Both good news and bad news emerged from the briefing given by outgoing military intelligence head Maj-Gen Aharon Ze'evi (Farkash) to the cabinet Sunday on Israel's strategic situation at the dawn of 2006. The trouble is that in many cases the good news is also the bad news. For instance, when ticking off the positive regional strategic developments for Israel, Ze'evi discussed the "continuation of the political process in the region," with an emphasis on the elections in Iraq, Lebanon and the Palestinian Authority. "The internal forces in the Arab world are gaining strength, and that is important," said Ze'evi, whose tenure is up at the end of the year. Important, however, does not necessarily mean good, and when Ze'evi spelled out the negative developments in the region, he numbered among them the rise of Islamic radical forces who were taking advantage of the political process. In other words, the very same process that holds the seeds of promise - democratization in the region - also holds the seeds of danger. What if Islamic radicals win those democratic elections? Ze'evi referred specifically to Hamas in the Palestinian Authority, the rise of the Moslem Brotherhood in Egypt (who went from 17-88 parliament seats in the recently held elections), and the increasing influence of the conservatives in Iran, the Shi'ites in Iraq and the Sunnis in Syria. The mind loves clear distinctions - positives and negatives; the good on one side and bad on the other. One of the most unsettling elements of Ze'evi's assessment was that it included so much overlap, so many contradictory trends. For example, while Islamic radicalism has lost some of its former legitimacy to carry out terror attacks - with the anti-terror stance of Jordan's King Abdullah being most notable - the Islamic radical movements have gained in overall political clout. Another example of this intermingling of the good news with the bad is the weakness of Syria's President Bashar Assad. On the one hand, a weakened and isolated Syria is good for Israel, and Damascus does not pose the same strategic threat to the country as it once did. On the other hand, continued international pressure on Syria could paradoxically lead it to heat up the situation on Israel's northern border in order to divert attention from its own troubles. Ze'evi also told the cabinet that there was not any coalition of Arab states today poised to wage a conventional war against Israel. Which is very reassuring, until he then went on to add that Iran, Syria, Hizbullah and Hamas are all stockpiling an arsenal of missiles - from the kassam rockets to the Shehab 3 - that can threaten "the heart of Israel." Who needs conventional troops in a doomsday missile scenario? THE OVERALL picture Ze'evi painted was not optimistic. The biggest danger, he said, was Iran, for three reasons: its continued development of a nuclear program; its development of long-range ballistic missiles able to carry a nuclear warhead; and its continued support of Shi'ite terrorism around the region. Labeling Iran a regional power, Ze'evi - again in one of those frustratingly contradictory moments - said that diplomatic efforts to halt Teheran's nuclear development should continue, even though he "didn't see the possibility through continued diplomatic efforts of halting Iran. In the coming months, we will witness the end of the abilities of our diplomatic maneuvers, and that of the world, against Iran." The chief of military intelligence was saying, in other words, that while diplomatic efforts wouldn't stop Iran from going nuclear, these diplomatic efforts must continue. Ze'evi listed the continued terrorism in Iraq on the negative side of Israel's strategic ledger, saying the Arab world was watching carefully to see whether the US would succeed in Iraq. This is the acid test for the US regarding all the processes it wants to set in motion in the region. But American participation in the region, and willingness to remain engaged here, is something he still placed on the positive side of the scale. Another problematic trend that Ze'evi discussed was what he described as a change, or new trend, in the agenda of al-Qaeda and the other radical Islamic terrorists: In addition to targets in the West, they are also focusing on hitting those in the "heart of the Levant" - Egypt, Syria, Jordan and, of course, Israel. Shin Bet head Yuval Diskin also warned the cabinet that al-Qaeda's ideology was beginning to make inroads in northern Samaria and Gaza. This phenomenon, he said, even has Hamas worried about losing support to the organization. Regarding the Palestinians, Ze'evi started with the positive, saying that the Palestinian GNP grew by eight percent in 2005. He also said that no Israelis have been killed by Gaza-originated terrorism since disengagement, and that there has been an 8% drop in the number of rocket attacks from Gaza since Israel withdrew from Gush Katif. In addition, he said that Israel's ability to fight terrorism has improved significantly, and the ability of the Palestinians to carry out major attacks was on the decline. The numbers bear this out, he said, with there being no comparison between the amount of attacks carried out this year and those carried out in 2002, at the height of the violence. Israel, he said, has become more effective in dealing with the terrorism than in the past. He added that there was a growing legitimization in the world - even in some corners of the Arab world - for Israel's fight against terrorism. The bad news, he said, however, is that PA chairman Mahmoud Abbas is in distress, having run out of "maneuver room" in his dealing with Hamas. "He can continue to play the game that he wants to take on Hamas but can't," Ze'evi said, "but if he looks at the results that he set for himself - one gun under one authority - those results are not encouraging." Hamas' impact on the decision-making process in the PA is getting stronger, Ze'evi said, and the fact that the organization is taking part in the upcoming elections will not affect its extremism. In 2006, Israel may very well find itself facing two distinct Palestinian geographic entities, he said, coining the phrase "Fatahstan" in the West Bank, alongside the already widely used "Hamastan" to describe Gaza. This situation, he said, is a testament to the near total disintegration of the Palestinian Authority. From an Israeli perspective, this is bad because as the PA gets weaker, and the PA security apparatus loses control, Israel's ability to influence events will diminish. And then there simply will be no one with any real clout to talk to. Diskin told the cabinet that the political strengthening of Hamas concerns him less than the weakening of Fatah. "The minute Fatah is weak," he said, "the PA's security apparatus, which is controlled by the Fatah 'Old Guard,' will have no motivation or public legitimacy to fight terror." Sounds a lot like the situation that faced Israel on the eve of 2005.