Israeli business site, Globes, ran an article today that summarized a recent Citibank research note. What caught my eye is that instead of publishing analysis on a severely undervalued (IMHO) Israel tech firm, Comverse Technology (OTC: CMVT.PK) or an unheard of diamond-in-the-rough (IMH0), Elbit Medical (Nasdaq: EMITF), this piece was on the take-aways of what's going on in Middle Eastern history in Annapolis, Maryland today.

If you haven't heard the harbingers of peace chirping away, you haven't see the fanfare going on in Annapolis. Everyone who is everyone is there (well, almost). Check out my piece over the weekend about two interesting stock picks as a play on the conference.

Beyond the tongue and cheek surrounding the love fest, Citibank wrote the following about the Israeli economy:
"In the past couple of years, strong domestic economic performance has allowed Israeli markets to shrug off several regional geo-political developments, including the victory of Hamas in the 2006 Palestinian Authority (PA) elections and last year's war in the north versus Hezbollah."In spite of these challenges, Israel has continued to prove its resiliency, according to the Globes article. Citibank cites only two scenarios that could significantly rattle investor confidence in the tiny country:

1. A renewed intifada, similar to what Israel experienced in the early 2000s
2. An escalation in tensions between the West and Iran, related to the latter's nuclear ambitions.

So, what's the upshot on the macro-economic effects of the post-Annapolis era?

Leave it to Citi to say it succinctly: Strong steps towards [such] normalization appear unlikely in our view.

Zack Miller is the lead equity analyst for America Israel Investment Associates, LLC., the managing editor of IsraelNewsletter.com and a former equity analyst for a leading multinational hedge fund. Author's fund holds positions in CMVT.PK and EMITF as of 11/26/2007.