This estimate assesses Israel's situation with particular reference to its central problem of security In the radically altered situation arising from the June war, Israel's security problems have two major aspects: (a) its military capabilities compared to those of the Arabs; and (b) the political, psychological, diplomatic, and administrative questions involved in dealing with the occupied territories and with its Arab neighbors in circumstances short of war.
A. Despite its smashing victory in the June 1967 war, Israel finds that acceptance by its Arab neighbors continues to elude it. A formal peace settlement is out of the question, and the present stalemate, with Israel occupying large tracts of territory and controlling a million Arabs, will probably continue for a long time.
B. Arab terrorist activity is likely to increase, though Israel will be able to keep it under control. Incidents along the cease-fire lines will also continue. Israel will retaliate on occasion, and this could develop into heavy fighting. In the longer run, continued Israeli occupation will almost certainly lead to a new round of major hostilities.
C. In this condition of uneasy truce, Israel will maintain a military superiority over the Arabs, with a view to deterring them or, if war comes, defeating them quickly enough to prevent serious damage to itself. This means modem weapons. Israel probably sees France as a not very reliable source of such arms, at least as long as de Gaulle is in power, and will look increasingly to the US. But it will also try to produce as much as possible of its own military equipment.
D. Six years ago, Israel contracted with a French supplier for a surface-to-surface missile with a range of 280 nautical miles. It could be deployed in Israel in 1969, if de Gaulle permits it. If he refuses to allow the French firm to deliver the missiles or to assist Israel in manufacturing them, the latter could go ahead on its own, but it would probably take at least five years to deploy a missile system.
[1 paragraph (8 lines of source text) not declassified]
[Here follows the 9-page Discussion section of the estimate.]
Sources: Foreign Relations of the United States, 1964-1968, V. 20, Arab-Israeli Dispute 1967-1968. DC: GPO, 2001.