PERES: SUCCESS OF LIKUD-LABOR COALITION

1. (C) Summary: Prior to the Likud Central Committee's
positive vote on December 9 to open coalition negotiations
with the Labor Party, United Torah Judaism, and Shas (see
septel), an obviously exhausted Labor Party leader Shimon
Peres stressed to the Ambassador the depth of his own
problems in convincing the Labor Party to join the coalition.
Peres repeatedly emphasized the "limits in my capacity" to
bring Labor into a coalition without an offer from Prime
Minister Sharon of at least one, and more reasonably, two
major ministerial portfolios. Peres also underlined his
desire to see disengagement proceed and said elections in
2005 would be a "waste of five-to-six months" during which
time disengagement could have been implemented. In a
separate meeting with the Ambassador December 9, Labor Party
Whip Isaac Herzog echoed Peres' worries, and laid out a
likely Labor Party timetable for approving a Sharon offer to
join the coalition and possible ministerial assignments.



2. (C) Summary cont'd: In response to the Ambassador's
query on the prospects of GOI negotiations with Syria, Peres
stressed that it would not be feasible for the GOI to achieve
settlement withdrawals both from Gaza and the Golan at the
same time. End summary.



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


Unity Prospects Hinge on Portfolio Divisions


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





3. (C) Labor Party leader Shimon Peres stressed to the
Ambassador December 9 that if Prime Minister Sharon offers
"meaningless portfolios" to Labor for joining the coalition,
there are "limits" in his capacity to bring his party into
the coalition. Peres agreed with the Ambassador that this
could present an immediate impasse in Labor's coalition
negotiations with Likud. Noting that Labor would constitute
one-third of a unity coalition, Peres underlined that Sharon
should understand that Labor should receive one or two major
ministerial portfolios. Sharon should understand that Labor
can not be satisfied with "secondary" portfolios just to
help Sharon pacify Likud opponents to a unity government,
Peres emphasized.



4. (C) Peres explained that if Likud votes in favor of
opening coalition negotiations with Labor -- as it did later
December 9 with a 62 percent majority -- and Sharon
immediately invites Peres to the negotiating table, Peres
must first bring the issue before the Labor Party Bureau's
240 members, which requires 48 hours notice before holding a
meeting. Obtaining the Bureau's approval will be a "tough
fight," Peres said, since it includes many ministerial
portfolio contenders. If the Bureau approves negotiating
with Likud, Peres continued, the matter must then be taken
before the party's Central Committee for a vote. He did not
specify when such a vote could occur.



5. (C) Labor Party Whip Isaac Herzog subsequently told
Ambassador Kurtzer separately December 9, however, that Peres
could bring the matter to the Party Bureau for a vote as
early as December 11, and then to the Central Committee
during its previously scheduled meeting December 12 when the
party is supposed to decide on a date for party primaries.
(Note: During the meeting with the Ambassador, Herzog
received a call from Labor faction Chair Dalia Itzik to
inform him that Ehud Barak and Peres had agreed on a
compromise date for party primaries for June or July 2005,
thereby avoiding a party showdown. See reftel. End note.)




6. (C) According to Herzog, Sharon intends to offer Peres
eight ministerial portfolios, including what amounts to two
ministerial portfolios in return for forgoing the foreign
ministry. In total, Sharon would offer 11 portfolios to
Labor, UTJ and Shas, Herzog noted. He said that Sharon would
likely first bring Labor and the UTJ into the coalition and
may even "find a way later" to return Shinui to the
coalition. Herzog opined that the main "stumbling block" in
the portfolio negotiations will be that Sharon will not give
Peres the portfolio of alternate prime minister, a post
currently held by Likud MK and strong Sharon ally Ehud
Olmert. He said that Peres will likely be offered a role
relating to implementing disengagement. Labor may ask for
the ministries of Interior, Transportation, and Education,
but Herzog quickly added, "I don't think we'll get them." He
opined that Sharon may offer instead the Internal Security
and Labor and Welfare portfolios to Labor. Herzog said that
he believes Justice will remain with Likud MK Tzipi Livni.



7. (C) Herzog said that once a coalition agreement is
reached with Likud, perhaps as early as December 16, Labor
would then decide on its candidates for ministerial
portfolios, most likely shortly after that decision. He then
shot off a list of Labor contenders for ministerial slots in
order of importance, including Binyamin Ben-Eliezer, Ephraim
Sneh, Matan Vilna'i, Dalia Itzik, himself, Ofir Pines-Paz,
and Shalom Simhon. Herzog noted several times in the meeting
that he was showing up as "very popular" within the Labor
Party. These candidates would likely be voted as ministerial
candidates through either separate internal party votes or by
a single vote on a "coalition list" that Peres would propose.
Herzog opined that Chaim Ramon may not be popular enough
within Labor to receive a portfolio. In response to the
Ambassador's query, Herzog said that Barak would not seek a
portfolio.



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


Window of Opportunity


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





8. (C) Peres noted said that while Sharon could create a
majority government without Labor, such a coalition would not
support disengagement. Elections would likely be the result
if a unity government with Labor can not be formed, Peres
noted. "I don't want this government to fall," Peres
stressed, since elections would "waste five-to-six months" of
2005 and postpone implementation of the disengagement plan.
Reflecting his desire to join with Sharon now, Peres said
that: "I feel if I don't put my strength into (advancing
disengagement), it will not work.... I am fighting for a
cause." Peres noted that while he does not like the
disengagement plan, it represents the best hope to move the
peace process forward.



9. (C) Herzog also commented on the need to move
disengagement forward speedily, but from the perspective that
Peres himself is waning in strength and focus. "Peres has
the chance to help Sharon," Herzog stressed. He noted,
however, that there is only a small window of opportunity
since Peres "is not the same...is weak and not focused." On
Labor support for disengagement, Herzog explained that the
three main constituencies in Labor -- the "good" settlement
movement consisting of Kibbutzim and moshavs, the
Israeli-Arab sector, and the veterans and elderly --
reluctantly support disengagement for varying reasons. He
stressed that to gain the support of the elderly, Labor would
have to bring some economic benefits for that group to the
coalition table with Likud. "There will be a big debate on
economic issues with Likud," Herzog stressed. "(Finance
Minister Netanyahu) Bibi hates us and we hate Bibi," Herzog
said.



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Negotiations on the Golan, Not Now Feasible


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





10. (S) Asked by the Ambassador how he viewed opening
negotiations with Syria, Peres noted that there is an "open"
or public GOI position on this issue and a "private one."
Peres explained that the GOI's public position is that it
cannot agree to negotiations with Syria while that country
continues to host terrorist organizations. According to
Peres, the GOI's realistic and private position is that
Israel cannot -- for domestic reasons -- feasibly negotiate
with Syria on settlement withdrawals from the Golan at the
same time it moves forward with settlement withdrawal from
Gaza. Peres also noted it would be problematic for Israel to
negotiate with President Assad, who represents only a
minority in Syria and whose actions are based on his desire
to improve his world image.

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