ISRAEL MEDIA REACTION

UNCLAS SECTION 01 OF 09 TEL AVIV 001782

SIPDIS

STATE FOR NEA, NEA/IPA, NEA/PPD

WHITE HOUSE FOR PRESS OFFICE, SIT ROOM
NSC FOR NEA STAFF

SECDEF WASHDC FOR USDP/ASD-PA/ASD-ISA
HQ USAF FOR XOXX
DA WASHDC FOR SASA
JOINT STAFF WASHDC FOR PA
USCINCCENT MACDILL AFB FL FOR POLAD/USIA ADVISOR
COMSOCEUR VAIHINGEN GE FOR PAO/POLAD
COMSIXTHFLT FOR 019

JERUSALEM ALSO FOR ICD
LONDON ALSO FOR HKANONA AND POL
PARIS ALSO FOR POL
ROME FOR MFO

E.O. 12958: N/A
TAGS: IS KMDR MEDIA REACTION REPORT
SUBJECT: ISRAEL MEDIA REACTION

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SUBJECTS COVERED IN THIS REPORT:
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1. Mideast


2. Warren Buffett's Israeli Deal

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Key stories in the media:
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The acquisition by US tycoon Warren Buffett, who is the
world's second-wealthiest man, of 80 percent of Galilee-
based Iscar Metalworking for USD 4 billion, which he
announced on Saturday, dominated the headlines over the
weekend. The move is Buffett's first significant deal
outside the US and the third largest deal he has ever
made. On Sunday, Ha'aretz quoted him as saying
Saturday that he did not rule out investing in
additional Israeli companies. The media reported that
the deal will make Iscar's owners, Stef Wertheimer and
his son Eitan, the richest family in Israel. The
Jerusalem Post and other media reported that PM Olmert
told Eitan Wertheimer on Saturday that the deal is
"major news and a great present for Israel" and that it
"will provide great momentum to the Israeli economy and
I am certain that it will lead to other economic
benefits." The media reported that the deal boosted
the Tel Aviv Stock Exchange (banner in Maariv).

All media reported that on Sunday, PM Olmert moved into
the Prime Minister's Office, vowing to redefine
Israel's borders and crack down on illegal Jewish
activity in the West Bank. He was quoted as saying at
a ceremony marking his move: "In the next few years, we
will change Israel's character to ensure it will be a
state with a solid Jewish majority living within
defensible borders that can provide security to its
residents and separate us from those who must live
alongside us and not among us." Yediot quoted
associates of Defense Minister Amir Peretz as saying
that the new government will not last longer than two
years. Leading media reported that on Sunday, Peretz
decided to allow 12,000 Palestinian workers to enter
Israel.

Ha'aretz quoted GOI sources in Jerusalem as saying that
high-ranking officials from several government
ministries have been covertly planning the legal
framework of the convergence plan for several months.
The newspaper reported that the members of the
interministerial plan were appointed by former PM Ariel
Sharon about six months ago.

On Sunday, all media reported that Amir Peretz's first
action as defense minister was to approve an IAF strike
in Gaza on Friday, in which five operatives of the
Popular Resistance Committees in Gaza were killed.
Ha'aretz reported that two Palestinians -- one in the
Gaza Strip and the other in West Bank were also killed
over the weekend.

Yediot and Israel Radio reported that President Bush
told the German weekly Bild Am Sonntag that Iran's
threat to attack Israel must be taken seriously. Major
Israeli media cite Iran's threat that should the US
menace Iran with sanctions, Iran would withdraw from
the Nuclear Non-Proliferation Treaty. Maariv quoted
Tzachi Hanegbi, the incoming chairman of the Knesset's
Foreign Affairs and Defense Committee, as saying Sunday
that Iran's nuclear program will be the most important
item on his committee's agenda.

Israel Radio reported that three Palestinians -- two
Hamas militants and a Fatah one -- were killed and
eight were wounded in clashes between members of the
two factions in the Gaza Strip. The radio cited the
London-based Ash-Sharq Al-Awsat as saying that talks
between PA Chairman [President] Mahmoud Abbas and PA PM
Ismail Haniyeh were inconclusive. Major media cited
the British weekly The Sunday Times as saying that the
Israeli intelligence services saved Abbas from an
assassination attempt by Hamas's military wing in his
Gaza City office. Abbas reportedly canceled his trip
to Gaza following an Israeli warning. Maariv reported
that Hamas is investing hundreds of thousands of
dollars in the acquisition of weapons. The newspaper
cited the concern of Fatah officials that the weapons
might be used against their movement. Major media
quoted Palestinian FM Mahmoud Zahar as saying that he
met with several unnamed European foreign ministers and
other officials.

All media reported that on Sunday morning, police
evacuated 41 settlers and supporters who had barricaded
themselves in a Palestinian house in Hebron. Ha'aretz
and Israel Radio reported that the Civil Administration
in the West Bank is in the process of mapping all
illegal construction by settlers throughout the
territory, including the work taking place in illegal
outposts. Ha'aretz wrote that the operation is
expected to last four months and is part of a broader
plan by the authorities in preparation for the
evacuation of illegal outposts and the razing of
illegal construction. Ha'aretz reported that the
mapping operation was announced Sunday at the High
Court of Justice by the commander of the Civil
Administration in the West Bank, Brig. Gen. Kamil Abu
Rukun, in response to a petition by Peace Now, which
called for the demolition of the outposts of Horsha and
Hayovel.

On Sunday, major media reported that former Mossad
deputy chief Ilan Mizrahi is to be named the head of
the National Security Council, replacing IDF Gen.
(Res.) Giora Eiland who will be stepping down at the
end of this month.

The Jerusalem Post reported that despite making an
official request to have its upcoming Fed Cup tie,
scheduled to be played in Israel, moved to a neutral
site, the Indonesian Tennis Federation is making plans
to play in Israel.

Maariv reported that in an interview broadcast Sunday
on Al Arabiya-TV, Jordan's King Abdullah II said that
two years are left to achieve peace. The King
reportedly urged Hamas to adopt a realistic attitude,
but did not explicitly call on it to recognize Israel.

Ha'aretz reported that Likud, the National Union-
National Religious Party, and Yisrael Beiteinu have
been holding talks aimed at forming a joint
parliamentary bloc against Olmert's West Bank
convergence plan.

Major media reported that Sgt. Hananel Dayan, the
soldier who was ousted from his unit for refusing to
shake hands with IDF Chief of Staff Dan Halutz is
threatening to petition the High Court of Justice
against the dismissal.

Major media reported that Foreign Ministry DG Ron
Prosor was leaving his post. He was appointed Israel's
Ambassador to Germany. Leading media reported that FM
Livni announced Sunday that lawyer Aharon Abromovitch
will replace Prosor as DG.

Ha'aretz reported that the US has requested from
Azerbaijan President Ilham Aliyev that his country open
an official representation in Israel. The newspaper
said that the subject was raised last week during
Aliyev's visit to Washington, where he met with
President Bush and other senior members of the
administration. Ha'aretz wrote that Aliyev did not
respond to the American request and quoted sources as
saying that he is unlikely to undertake such a move in
the near future, and certainly not during the period in
which Azerbaijan heads the Economic Cooperation
Organization, a regional group comprising predominantly
Muslim and Turkic states from Central Asia. Ha'aretz
wrote that the US request follows an appeal by Israel
to the Bush administration, which was made to boost a
similar demand by Jewish American groups.

Over the weekend, leading media reported on the
resignation of CIA Director Porter Goss. The media
also reported on the reshuffling of the British
government following the Labour Party's local-election
defeat on Thursday.

Hatzofe reported that five long-range F16-I Lockheed
Martin aircraft arrived in Israel on Sunday.

Based on statistics released by the Department of
Homeland Security, Maariv reported that every year, the
US Citizenship and Naturalization Services arrest 550
Israelis staying in the US illegally, and prevent their
return to the US for at least 10 years.

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1. Mideast:
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Summary:
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Independent, left-leaning Ha'aretz editorialized: "The
new defense minister, Amir Peretz, and public security
minister, Avi Dichter, who is familiar with the
thuggery of the Hebron settlers from up close, are now
obligated to prove that the law is not an air bubble
when it reaches the territories."

Senior columnist Haggai Huberman wrote in the lead
editorial of nationalist, Orthodox Hatzofe: "Olmert is
basing his policy on demagoguery.... Uprooting the
settlements has become the main thing."

Senior Middle East affairs analyst Zvi Bar'el wrote in
Ha'aretz: "While dialogue with Hamas is likely to
promote Arab cooperation on the Iran issue, Israel has
decided that Hamas is the bigger threat."

Yonatan Touval, a researcher at the Economic
Cooperation Foundation, an NGO founded by the
architects of the Oslo Agreement, whose objectives are
to build, maintain and support Israeli-Palestinian and
Israeli-Arab cooperation in the political, economic,
and civil society spheres, wrote in Ha'aretz: "Israel's
unofficial boycott of the Quartet is perhaps the
biggest diplomatic open secret in current Mideast
negotiations."

George Conger wrote from London on page one of the
conservative, independent Jerusalem Post: "Israel may
have come out the winner following Prime Minister Tony
Blair's cabinet shuffle on May 5."



Block Quotes:
--------------


I. "The Routine of Violent Eviction"

Independent, left-leaning Ha'aretz editorialized (5/8):
"The new defense minister, Amir Peretz, and public
security minister, Avi Dichter, who is familiar with
the thuggery of the Hebron settlers from up close, are
now obligated to prove that the law is not an air
bubble when it reaches the territories. Arresting the
protesters, putting them on trial quickly and issuing
the army with strict and precise instructions aimed at
protecting the Palestinians' rights: These actions are
likely to make it clear that the security forces'
recent actions are not just a momentary legal spasm,
but part of a policy that has come to stay."

II. "Meditations on the 'Lifeline of Zionism'"

Senior columnist Haggai Huberman wrote in the lead
editorial of nationalist, Orthodox Hatzofe (5/7):
"Prime Minister Ehud Olmert said as he presented his
government to the Knesset that 'partitioning the Land
with the goal of ensuring a Jewish majority is a
lifeline for Zionism.' Any intelligent person with
eyes in his head who correctly analyzes the Prime
Minister's political plan understands immediately that
this is not a lifeline but a noose for Zionism, and
perhaps for Israel.... Olmert is basing his policy on
demagoguery and the mendacious argument that the
'continued dispersed settlement throughout Judea and
Samaria [i.e. the West Bank] creates an inseparable
mixture of population that will endanger the existence
of Israel as a Jewish state.' An utter lie. Today
already separation can be created between the Jewish
settlement blocs and the Palestinian blocs, without
removing a single settlement. Those facts, of course,
are something that no one will ever say, because
uprooting the settlements has become the main thing."

III. "Hamas or an Iranian Nuke"

Senior Middle East affairs analyst Zvi Bar'el wrote in
Ha'aretz (5/7): "It is true that most Arab spokesmen
have recently stopped conditioning their support for
the nuclear demilitarization of Iran on having Israel
denuclearize first, and Iran is perceived more and more
as a physical threat, while Israel is seen as an
ideological one -- but there is still a big difference
between this fine distinction and a direct and explicit
Arab demand of Iran. As in the case of Iraq, it seems
that most Arab leaders are again gathering in the cozy
corner of vague words and fears of war without taking
any real action. It is as if they are saying -- since
we cannot influence Israel's nuclearization, it would
be better not to deal with Iran. [Egyptian President
Hosni] Mubarak and [Saudi King] Abdullah can change
this political isolationism.... But how is it possible
to mobilize Arab support for an Israeli argument when
Israel is not only an occupier but also refuses to
engage in conversation with its adversary -- even when
this adversary closely adheres to a ceasefire? This is
something absurd, which is difficult to resolve. And
thus, while dialogue with Hamas is likely to promote
Arab cooperation on the Iran issue, Israel has decided
that Hamas is the bigger threat. It is such a big
threat that Israel easily mobilized a global boycott
against it. Iran is apparently only child's play."

IV. "Tough Challenges For the Quartet"

Yonatan Touval, a researcher at the Economic
Cooperation Foundation, an NGO founded by the
architects of the Oslo Agreement, whose objectives are
to build, maintain and support Israeli-Palestinian and
Israeli-Arab cooperation in the political, economic,
and civil society spheres, wrote in Ha'aretz (5/8):
"The Quartet should draft a separate memorandum of
understanding with Israel. The exact content of such a
memorandum may not be that important, although it
should definitely include an understanding that Israel
immediately and unconditionally resumes the transfer of
Palestinian tax money it collects at the borders. More
important, however, is the very act of concluding such
a memorandum if through such a document Israel was
brought to recognize the Quartet as such. Israeli
officials have, of course, met over the past four years
with individual members of the Quartet, but never
collectively, never together -- never, that is, as a
Quartet. Israel's unofficial boycott of the Quartet is
perhaps the biggest diplomatic open secret in current
Mideast negotiations. Clearly, if the U.S., EU, UN and
Russia can't bring Israel to recognize the Quartet,
there can be little confidence in the Quartet's ability
to do much more. Yet it must achieve much more or else
refrain from further involvement, for to continue
playing a counter-productive role is worse than playing
no role at all."


V. "Blair Cabinet Shakeup May Be Good For Jerusalem"

George Conger wrote from London on page one of the
conservative, independent Jerusalem Post (5/7): "Israel
may have come out the winner following Prime Minister
Tony Blair's cabinet shuffle on May 5. The demotion of
Foreign Secretary Jack Straw and appointment of Blair
loyalist Margaret Beckett to his post are likely to
result in a more unified Anglo-American approach to
Iran, Hamas, and the Middle East.... Beckett is
expected to strictly follow Blair's Middle East foreign
policy strategy, moving away from an EU-centered
approach to closer partnership with the US. Beckett's
experience with climate change negotiations and support
for the Kyoto Treaty protocols will not mean Britain
and the US will lockstep however, with the potential
for conflict arising over this contentious issue
between the view of Bush and Blair."

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2. Warren Buffett's Israeli Deal:
--------------

Summary:
--------------

Chief Economic Editor Sever Plotker wrote in mass-
circulation, pluralist Yediot Aharonot: "One of the
jewels in the crown of ... Israeli industry is now
moving into foreign, distant, anonymous hands."

The conservative, independent Jerusalem Post
editorialized: "Investors the world over will not miss
this event and will be able to reason that if [Warren]
Buffett considers Israel a land of promise, they might
do the same."





Block Quotes:
--------------


I. "Buffett's Vote of Confidence"

The conservative, independent Jerusalem Post
editorialized (5/8): "When Israel was founded and
struggled to stay alive 58 years ago, it would have
taken a particularly hallucinatory imagination to
forecast a day in which Israeli industry would thus
interest the world's greatest movers and shakers.
Nevertheless, this should not be the culmination of our
aspirations. It is not too brazen to hope that truly
successful Israeli firms assume the role of major
players in the globalized marketplace yet stay fully
and unequivocally Israeli. Other small economies have
done it. Finland's Nokia, for instance, remains
Finnish.... Investors the world over will not miss this
event and will be able to reason that if [US tycoon
Warren] Buffett considers Israel a land of promise,
they might do the same. Our challenge will be to keep
that promise viable. With all his goodwill, Buffett is
not [Israeli industrialist Stef] Wertheimer [who sold
him his Iscar firm] and his commitment to the Galilee
hinges on the bottom line. Still, while the guiding
considerations in future for Iscar may become less
Israeli-oriented, the acquisition, assuming the
business continues to flourish, will continue to
benefit this country for many years to come."

II. "Pride Mixed With Sorrow"

Chief Economic Editor Sever Plotker wrote in mass-
circulation, pluralist Yediot Aharonot (5/7): "The
investment of USD 4 billion by the richest private
investor in the world is ... not only an unusual mark
of appreciation for Israeli industry and for the
Israeli industrial sector. It is also a bad mark for
Israeli bureaucracy, Israeli regulation and the Israeli
capital market. The pride is therefore mixed with
sorrow.... When [US tycoon Warren] Buffett makes his
leading investment in Israel, he gives the highest
possible grade to our industries. So why the sorrow?
Over the fact that one of the jewels in the crown of
that same Israeli industry is now moving into foreign,
distant, anonymous hands. Not for control over
'strategic investment,' but rather to a holding company
that wants profit, profit and more profit. The profits
of Iscar will now be added not to the Israeli gross
national product but to the product of Warren Buffett
and of countless joint shareholders in his holding
firm. True, the management will remain in the
Wertheimer family's hands -- that is Buffett's method -
- but the array of concerns will gradually become less
and less Israeli and more and more American."

JONES