PERES TELLS CODEL BAYH THAT OLMERT WILL BE NEXT

"S E C R E T SECTION 01 OF 02 TEL AVIV 000145

SIPDIS

CODEL

DEPARTMENT FOR H

E.O. 12958: DECL: 01/11/2016
TAGS: PREL PGOV IR IS KPAL PINR ELECTIONS GOI INTERNAL ISRAELI PALESTINIAN AFFAIRS GOI EXTERNAL
SUBJECT: PERES TELLS CODEL BAYH THAT OLMERT WILL BE NEXT
PRIME MINISTER

Classified By: Political Counselor Norman H. Olsen. Reason 1.4 (B/D).


1. (C) SUMMARY: In a January 6 meeting, former Vice Premier
Shimon Peres told Senator Evan Bayh, that Prime Minister
Ariel Sharon's chances of returning to political power are
""nil,"" and that Alternate Prime Minister Ehud Olmert will be
the next Prime Minister of Israel. Peres discussed the
future of Kadima in positive terms, citing the need for such
a new party to bring about peace. Peres said that he
believes privatization of the economy can aid the peace
process. He expressed pessimism about the outcome of the
Palestinian elections, noting that he could not identify a
strong Palestinian interlocutor for peace. Peres emphasized
the need for the United States to stay the course in Iraq,
but he predicted that having Shiite parties in power,
together with a weak and divided Iraqi military apparatus,
would support Iranian aspirations and terrorism in the
region, and instability in Iraq. Peres also offered an
analysis of the current situation inside Iran, which, he
said, outlines the need for the U.S. and Europe to take a
three-pronged strategic approach using political,
psychological and economic pressures. Peres stressed
internal vulnerability in Iran, based on Israeli analysis.
END SUMMARY.

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Peres: You Need a Third Party to Make Peace
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2. (C) Peres expressed regret that Sharon had lost his
capacity to govern, and assessed that Sharon's chances of
returning to political power are ""nil."" Kadima will still
receive the largest number of votes in the March elections,
he predicted, and Alternate PM Ehud Olmert will become the
next prime minister. Peres asserted that Kadima's role in
Israeli politics is essential to the peace process, adding
that Kadima has filled a political ""vacuum"" brought about by
the increasing radicalization of the right. Sharon's
disengagement plan made Sharon a hero, ""even in the eyes of
Europe,"" but this same policy alienated Sharon from the far
right, Peres said.


3. (C) Peres said that his personal agenda is to promote
Israeli economic interests and companies abroad as a means to
promote peace. He said that he believes this strategy has
worked for the United States and China, and that it could do
the same for Israel. He also said thriving private sectors
are critical to moderating the Arab world. Peres highlighted
his current book, ""The Privatization of Peace,"" in which he
lays out these concepts.

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Dire Predictions for Palestinian Elections
--------------


4. (C) Peres was pessimistic about the January 25 Palestinian
Legislative Council elections, estimating that the struggle
between Hamas and Fatah, and within Fatah, will continue
after elections. This internal struggle could potentially
produce ""something positive,"" Peres said, but added that, at
present, a viable Palestinian interlocutor for peace does not
exist. He characterized Hamas and Palestinian Islamic Jihad
-- not Israel -- as the greatest enemies of the Palestinian
cause. Peres remarked, ""When a cat is chasing a mouse, there
is no chance the mouse will get a ceasefire.""

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Iraq: You Can't Leave a Patient in the Middle of Surgery
-------------- --------------


5. (C) Peres strongly emphasized the need for the United
States to stay the course in Iraq, likening the situation in
Iraq to a patient on a surgeon's table. ""A surgeon cannot
simply leave a patient in the middle of surgery,"" he said.
According to Peres, the repercussions of leaving Iraq affect
not only the United States and its partners, but also Arab
countries with Sunni majorities that are vulnerable to
terrorist attacks, such as Saudi Arabia and Jordan.


6. (S) The terrorists, Peres said, are Shiite Muslims who
are infiltrating Iraq through the Iranian border and
destabilizing the country. Peres suggested that the U.S.
work more closely with the Iraqi military to learn their
culture and language, and offered that Iraqis could learn
American self-assurance on the battlefield. Senator Bayh
agreed with this assessment, noting the additional challenge
of an Iraqi army divided into Kurd, Shiite, and Sunni
elements. Peres also cautioned that the methods the U.S. is
pursuing in its push for democratic reforms have put majority
Shiites in political power, and that ""democratic processes do
not always yield democratic results."" Another Shiite
country, Peres said, is what Iran wants.

--------------
Iran: An Israeli Intelligence Analysis
--------------


7. (S) Peres thanked Senator Bayh for his position on
speaking out against Iran, but urged that the United States
pay more attention to what is going on inside that country.
Peres pointed to a lengthy profile of Iran produced by what
he said was Israeli intelligence on the ground, using it to
justify a three-pronged strategic approach -- political,
psychological and economic -- toward the Iranian regime.
Peres claimed that Iran's population has doubled to 72
million from 30 million since the first U.S. strike against
Iraq in 1991 and has brought about a major increase in
poverty and crime. He claimed that Tehran alone now has
900,000 prostitutes. Overall, he said Iran has 3 million
drug addicts, 18 percent inflation, and 15-17 percent
unemployment. Since the election of the new regime, Peres
added, the stock exchange has dropped 30 percent. He claimed
that some 200,000 Iranians, including some clerics, are
leaving annually, that there are 100,000 anti-regime
websites, in a variety of languages, and that the number of
executions of journalists and dissidents is increasing.


8. (S) Peres assessed that a majority of Iranians support
regime change and engagement with the West. He cited a June
9, 2005 poll, which shows that 70 percent of Iranians believe
a U.S. presence in the Middle East increases the chances for
democracy in Iran. Peres acknowledged that the United States
cannot achieve its objectives alone, noting that Iran will
continue to ""play"" the international community unless the
United States, Europe, and Russia show a unified front.
Peres assessed that if Europe and the United States can agree
on their political, psychological and economic approach
toward Iran's regime, Russia will follow suit. Time is of
the essence, he underlined, since Iran will complete R&D for
its nuclear program ""in a matter of months.""


9. (S) Peres suggested a range of steps to implement his
strategy on Iran. The United States could organize its
Iranian diaspora population to help lead a human rights and
freedom campaign against the Iranian regime, he suggested.
The Iranian diaspora should understand that the international
community is not criticizing Iran as a whole, Peres said, but
rather the current Iranian regime and radical Islam. The
U.N. Security Council could make demands of Iran that are not
necessarily tied to its nuclear ambitions, Peres said; for
instance, Peres continued, Israel would like to see Iran
abandon its long-range missile program. It is essential,
Peres added, that the international community push for a
document outlining ""punishment"" for any Iranian use of
nuclear weapons. Noting the statistics he had earlier
highlighted on the Iranian economy, Peres assessed that
economic sanctions could have a greater impact than imagined.
Peres said that he believes this three-pronged approach will
prevent the need for military action. He encouraged Senator
Bayh to continue speaking out against the regime, but to
equally state his support for the people of Iran.


10. (U) Senator Bayh's delegation cleared this cable.

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