Iran will cross the "technological threshold" enabling it to independently manufacture nuclear weapons within six months to a year and attain nuclear capability as early as mid-2009, according to Israel's Military Intelligence.

MI also believes Syria is readying for war with Israel, although it is not interested in starting such a conflict at this time.

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Military Intelligence says Iran's nuclear program is the major threat facing Israel, followed by the danger of war with Syria and the possibility that Hezbollah will involve itself in such a conflict. Palestinian terror is predicted to continue, but is not considered a an existential threat against the country.

Israel Defense Forces intelligence analysts say they are unconcerned about the danger of Iran's immediate use of nuclear weapons against Israel, but are concerned about the sense of security nuclear capabilities will give Tehran. According to MI, Iran's support of terror, which is delivered in partial secrecy, will become more open.

MI says it is unlikely that Iran will attain nuclear capability before mid-2009, and it is more likely to happen around 2010. U.S. intelligence predicts that Iran will attain nuclear capability within three to six years.

Iran's nuclear program may be delayed by one of three possibilities: a military attack on Iran, a system of pressures and sanctions that will push Iran into a compromise, or a continuation of the technological difficulties it is now experiencing.

MI says the Iranian regime is standing strong, with huge oil revenues allowing it to buy domestic peace and neutralize public opposition.

As for Syria, IDF intelligence analysts predict a continued negative trend if the diplomatic process with Israel is not renewed. Damascus does not appear interested in a war with Israel, but its concern is over a misunderstanding that could lead to war. MI says it is concerned that Iran and Russia are feeding Syria false information that Israel is preparing to attack it with American agreement. Syria is continuing to arm, train and test improved weapons together with Hezbollah and Iranian representatives. MI believes Syria is still supplying arms to Hezbollah including mid-range rockets to replace those destroyed by the Israel Air Force during the Second Lebanon War.

MI believes Hezbollah is not currently interested in another round of fighting against Israel due to the damage it suffered last year. MI estimates that Hezbollah lost 600 fighters, about one-tenth of its forces. Hezbollah has begun to recruit new fighters, but Shi'ite enthusiasm to join the force has lessened since the war. As a result, the organization has been forced to draft boys as young as 15 to fill its ranks.

The IDF believes that in many countries and terror organizations in the Middle East, the "narrative of resistance" is taking root. This idea states that the problems with Israel will not be solved at the negotiating table, as with Jordan and Egypt, but by armed conflict. It could take a generation, but in the long term, such attrition will lead to Israel's defeat. Support for the idea came from Israel's unilateral withdrawal from Lebanon in 2000 and disengagement from Gaza in 2005, what is seen as American preparations to withdraw from Iraq, and to some extent the outcome of the Second Lebanon War.

MI sees gradual erosion of Israel's deterrent power against neighboring states and terror organizations, but believes it is not as serious as some believe. It says that not only has the army begun to restore its capabilities, but also the region is beginning to process what happened during the war and realize that Israel has a highly capable air force and intelligence system.

As far as the Palestinians are concerned, analysts say it is very unlikely that Palestinian Authority Chairman Mahmoud Abbas will take back control of the Gaza Strip. Abbas, MI says, will attempt to rehabilitate his power base in the West Bank and hold elections in both areas. But Hamas, which will gain more legitimacy in the Arab world, will block this move.