial and military troubles, Hezbollah has continued its preparation for a war against Israel, amassing an impressive arsenal of nearly 100,000 rockets and missiles capable of reaching every strategic and military site in the country. But it’s more the quality than the quantity that is a major concern for Israel. Hezbollah, with the help of Iranian experts, is working hard to improve the accuracy of its missiles.

Israeli war planners estimate that, if war breaks out, Hezbollah will try, for the first time, to dig tunnels inside Israel, to shift the battle to Israeli territory and try to conquer settlements near the border.

Thus, Hezbollah is considered the main military threat against Israel and the prime target for intelligence efforts to gather information about its capabilities and intentions.

“The next war will be different from the wars we’ve seen in the past 20-30 years.

The conflict will be very complex” military sources tell The Report. “It may last many, many weeks. Hezbollah has turned the majority of its Shi’ite villages in southern Lebanon into massive strongholds.”

The sources, however, warn that in case of war, Israel will take a different approach and strike, with all its force, against all Hezbollah positions including inside the villages, which “will create a huge refugee problem in Lebanon.”

Though Hamas doesn’t want to be dragged into a new round with Israel and is not ready for it, it continues with efforts to improve its preparedness. Hamas is manufacturing rockets and prioritizing efforts to increase their range and accuracy (in Protective Edge, Hamas hit Tel Aviv and fired unsuccessfully in the direction of the northern port city of Haifa).

Though caught between Israeli and Egyptian blockades and close security and intelligence cooperation, Hamas has never given up its efforts to smuggle weapons, explosives and rockets via tunnels between Sinai and Gaza though it has become much more difficult. Hamas is also continuing to dig tunnels and the IDF estimates that some– probably more than 10 – are very close to the Israeli border and may penetrate inside Israel.

The NIE also admits, though in very vague words, that the changes and turmoil in the Middle East has improved Israel’s strategic posture.

Though they occasionally mention Israel in propaganda bulletins, Islamic State in Syria and Iraq, and in Sinai, as well as al- Qaida in Syria, known as Jabhat al-Nusra, have no interest or intention to turn their weapons against Israel. They have other priorities and more immediate enemies.

The Middle East is characterized by the growing schism between Shi’ites and Sunnis, between Iran and Saudi Arabia, and rifts inside the Sunni world between zealots and terrorists, such as Islamic State, which is fighting against less radical groups and regimes.

The Iran nuclear deal is also seen by the IDF as an opportunity of sorts, in blatant contrast to the perception and rhetoric of Prime Minister Benjamin Netanyahu.

“THERE ARE advantages to the nuclear deal,” the IDF sources say. “True, a better deal could have been reached, and there’s a bit of frustration because the deal doesn’t take care of the Iranian involvement and efforts to increase its hegemonial aspirations in the region. But the fact is that the amount of enriched uranium has been significantly reduced as has the number of centrifuges, and Iran’s capability to produce plutonium at its nuclear reactor in Arak has also been dismantled. These are dramatic developments with which you can’t argue.”

The intelligence estimate sees February as a critical time for Iran’s future. Elections for the Iranian parliament, the Majlis, as well as the Assembly of Experts – a small but important body that is in charge of electing or removing the supreme leader, the next spiritual leader of the country – took place. Twelve thousand candidates registered, but the election committee disqualified 40 percent of them, eventually leaving just 30 moderate candidates.

The constant rifts and battles between the conservatives and reformists that have taken place in Iran since the death of Ayatollah Khomeini, the founder of the Islamic Republic, nearly 30 years ago, are reaching a peak. The elections will determine the direction Iran will take in the coming years with serious consequences not only for its own people but also for the rest of the Middle East, Israel included.

“It’s clear,” say the IDF sources, “that the majority of the Iranian people want more freedom and openness to the West and less religiosity, but will the conservatives in the judiciary, in the religious circles and in the Revolutionary Guards allow it to happen?” In addition, the IDF estimates that Iran is set to receive tens of billions of dollars from its frozen bank accounts abroad and from the lifting of sanctions. Most of the money will be invested in improving the economy. Some will be used to cover past debts. Nevertheless, oil prices have dramatically dropped from more than $100 per barrel to under $30, which endangers Iran’s hopes for economic recovery.

Yet, Iran hasn’t given up the dream of a regional hegemony. It will use some of its bonanza to fund Hamas and attempt to gain a hold in the West Bank. It is also guiding and paying for terrorist infrastructures in the Syrian Golan Heights.

Military Intelligence and the Mossad will continue to monitor Iran to follow its expansionist aspirations and to make sure it doesn’t violate its commitments under the nuclear deal.

Regarding the Palestinians, the NIE is also not fully in sync with the government led by Netanyahu and Defense Minister Moshe Ya’alon.

The estimate talks about a high potential for escalation in the West Bank if the peace process is not resumed. The IDF hopes that the government will at least continue with its current policy of economic incentives by allowing 120,000 Palestinians to work in Israel and the Jewish settlements, and that the Palestinian Authority led by Mahmoud Abbas will continue to permit the cooperation of its security agencies with the Shin Bet and the IDF.

Yossi Melman is an Israeli security commentator and co-author of ‘Spies Against Armageddon.’ He blogs at www.israelspy.com and tweets at yossi_ melman

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