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Born in Vilna, Poland, Gonen immigrated to the British Mandate of Palestine with his family at the age of three. He served in the Haganah at fourteen, and participated in the battles over Jerusalem in Israel's War of Independence, being wounded five times.
After the war, he remained in the Israel Defense Forces (IDF), rising through the ranks of the Armored Corps. He commanded a tank company during the 1956 Sinai Campaign, and was awarded the Medal of Courage. He was later charged with overseeing the integration of the new Centurion tank into the IDF, and later commanded the first battalion composed of these tanks.
In 1966, he was appointed commander of the 7th Brigade. It was in this capacity, during the Six-Day War, that he led his troops from the Rafah salient right up to the Suez Canal. After the war he delivered a famous speech, entitled "My Glorious Brothers, Deserving of Fame", which included the famous line: "We looked death straight in the face, and it lowered its eyes at us."
Throughout his army years, Gonen was not well liked by his subordinates, who viewed his methods as unjust and Draconian. He was known to set especially low speed limits for the men of his brigade, only to flout these speed limits himself. It was also documented in a popular Israeli book " " ("Chasufim Batzariach", "Exposed in the Turret") that he would deliberately cause his men to fail inspections and then punish them for it. He was overly strict, often meting out severe punishment to soldiers accused of minor offenses such as failure to polish their boots. His subordinates often requested a transfer to a different unit.
In March 1968, Gonen oversaw the armored corps in the Battle of Karameh in Jordan, where Yasser Arafat and the PLO had their base. A few armored vehicles were left on the scene and used by the PLO for propaganda. He continued to rise through the ranks, and on 15 July 1973, he replaced Ariel Sharon as Chief of the Southern Command.
Gonen's response to the Egyptian attack during the Yom Kippur War and his actions during the first days of fighting (culminating in the disastrous attack on Hizayon on October 8) was deemed a failure by the army's General Staff, and he was replaced on 10 October by Haim Bar-Lev. The Agranat Commission, which investigated the events leading up to the war, wrote about him that:
He was removed from all command upon the publication of the Commission's interim report, but this was revoked once the final report was released, and Gonen was given a new position on the General Staff. In both the media and public perception, however, he was considered responsible for many of the fiascos of the war.
Gonen resigned from the IDF in 1974 and left for Africa, where he embarked on various business ventures. He never returned to Israel except for short visits.
In writing of Gonen in his comprehensive book on the war, Abraham Rabinovich said of him:
In an interview with the Maariv daily newspaper on 7 August 2003, his personal assistant, Amir Porat, revealed that Gonen considered assassinating Moshe Dayan after the war, and that he lived in fear that he would somehow "disappear". Throughout his entire military career, he was considered to be a strict disciplinarian, a political right-winger, and even a militarist.
His tragic life story was the subject of a play, Gorodish, by Israeli author Hillel Mittelpunkt.