You’re the CEO of IBM or Intel or Siemens or Nestlé or any one of the 500 other Western companies that have opened up operations in Israel, home to the developed world’s fastest-growing economy.

What do you do should Iran get the bomb? Do you continue to invest in Israel, on the hope that Iran doesn’t make good on its promise to wipe it off the map? And even if, from the safety of your head office in Europe or North America, you do decide that Israel’s business environment justifies the risk of continued investments, would your top executives agree to stay in or relocate to Israel, knowing that they would be putting their families at risk of perishing in the same mushroom cloud that could snuff out the tiny country?

This calculation is today being made not by Western CEOs as much as by Israeli Prime Minister Benjamin Netanyahu and his minister of defence, who must weigh the consequences of allowing Iran to acquire a nuclear bomb. Even if Iran doesn’t explode a nuclear bomb on Tel Aviv, they believe, living under the shadow of that mushroom cloud represents an existential risk for Israel.

According to accounts of Netanyahu’s views that appeared in the Israeli press this week, he expects that an Iranian bomb would end foreign investment in Israel, the engine of growth that has seen the country’s GDP soar four-fold in the past two decades. Without Israel’s vast economic superiority over its well-armed and far larger enemies, it would be hard pressed to support the massive cost of its armed forces and its homeland defences needed to keep the country safe.

How important is foreign investment to Israel’s economic success? According to a study last year from Columbia University, the average annual value of foreign direct investment into Israel is a staggering 5% of GDP, an amount that in recent years represents almost 30% of gross capital formation. The foreign multinational enterprises that operate in Israel account for fully 40% of Israel’s exports. If these massive components of the Israeli economy dry up upon Iran’s acquisition of the bomb, as Netanyahu believes, the country faces a wrenching future, particularly if Israel also sees a massive exodus of its best Israeli brains, as Netanyahu also expects. With another 20% of Israeli exports coming from Israeli multinationals with affiliates in foreign countries, Israelis who decide to flee the country in the face of nuclear annihilation would have ready-made options.

Netanyahu’s assessment of multinational behaviour and its consequence for Israel’s economy carries weight, and not just because his free- market reforms are widely credited with spurring the foreign investment that did so much to make Israel the “start-up nation.” Prior to becoming a politician, Netanyahu learned the ropes of international finance at the Boston Consulting Group, the same global management firm that gave Mitt Romney his start, and at the MIT Sloan School of Management, following which he began a business career in Israel while also writing books and founding an anti-terror institute that, according to U.S. Secretary of State George Schultz, helped shape U.S. policy on international terrorism.

Netanyahu’s assessment is not universally accepted. It runs counter to a current school of thought in the U.S. State Department, for example, which believes Israel can live with a nuclear-armed Iran, much as the West lived under the threat of nuclear annihilation during the Cold War with the Soviet Union. Better to let Iran have the bomb and manage the consequences, this school states, than to risk an attack that could engulf Israel in an expensive and possibly calamitous multi-front war with its more populous, well-armed enemies to its north, south and east.

Except the Soviet Union was atheistic, materialistic and of this world, rebuts Netanyahu, unlike religiously fanatic Iran with its apocalyptic welcome of the hereafter. As for the war-is-expensive argument, in the choice between living with the bomb and militarily preempting it, the economically prudent course is war.

Although many see Netanyahu as a military hawk, he is an Israeli leaders who has kept Israel out of war, an accomplishment that rivals his grasp of Israel’s economy. The irony is that, to protect Israel’s economic accomplishment, he may now need to go to war. (© 2012 National Post, a division of Postmedia Network Inc. 08/18/12)