HERZILYA, ISRAEL— The city of Herzliya sits about ten miles north of Tel Aviv on Israel’s breezy central Mediterranean coast. Often referred to as the “Silicon Valley of Israel,” it’s home to high-tech startups, palm tree-lined boulevards, a number of very decent bars, restaurants and beachside hangouts and, as I discovered soon after getting into my room at the Dan Accadia Hotel and checking the sea view, quite a few surfers. But for the road signs in Hebrew and Arabic, one could be forgiven for mistaking it for California.

It’s also the home of the Interdisciplinary Center (IDC), Israel’s first private university. Established in 1994, the IDC boasts some of the most advanced facilities in the country, including an ultra-modern library donated by, and named for, Marc Rich, the indicted commodities trader who was infamously pardoned by President Bill Clinton just before Clinton left office.

Since 2000, the IDC’s Institute for Policy and Strategy has hosted what has become Israel’s most prominent and important annual policy gathering, the Herzliya Conference. The four-day forum brings together a decidedly conservative-leaning contingent of politicians, policymakers and analysts—overwhelmingly made up of Israelis and Americans, but with a sprinkling of other flavors—to discuss the main security challenges faced by the Jewish state.

The conference is no modest affair. Registration for non-Israelis can run up to $5,000. Organizations are asked to pay upwards of $50,000 to sponsor discussion panels. In addition to the public events, there are invite-only roundtable discussions—held under the Chatham House rule that prohibits publicly identifying any fellow participants—which reportedly can get a bit heated. In the conference’s lobby, people huddled around coffee tables with very serious looks, obviously discussing matters of great import. In the conference’s dining hall, former and current Israeli and US officials schmoozed over chicken and noodles fired at stir-fry stations around the room. The Washington Institute for Near East Policy’s David Makovsky has called Herzliya “the Davos for Middle East wonks.” An Israeli friend put it differently: “Neocon Woodstock.”

But instead of a lot of young naked people frolicking under the influence of LSD, the Herzliya Conference has a lot of middle-aged nerdy people fretting over the influence of IRGC (the Iranian Revolutionary Guard Corps). Less good vibrations, more clash of civilizations. As at Woodstock, there’s also a mood of mutual congratulation, a belief among the participants that they are the enlightened. “Herzliya is the place where the neocons get together to pat themselves on the back about being right about everything,” says Gershon Baskin, who leads the Israel/Palestine Center for Research and Information. “That’s the mentality. They are right and everyone else just doesn’t get it.” It’s probably not correct to say that Herzliya is where a lot of big decisions are made. But it’s a place where relationships that can shape those decisions are created and renewed.

The conference has also become a regular stop for aspiring presidential candidates looking to burnish both their national security and pro-Israel credentials in one stop, with John McCain, Mitt Romney and John Edwards all making appearances in 2007. This year, Mississippi governor Haley Barbour spoke on the closing night, preaching the gospel of offshore oil drilling through his thick Southern drawl to a perplexed audience. One Israeli official laughed that these appearances were almost entirely for American political consumption. “Israelis have no idea who these people are.”

In the past, the conference has been held at one of Herzliya’s swank beachfront hotels. This year it was held on the campus of the IDC itself, which is situated—quite appropriately, given the conference’s militaristic bent—just off Menachem Begin Boulevard on several grassy acres. Though Begin’s general theory of the Middle East—that the Arabs only (or at least best) understand force—seems to strongly inform the conference’s ideological orientation, his spirit loomed large this year for reasons that organizers and attendees almost certainly wouldn’t have preferred.

Looking at the conference schedule several weeks beforehand, the focus was clearly intended to be on Iran. Multiple panels and discussions centered on various dimensions of the Iranian threat: Iran’s extremist ideology, its support for terrorist groups, its deepening relationships with Iraq, Syria, Lebanon and Turkey, and, of course, the specter of its nuclear program. After the Tunisian revolution, a panel was quickly added to discuss the issues of destabilization and reform in the Arab world. But then came Egypt, and the hundreds of thousands in Tahrir Square, and the calls for Mubarak to go.

The implications for Israel of the end of Mubarak’s thirty-year rule—which include the possibility of upending the peace accord signed by Begin with Sadat and Carter at Camp David in 1978, the most important treaty in the country’s history and the cornerstone of its regional strategic concept—permeated the conference like a fog. Begin continues to be venerated by many conservative Israelis as a warrior, a “man of the gun,” an unapologetic Israeli ultra-nationalist. But it was Begin’s legacy as a peacemaker—and the prospect that that legacy could be overturned in favor of a new and much less manageable order—that shadowed every discussion.

To be sure, drumbeating on Iran still dominated the official conference agenda. But, as if to demonstrate that everyone has limited bandwidth for worry, almost every discussion eventually circled back to Egypt. There was growing anxiety that while Israel continued to confront the threat from the East—the growth of a “poisonous crescent” (as one member of the Israeli government put it to me) consisting of Iran, Iraq, Turkey, Syria and Lebanon—the peace on its western border could no longer simply be taken for granted. Egypt was raining on everything.

The drummers were already going to have trouble keeping the beat in the wake of outgoing Mossad chief Meir Dagan’s and Deputy Prime Minister Moshe Ya’alon’s recent statements that efforts at sabotage and international sanctions had likely delayed an Iranian nuke for several years. Egypt only made things more complicated. Still, it was odd to hear neoconservative doyenne Danielle Pletka of the American Enterprise Institute dismiss as “propaganda” former Mossad head Efraim Halevi’s assertion that “the US and Israel are winning the war against Iran.” “If Iran is losing, I’d like to be that kind of loser,” Pletka said, reminding the audience that, “Khomeini referred to Israel as a one-bomb country.”

“What I’m saying is not propaganda,” Halevi shot back. “The danger is believing the propaganda of others.”

A panel on the process of violent jihadist radicalization was most notable for the moderator’s introduction of panelist Judith Miller—the disgraced journalist whose credulous reporting on Iraqi WMD’s helped lead the United States into war—as someone “who went to jail to protect a reporter’s right to protect a source.” The source in question, Scooter Libby, who had leaked to Miller the identity of CIA operative Valerie Plame, was in the audience at the time. He shifted in his seat just the tiniest bit.

As a result of the revolution in Egypt, a key theme that emerged at the conference was hostility to Arab democracy and the assumption that it would bring only chaos and danger for Israel—a mantra that also exposed a division between Israeli neoconservatives and some of their American comrades. “In the Arab world, there is no room for democracy,” Israeli Major General Amos Gilead told a nodding audience. “This is the truth. We prefer stability.” Former Israeli Ambassador to the US Zalman Shoval scoffed that George W. Bush’s freedom agenda’s “principle accomplishment seems to be the victory of Hamas in Gaza.” Boaz Ganor, the executive director of the IDC’s International Institute for Counter-Terrorism, warned, “When these people [Arabs] vote, they are voting for what Coca-Cola calls the real thing and that is fundamentalism.” Shmuel Bar, Director of Studies at the IDC’s Institute of Policy and Strategy, declared that the US had “become an agent of revolutionary change in the Middle East, at the expense of stability.”

In opening remarks to a late-addition panel on “Stability vs. Democracy,” progressive analyst Brian Katulis—one of a handful of non-conservatives invited to participate in the conference—declared the panel’s title false choice. Calling America’s “continuing addiction to dictators” part of “a cold war hangover,” Katulis stressed the regional trends driving events in Egypt—massive unemployment, millions of disillusioned youth—and suggested that Israel and the United States would be wise to anticipate them. “There’s a delusion that we can prevent these trends,” said Katulis. “And we’ll probably hear some of these delusions on this panel.”

As if to immediately make Katulis’s point for him, Martin Kramer of Israel’s conservative Shalem Center began by mocking the Obama administration’s repeated assertions that the regional “status quo is unsustainable,” suggesting that it should be taken as the administration’s motto. "In Israel, we are for the status quo," Kramer said. "Not only do we believe the status quo is sustainable, we think it’s the job of the US to sustain it."

Responding to Kramer’s remark afterward, Israeli analyst Meir Javedanfar said, “The first stage after a divorce or death is denial. This is followed by anger, then bargaining, depression and acceptance.” Kramer “is still in the denial stage. His statement shows that he still has not realized that the relationship with Egypt is over.”

But however much in denial, Kramer’s and Bar’s comments get at something real among conservative Israeli foreign policy elite: a sense that America, under both Bush and Obama, has failed to apply its power correctly in the region. This inability to achieve certain goals has consequently led to a perception of American decline (never mind that the refusal of allies like Netanyahu to honor American requests contributes to that perception). Many also voiced concerns that Obama’s treatment of Mubarak would cause other US client states to question America’s commitments.

“Obama is perceived, in a moment of truth, to have abandoned an ally,” said Brig. Gen. Michael Herzog, now a senior fellow at the Jewish People Policy Institute. “It’s unfair, but that’s the perception.” Herzog also doesn’t characterize Israeli views on democracy as harshly as some others. “Many, if not most, Israelis would lean at this point towards stability” rather than democracy, Herzog said, “not because they don’t want to see democracy around them—they do—but because they are highly skeptical whether the upheaval in Egypt will lead to real democracy in the foreseeable future.” And many Israelis are deeply concerned over potential negative developments in the meantime.

As for the Israeli-Palestinian peace process, signifying the low priority that Israelis themselves now give to the conflict, it got one panel out of four days. Former Congressman Robert Wexler, now the president of the S. Daniel Abraham Center for Middle East Peace, made reference to the recently leaked Palestine Papers, documents that showed the extent of potential Palestinian concessions. “No longer with any credibility can Israelis suggest that there is no partner for peace,” he said. Given how useful that trope has been for the Israeli and American right, it’s hard to imagine that they’ll relinquish it in response to something as relatively minor as evidence that it’s wrong.

As I sit writing this, Mubarak has just stepped down. It’s unclear exactly where Egypt is going and how its new iteration will affect Israel. But it’s safe to say that the Egypt-Israel relationship won’t be the same; the sense of dread over that in Herzliya was palpable. Mubarak may not have been the greatest guy, certainly no democrat, but he was the devil they knew. Israeli leaders love to brag that Israel is “the only democracy in the Middle East.” From the reaction at Herzliya to Egypt’s freedom fever, it’s clear that quite a few influential Israelis would prefer to keep it that way.

But they’ll cope. In at least one interesting way, they already are. Two weeks after the demonstrations began in Egypt, and four days before Mubarak finally abdicated, I visited the Israeli Prime Minister’s office for a meeting with a member of his cabinet. Just beyond the reception desk is a hallway whose walls are ornamented with large photos of past and present Israeli prime ministers with other world leaders. One was a photo of President Obama, Prime Minister Netanyahu, Palestinian President Mahmoud Abbas and Jordan’s King Abdullah, taken at the reopening of direct talks last September. Egyptian President Hosni Mubarak had already been cropped out.