1. (C) Summary: Prime Minister Sharon and his staff have
forcefully denied the explosive March 3 "Ma'ariv" story
impugning his motives in the handling of the release of
Elhanan Tennenbaum as part of the Hizballah prisoner
exchange. Contrary to the paper's allegation that Sharon was
influenced by his business relationship 30 years ago with
Tennenbaum's former father-in-law, Shimon Cohen, Sharon Chief
of Staff Dov Weissglas told the Ambassador that Sharon had
had no idea of any familial relationship between Tennenbaum
and Cohen. Weissglas also cast doubt on the motives of the
right-wing reporter who broke the story. Although opposition
parties are expected to submit no-confidence motions over the
matter and to demand a commission of inquiry, Sharon's
potential rivals within Likud have fallen into line behind
him. Absent any reliable report proving the PM lied about
his knowledge about the relationship between Tennenbaum and
Cohen, the story will probably blow over in the coming days,
especially as Israelis turn to the Purim holiday, effectively
through Monday. As one pollster noted, however, the story
will likely contribute to a growing lack of confidence in the
PM. End Summary.



--------------------------


The Story: An Alleged Connection
Between Sharon and Tennenbaum


--------------------------





2. (SBU) The popular Hebrew daily "Ma'ariv" created a media
frenzy with its March 3 "exclusive" about a personal
relationship between PM Sharon and the father-in-law of
Elhanan Tennenbaum. Tennenbaum was returned to Israel as
part of the January 29 Hizballah prisoner exchange (reftel).
Ma'ariv devoted the entire front page -- under an apparently
deliberately ambiguous banner headline that could be
translated either as "The Connection" or "The Conspiracy" --
and the succeeding six inside pages to the matter. The story
contended that Tennenbaum's former father-in-law (he is now
divorced), Shimon Cohen, was a business partner of Sharon in
the 1970's, one of three people responsible for the
agricultural management of Sharon's Shikmim Farm. Kalman
Liebskind, who was the lead writer of this piece, stopped
short of alleging that this personal acquaintanceship
influenced the PM in his decision making on the prisoner
exchange deal, but he faulted Sharon for failing to reveal
the nature of his connection with the Tennenbaum family.



3. (SBU) Reports differ over how recently Sharon may or may
not have had contact with the now 89 year-old Cohen, and
whether Sharon knew of Tennenbaum's relation to his former
business partner. Some reports referred to a "strong"
relationship between the two and cited Cohen as saying that
the PM was aware of the familial relationship between Cohen
and Tennenbaum. Meanwhile, Cohen was quoted in other news
outlets as saying that he had not stayed in contact with
Sharon for the past 30 years and that he had forbidden his
grandchildren (Tennenbaum's children) from seeking
preferential treatment based on his past dealings with
Sharon. The most that Liebskind et al. could come up with in
a March 5 follow-up story was that Cohen was a party to a
1992 legal dispute about a land deal near Sharon's Shikmim
farm in which Sharon's younger son, Gilad, was involved, and
in which Sharon had intervened.



--------------------------


Calls for Sharon's Resignation


--------------------------





4. (SBU) The Ma'ariv scoop was accompanied by two
strongly-worded op-eds calling on Sharon to step down. Dan
Margalit, who previously called for the PM's resignation over
the David Appel (or "Greek Island") affair, gave voice to an
increasing sense of exasperation with corruption that many in
Israeli society feel: "I used to joke bitterly that
Tennenbaum must be a partner in the Greek Island enterprise.
Now it has become apparent that the business relationship
between Tennenbaum's family member and Sharon was stronger."
Ultimately, Margalit faulted Sharon less for his presumed
favoritism toward Tennenbaum than for his failure to fully
disclose his ties to Tennenbaum's father-in-law, suggesting
that the incident reflects a deeply flawed culture of
government.



5. (SBU) Commentator Ben Caspit, who has been critical of
Sharon in the past but not in the Sharon-bashing style of the
Israeli left, offered a similar take, suggesting that this
scandal could be the straw that breaks Sharon's back.
Condemning Sharon's alleged failure to disclose his
relationship with Cohen, he wrote: "You didn't think that
this marginal detail, your acquaintance with the family, the
business ties, was relevant and connected to the issue? You
believed that such a thing could remain secret, unknown,
concealed forever? Where is the judgment? Where is the
decency? Where is the proper conduct, which is supposed to
serve as an example to all...? Is it possible that you don't
even understand this? If so, it's an even harsher problem.
This is, perhaps, your natural way of thinking. That is the
way you picked up the phone in the past, called on the
director general of the Transport Ministry and tried to help
your friends from Kfar Malal. (Note: Allegedly to secure a
higher price for land acquired by the GOI. End Note.) That
is the way that you became entangled in further affairs,
surprisingly similar to one another..... We have lost our
faith in you. We somehow got through the stories, the
recordings, the photographs, the denials, the silences....
We can no longer do it.... Go home, to Shikmim Farm."



--------------------------


Angry Denials from the PM


--------------------------





6. (C) Speaking privately to the Ambassador, the PM's Chief
of Staff, Dov Weissglas, said that Sharon had no idea that
Cohen was related to Tennenbaum. He also cast doubt on the
motives of the Ma'ariv reporter who broke the story, pointing
out that Ma'ariv had brought the writer on board from "Mekor
Rishon," a right-wing, settler-oriented newspaper, to help
balance the perception that its editor-in-chief, Amnon
Dankner, is too leftist. Weissglas pointed out that this was
not the first time Liebskind had concocted a far-fetched
conspiracy theory about the PM -- a previous story had made
allegations about business ties between Sharon and the Greek
Orthodox Patriarch.



7. (SBU) Publicly, too, the PM and his staff wasted little
time in rebutting the Ma'ariv story. The PM's bureau issued
a statement denying that Sharon or anyone in his office knew
who Tennenbaum's father-in-law was at the time of the Cabinet
discussion of the prisoner exchange. The statement also
pointed out that the relationship was short-lived and took
place 30 years ago. The PM also refuted the story in
personal interviews with Israel's leading television
channels, breaking with his long-standing policy of granting
interviews only on major holidays. He rejected the
"malicious and despicable" allegations as "libel." In
addition, Sharon made an angry, impromptu statement to
members of the press at the Knesset. Unnamed officials in
the PM's office dismissed the report as just "another attempt
at defamation." Other "sources" close to the PM have been
quoted in the print and electronic media suggesting that the
Ma'ariv story represents little more than a far-right attempt
to discredit Sharon over the Gaza withdrawal plan.



--------------------------


Politicians Holding Fire


--------------------------





8. (C) Leading political figures have been, for the most
part, relatively cautious in responding on the record about
these latest allegations. With increasingly damning leaks
about Tennenbaum's unsavory activities (news stories this
week reported variously on boxes of highly classified
military documents and forged IDs that Tennenbaum had at his
home at the time of his abduction, as well as his alleged
involvement in drug deals and gambling; his fathering of a
child out of wedlock was also revealed), the whole affair is
taking on a bit of a foul smell with the Israeli public.
Press coverage has reminded the public that the cabinet vote
on the prisoner exchange was extremely close -- 12 to 11 --,
probably leaving those ministers who voted in favor of the
deal feeling vulnerable. (Note: The GOI did not release a
list of which ministers voted which way. End Note.) A quote
from an unnamed cabinet official suggests that such ministers
may be eyeing Sharon, who campaigned vigorously for the
exchange, as the fall guy: "One thing is certain," an
unnamed government minister was quoted as telling Ma'ariv,
"Without Arik Sharon, Elhanan Tennenbaum would still be held
captive by Hizballah." An Embassy contact in MOD DG Yaron's
office made this same point in private.



--------------------------


... Including Among Likud


--------------------------





9. (C) The conventional wisdom is that Labor and other
opposition parties will treat this scandal as they have the
previous corruption scandals surrounding the PM -- they will
continue to pursue (unsuccessfully) no-confidence motions and
will probably also demand an official commission of inquiry.
As long as these efforts are relegated to the opposition,
however, they will have little practical impact on Sharon.
Thus, the reaction within Sharon's own Likud ranks may be
determinative, and thus far, Sharon's principal Likud rivals
have fallen into line behind him. Finance Minister
Netanyahu, Education Minister Limor Livnat, and
Minister-Without-Portfolio Landau have all stated publicly
that they do not believe the PM acted out of extraneous
considerations in the Tennenbaum deal. Voicing gentle
criticism, Likud MK Ehud Yatom was quoted on Israel Radio as
saying that this matter is liable to raise questions and to
create the impression of concealment. Other MKs are
reportedly taking up their concerns, many of which pre-date
the Ma'ariv disclosure, in the context of the Knesset
Subcommittee on Intelligence and Secret Services, demanding
explanations for the high price Israel paid for Tennenbaum's
freedom.



--------------------------


Will it Go Anywhere?


--------------------------





10. (C) As commentator Yossi Verter wrote in Ha'aretz, only
"time will tell whether Sharon dug his own grave" with his
denials of knowledge about Cohen's relationship with
Tennenbaum. "Any reliable report proving the prime minister
lied on such a sensitive subject, with such moral, national,
and security implications, could bring such disgrace upon him
that it would be impossible for him to continue in office."
Channel 10 political correspondent Raviv Drucker predicted to
poloff that the whole issue amounted to "nothing" -- at least
"nothing anyone would be able to prove" -- and would
"disappear" in a matter of days. Pollster Dahlia Scheindlin
shared the view that the initial story was "overblown,"
although she opined that it would contribute to a general
lowering of Sharon's credibility and would fuel the
perception that political expediency is a factor in Sharon's
policy making. In fact, a Dachaf poll published on March 5
showed the percentage of Israelis who consider Sharon to be
lacking credibility jumped from 51% in early February to 57%
in early March. This poll found no direct linkage to the
Tennenbaum issue, however, with 53% of Israelis accepting
Sharon's motives as "pure" in the Tennenbaum/prisoner
exchange deal.

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