Executive Summary: While Israel is an ideal partner for the European Union and NATO, this will not happen for various reasons. Israel will lose important freedom of action while the EU/NATO are reluctant to expand into the Middle East.

Israel: The Ideal NATO Partner

In an ideal world, Israel would be part of both the EU and NATO for many reasons. On strictly formal grounds, Israel belongs in the EU because it is the only country in the Middle East and North Africa that fulfills all the EU criteria: It is the only country with a stable democracy, rule of law, a liberal (limited) state, and no capital punishment.
Economically, it is a country that has jumped straight from an agrarian to a high-tech service industry without passing through the intermediate stage of industrialization – which is a unique success story in the history of development.
Israel’s per capita income puts it very close to the big Mediterranean countries, Spain ($28,000) and Italy ($32,000), and it dwarfs that of Poland ($15,000) and Portugal ($21,000). Israel’s technology is more sophisticated than some sectors of the big European countries, notably avionics, biotechnology and software development.
Israel would also make a good military partner for NATO, given an army that, man for man, could beat any European force. The numbers are striking: Israel has 3,500 MBTs compared to France's 637 and Germany's 1,400. Israel boasts 435 combat aircraft, dwarfing France (261) and Germany (298). This hardware is generated by a population that is less than one-tenth of Germany.
In geopolitical terms, Israel would be a god-sent for the West, given that the greater Middle East will be the most conflict-rich strategic environment of the 21^st century. Even with Iran on the march, Israel possesses military primacy in the Middle East, especially given its non-declared nuclear strike force.
In other words, Israel would offer precisely what the West needs as it looks at the “civilization of clashes” that is the Arab-Islamic world: the best and most well-equipped army; a sophisticated economy, especially in the armament sector; and by far the highest level of political development.

Cost-Benefit Analysis

Considering cost-benefit ratios, what would be in it for Israel? What would be in it for the West?
If Israel were a member of NATO, it would be part of the most powerful military bloc in the world. NATO's military has outlasted all predictions of its imminent demise, and has been able to project its forces half-way around the world, not just to Bosnia, but also to Afghanistan. Membership would confer a strong quantum of deterrence, and of course add enormously to Israel’s defense capabilities, assuming that NATO would fight for Israel in the hour of need.
Politically, the benefits would be just as impressive. Israel-in-NATO implies an end to the endemic threat of isolation in the community of nations. Given Israel’s encirclement by hostile states on three sides, NATO would provide a distant, but sturdy home of legitimacy.
Joining the EU would be advantageous for both sides. Both partners offer the same level of economic development, with Israel providing the EU with everything from avocados and bikinis to anti-missile defenses and bio-med technology.

Realities

The real question is whether the union will happen, above and beyond the association agreements in place.

The EU
First, for those countries that oppose Turkish membership, and that number has been growing since Erdogan’s ascent to power and the re-Islamization of his country ever since, Israel would offer a classic additional argument: If we let in Israel, how can we deny entry to Turkey? Ergo, no to Israel. Or: If Israel, we must let in Palestine as well. But Palestine, even if it became a state, would not meet THE political and economic criteria. Hence, no to Israel again.
Second, there are those traditionally pro-Arab countries in Europe, especially on the Mediterranean, that would cry out: “No, that will ruin our relationship with the Arab and North African world. To protect that relationship, we must not take in Israel, as economically advantageous as it may be.”
Third, a more general argument would center on geography, even though it does not carry much water in the age of jet cargo planes and real-time delivery of digital products by the Internet. This would be the argument of contiguity: The EU has to be a seamless, contiguous entity; hence it could not accommodate outliers 3,000 km from Berlin and 4,000 km from London.
Does Israel really need the EU, apart from the legitimacy that membership in the most prestigious club in the world would confer?
Even without formal membership, Israel is one of the biggest EU trading partners in the Euromed area, with total trade with the EU amounting to more than €27 billion in 2008. The EU is Israel's largest market for exports and its second largest source of imports after the US. Israel is part of the Euro-Mediterranean Partnership, which seeks to expand free trade across the Mediterranean, with the ultimate aim of creating a Euro-Mediterranean Free Trade Area by 2010.

NATO
How about the Atlantic Alliance? Upon cool deliberation, the answer would have to be that Israel-in-NATO serves neither side’s best interests.
Let’s start with a conceptual point. Any alliance must crack the classical dilemma between abandonment and entrapment. Preventing abandonment in the hour of need calls for maximal entanglement, which makes sure that my partners will fight on my side when I am attacked. Entrapment poses the opposite imperative:  I do not want to be drawn into a conflict that are not my own.
Now assume a rational, even-handed NATO leader. Would he want to get himself in a situation where he had to fight Israel’s wars? True, on the asset side, Israel would be the strongest military force between Beirut and Tehran, but it would also be the one and only NATO country at the center of almost all regional conflicts in the richest threat environment of the world. Israel has fought more wars than any Western country in the postwar period – 6, 7, or 8, depending on how you are counting. Most of these wars (the exceptions are the Yom Kippur War preceded by the War of Attrition) have been offensive wars, at the time and place of Israel’s choosing.
Therefore, the entrapment risk in unwanted conflicts is statistically very high.  On the other hand, the gains for NATO are not dramatically clear.  The threat to Israel is only indirectly related to threats to Europe and the United States. What Euro-politico, who has to look out for his country’s interest first, would entangle himself on the side of Israel – even if he is favorably disposed to the Jewish State?
His fear of entrapment will surely overwhelm the advantages of Israeli NATO membership, especially since Israel’s history and vulnerable strategic position tell him that Israel will not wait to absorb the first blow and thus has a strong incentive to go first in a major crisis. With its survival always at stake, Israel will not wait for a green light by the NATO Council.
It follows that without a seamless threat, there will not be a seamless alliance. This will change only when the threat to Israel is more or less congruent with the threat to the Alliance, that is, if a hegemonial pretender like Iran had designs not only against Israel, but also against the northern side of the Mediterranean. This is where Israel as a critical asset might outweigh the risk it might pose as a tail that wags the NATO dog.
NATO membership also is not in Israel’s best interests, even though an increasing number of Israeli leaders and commentators argue in favor of such membership. To explain why Israel’s interests might not be well served in NATO, let us go back to the abandonment-entrapment dilemma that each and every alliance poses.
To minimize the entrapment risk, NATO would only extend membership if it came with the highest degree of control over Israel’s strategic choices. If I am in on the crash, I want to be in on the take-off, is the rule here.
Is it in Israel’s interest to accept such chains? If your survival is always at stake, you do not want to entrust your fate to a cast of thirty, each one with a veto power. Nor to a number of states that are more sympathetic to the Arabs than to yourself.
In short, the gain in deterrence and defense capabilities do not outweigh the existential risk of entrusting your security to a very heterogeneous alliance that encompasses some key members who do not share your basic interests.
To elucidate the abandonment-entrapment dilemma, West Germany might serve as a paradigmatic example. West Germany had a strategic problem during the Cold War that evoke Israel’s. It had revisionist interests toward the East (reunification, hence the absorption of East Germany) and was at the same time the most vulnerable member of NATO. Situated on the frontline of the Cold War, West Germany was the pre-ordained battlefield and victim.
Bonn had to assure the allies that it would not entrap them into its own separate conflict with the Soviet bloc. It also had to extract an iron-clad assurance from them that it would not be left alone in case the Soviets attacked westward. How was the dilemma solved?
To reassure its allies, West Germany renounced all strategic autonomy, integrating its forces completely into NATO. West Germany did not even have its own general staff. In exchange, the Federal Republic received the strongest possible guarantees by demanding and gaining a vast Allied presence on its soil. This was the “layer-cake” along the Federal Republic’s eastern border, consisting mostly of American and British forces and complete with nuclear weapons. This multinational deployment (about one million men) signaled to the Soviets: If you attack West Germany, you attack the entire alliance – hundreds of thousands of Allied troops.
Would Israel want such a NATO force? Certainly not on its own territory, as defined by the “Green Line”. But even in the Gaza Strip and the West Bank, international forces would be of dubious, perhaps even negative value. These troops might well act as an unwitting cover for Arab militants who will not be deterred by these forces, and will hide behind them when Israel strikes back. Hizballah in southern Lebanon and Hamas in Gaza have always positioned themselves next to UN installations to draw Israeli fire on UN schools or refugee camps. UNIFIL was no obstacle for Hizballah, but a major problem for the IDF, which had to be careful not to attack UNIFIL positions whenever it invaded the south.

Conclusions

The upshot, then, is that tighter bonds between the EU and Israel serve the interests of both sides, but formal membership would create more costs than profits. Increased, but sub-formal cooperation with NATO adds legitimacy for Israel and a slight amount of deterrence. Full membership is not in the interest of either side. For NATO, full membership is conceivable only if Israel gives up all strategic independence, something that is not in Israel’s vital interests.
For the time being, Israel’s strategic interests are best served by the implicit alliance with the United States, which offers the best of all possible worlds: The US is the security lender of the last resort, but the “interest” Israel has to pay for that credit line, as measured in strategic options foregone, is tolerable. Each side knows that it can count on the other in extreme situations. Keeping one’s distance adds to both sides’ options. This informal, but very intimate alliance improves America’s margin of political maneuver in the Arab world, while maximizing Israel’s strategic autonomy against it.
It is difficult to see how dependence on European countries could beat the deal that joins America and Israel by dint of the strongest glue there is in the affairs of nations: mutual strategic interest.

Dr. Josef Joffe is editor of Die Zeit, senior fellow at the Freeman-Spogli Institute for International Studies, and Abramowitz Fellow in International Relations at the Hoover Institution, both at Stanford University. This perspective is based on his lecture at the BESA-ADL international conference on "US-Israeli Relations" on May 6-7, 2009.