LABOR'S ENTRY TO COALITION COULD HINGE ON

C O N F I D E N T I A L SECTION 01 OF 02 TEL AVIV 001941

SIPDIS

E.O. 12958: DECL: 03/31/2014
TAGS: PGOV IS GOI INTERNAL
SUBJECT: LABOR'S ENTRY TO COALITION COULD HINGE ON
INDICTMENT DECISION

REF: TEL AVIV 1906

Classified By: Ambassador Daniel Kurtzer for reason 1.4 (b) and (d).


1. (C) Summary: In the face of a possible bribery indictment
against PM Sharon, speculation has begun over whether Labor
will put on hold any plans to take the place of the
right-wing parties in Sharon's coalition if they eventually
bolt over Gaza withdrawal (reftel). Before the State
Prosecutor delivered her recommendation to indict Sharon on
March 28, MKs both in and outside Labor treated a unity
government as imminent if and when Sharon's disengagement
plan wins Cabinet approval, since leaders of both right-wing
coalition parties had said they would then leave the
coalition. One Labor MK told Ambassador Kurtzer as recently
as March 23 that there are no substantive barriers, including
on the nature of PM Sharon's disengagement plan, that would
hold Labor back from joining with Likud. PM Sharon's
announcement that he now intends to present his plan to Likud
voters for approval, probably in mid-May, and only then
present it to the Cabinet, puts off at least for some weeks
the rightists' decision point. With reports now indicating
that AG Menachem Mazuz could take two months to reach an
indictment decision, Labor could still find itself in the
awkward position of having to decide whether to join with
Sharon before the AG decides whether to indict him. While
Labor leaders are remaining judiciously silent on the
prospects of a unity government, they must now weigh the
costs of joining a government headed by a tainted prime
minister who says he is determined to take the major step
that Labor has endorsed for years. End summary.

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Pre-Arbel Announcement, MKs Saw Labor/Likud Unity Imminent
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2. (C) Before State Prosecutor Edna Arbel recommended to AG
Menachem Mazuz March 28 that he indict PM Sharon on bribery
charges in the "Greek Island Affair" (reftel),Labor MKs
predicted Labor would join the Likud government as soon as
the right-wing National Religious Party (NRP) and National
Union (NU) bolt the coalition. NRP and NU leaders had said
they would do so to oppose Sharon's controversial Gaza
disengagement plan, and while they have offered various
timing scenarios, observers looked for a walkout immediately
after a Cabinet approval of the plan. MK Isaac Herzog
(Labor) told Ambassador Kurtzer on March 23 that 16 of the 19
Labor MKs would agree to join a Likud government, with Labor
MKs Amram Mitzna, Yuli Tamir, and Avraham Burg the only
hold-outs. MK Burg and Shinui MK Eti Livni both told poloff
in separate conversations that Labor was eager to join with
Likud. Echoing this assessment from the Likud side, Deputy
PM Ehud Olmert asserted in a March 26 radio interview that he
is "almost certain" that "if political conditions are ripe
the Labor Party will join the government."


3. (C) In fact, Labor is so anxious to join with Likud,
Herzog told Ambassador Kurtzer on March 23, that there are no
real substantive issues that block its agreement to join.
Labor would even go along with a a withdrawal plan for Gaza
settlements only, despite Labor's desire for inclusion of
West Bank elements too, Herzog said. Herzog went so far as
to forecast which ministerial seats Labor would receive if it
joins the coalition. Peres, he predicted, would promise
seats to former unity government Defense Minister Binyamin
"Fuad" Ben-Eliezer, Dalia Itzik, Chaim Ramon, Shalom Simhon,
and Avraham Shochat and Peres would seek the foreign minister
seat for himself.

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Labor on the Verge
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4. (C) State Prosecutor Arbel's recommendation to indict
Sharon, however, could complicate Labor's decision to join
with Likud. For now, Labor's leaders are remaining
judiciously silent. Only a handful of Labor MKs have so far
commented on Arbel's recommendation, leaving a party view on
the matter anything but clear. Labor MKs Yuli Tamir and Ofir
Pines-Paz called on the PM to suspend himself until his name
is cleared (reftel),while Labor faction chair Dalia Itzik
called on her Knesset colleagues to reserve judgment until
after the AG decides on whether to indict. Labor MK Burg
reportedly on March 29 called on Peres to announce that Labor
will not join with Likud while Sharon is involved in
scandals. Without providing the names of its sources, the
major Hebrew daily "Ma'ariv" reported on March 30 that
Arbel's indictment recommendation "caused the immediate
suspension of a secret agreement recently reached by Sharon's
aides and Labor Party representatives," identified in the
report as Sharon COS Dov Weissglas on the Likud side and MK
Chaim Ramon on the Labor side. According to the unsourced
Ma'ariv article, which Peres and a Sharon spokesperson have
since denied, Likud and Labor teams discussed a division of
ministerial portfolios similar to that recounted by Herzog
above.

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Sharon May Push the Envelope
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5. (C) Labor leaders clearly face the difficult situation of
having to choose between joining a government headed by a
tainted prime minister or not joining and thereby sacrificing
a chance to realize a Gaza withdrawal, a policy Labor has
endorsed for years. Sharon's decision to hold a Likud-wide
referendum, probably in mid-May, and only later to submit the
withdrawal plan to the Cabinet, puts off for some weeks the
rightist coalition partners' decision point on leaving, and,
by extension, Labor's decision point on joining. At the same
time, reports now indicate that AG Mazuz is looking at two
months to reach a Sharon indictment decision. Labor may thus
still have to make its decision on joining the coalition
without the benefit of the AG's decision.

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