"On May 14, 1948, the State of Israel declared its independence and was immediately engaged in a war with all of its neighbors. Armed conflict has marked every decade of Israel's existence. Despite its unstable regional environment, Israel has developed a vibrant parliamentary democracy, albeit with relatively fragile governments. Prime Minister Ariel Sharon formed the current three-party coalition in January 2005 in order to secure support for his plan to withdraw from the Gaza Strip and four small settlements in the West Bank. Evacuation of the settlers was completed on August 23. Some observers are predicting an early national election in 2006. Israel has an advanced industrial, market economy in which the government plays a substantial role. The economy has recovered from declines experienced due to the Palestinian 'intifadah' (uprising) against Israeli occupation and the international high-tech crash. The government is attempting to reduce the role of government in the economy. Israel's foreign policy is focused largely on its region, Europe, and the United States. The government views Iran as an existential threat due to its nuclear ambitions, and blames Iran for supporting anti-Israel terrorists. Israel negotiated a series of agreements with the Palestinians in the 1990's, but the Oslo peace process ended in 2000, shortly after the beginning of the 'intifadah'."
CRS Issue Brief for Congress, IB82008
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