THE LIEBERMAN FACTOR IN ISRAEL POLITICS AND U.S.

C O N F I D E N T I A L SECTION 01 OF 03 TEL AVIV 004303

SIPDIS

E.O. 12958: DECL: 10/27/2012
TAGS: PREL PGOV PINR KPAL IS US
SUBJECT: THE LIEBERMAN FACTOR IN ISRAEL POLITICS AND U.S.
INTERESTS

REF: A. TEL AVIV 4034

B. TEL AVIV 4256

C. TEL AVIV 4107

D. 02 TEL AVIV 1441

E. 03 TEL AVIV 3172

F. 04 TEL AVIV 1689

G. 01 TEL AVIV 1870

Classified By: Ambassador Richard H. Jones. Reason 1.4 (B/D)


1. (C) Summary: Avigdor Lieberman's Yisrael Beiteinu (YB)
party is poised to formally join the governing coalition on
October 30, following negotiations with PM Olmert and the
grudging acceptance of this deal by Labor Party chairman Amir
Peretz. Although several Labor MK's have made their
vociferous opposition to Lieberman's inclusion known (ref A),
their ability to block Knesset approval of the deal on
October 30 -- or force Labor to leave the coalition because
of it is limited, and will fail. By bringing in YB, Olmert
buys more time in office and some political stability in the
Knesset at a time when he is down in the polls for his
handling of the Lebanon war and facing investigation for
several allegations of corruption (ref B). The political
impact may well be the creation of another "bipolar" Israeli
government that is similar in some respects to the first
Sharon government of 2001 -- when Labor and YB last
participated in government together. Unlike the situation
that prevailed in 2002 and 2004 when Lieberman quit Sharon's
cabinet over policy issues while Labor lingered, Lieberman
now has greater political leverage, and may, in joining the
coalition, ultimately force Labor to quit, particularly if he
succeeds in blocking Labor policy objectives regarding the
Palestinians. The new coalition may well be better able to
survive domestic battles in the Knesset over issues like the
budget, but adding Lieberman will likely render Olmert's
government less willing or able to move ahead with U.S.
policy initiatives, such as implementing the AMA or
dismantling outposts. End Summary.

WINNERS AND LOSERS OF COALITION POLITICS


2. (C) In the tumultuous world of Israeli politics, Olmert
is viewed by his supporters and even some critics as having
made an astute political move that secures his longevity in
office and protects the Kadima-led coalition in the Knesset
from fracturing in the aftermath of the Lebanon war. Olmert
has cemented a center-right alliance that his political
strategists, such as Kadima faction leader Avigdor Yitzaki
have advocated ever since the March 2006 elections. For his
part, Lieberman is poised to enter Olmert's coalition at the
expense of two of his competitors (for PMship): a weakened
Amir Peretz on the left and an outmaneuvered Binyamin
Netanyahu on the right.


3. (C) In joining the coalition, Lieberman achieves
heightened political status at the expense of his former
mentor and current opposition rival, Netanyahu, and could
serve as a kingpin who ushers in his friends on the far-right
when and if Labor bolts the coalition. "Benny Elon of the
National Union (which was paired with Yisrael Beiteinu in the
last Knesset) and the National Religious Party are already
making noises about joining the coalition," Kadima MK Yoel
Hasson, who is the Kadima whip, told poloff October 24.
Netanyahu's titular status as opposition leader is of even
less consequence now that a stalwart of the Israeli "national
camp" will become a pivotal member of the Olmert government.
Hasson, who also serves as faction leader Yitzaki's deputy,
remarked: "Lieberman realizes that if he wants to be PM, he
must be closer to the center. In joining the coalition, he
forces Bibi to appear to be further to the right (than he,
Lieberman, is)." Adding insult to injury, as Minister for
Strategic Threats, Lieberman will be empowered to deal with
the strategic threat -- Iran -- that Netanyahu has been
focused on for a decade, and especially since the March
elections.

LABOR DIVIDED, PERETZ FLIP FLOPS


4. (C) Peretz remains immobilized by competitors for the
2007 Labor Party leadership race and his own indecisiveness.
One day, Peretz states that he will never serve in a
government with Lieberman, only to flip-flop days later.
Arab MKs in the Labor Party, and others, are pinning their
hopes on securing a secret ballot of the Labor Central
Committee on Sunday, October 29, which will decide whether
Labor approves YB's entry in the coalition and Lieberman's
ministerial appointment when it comes to the Knesset, likely
on October 30. MK Nadia Helou (Labor) told poloff October 26
that Labor's Knesset faction leader, MK Efraim Sneh, had now
joined the cohort of Labor leaders that support staying in
the government -- perhaps enticed by a return to the newly
revived Deputy Defense Minister portfolio that Olmert offered
to Labor as a sweetener for the bitter Lieberman pill. Helou
implied that this move had tipped the balance in favor of
Labor staying in government -- for now. On the other hand,
Helou, who is one of two Arabs in the Labor Party, discounted
the importance of Olmert's reported offer to Peretz of the
chairmanship of an inter-ministerial committee on Arab
issues, noting that previous committees gave rise to more
talk than action on the ground. She echoed comments made by
Peretz in the press that the current coalition would last no
more than a year and predicted early confrontation over
issues ranging from social policy to foreign policy.

LIEBERMAN'S PRICE PAID IN ABANDONMENT OF REALIGNMENT


5. (C) Olmert secured Lieberman's participation in the
government for the price of a single ministerial portfolio,
which, in Israeli politics, is a bargain. Yet Lieberman, who
has a reputation of opting to honor his principles rather
than hold on to ministerial positions, secured influence on
GOI policy, which is of greater importance to him than posts
for other YB politicians. As Lieberman wrote to the Speaker
of the Knesset on September 4, 2006, he does not support
evacuation of outposts or further unilateral territorial
concessions. While Olmert maintained that the government
guidelines (www.pmo gov.il/PMOEng/Government/Policy) would
remain in force, Olmert has, in fact, also announced that he
has put on hold the realignment policy that catapulted Kadima
into power last March. Moreover, in his first address to the
Knesset fall/winter session, Olmert placed government reform
ahead of peace process-related priorities and did not mention
realignment at all (ref C).

LIEBERMAN'S PAST POLICY PRESCRIPTIONS AND CURRENT FOCUS


6. (C) In the policy vacuum created by Olmert's apparent
abandonment of further, unilateral withdrawals from the West
Bank in the wake of the Lebanon war, Olmert has opened the
door for Lieberman to wield new policy influence on
"strategic threats." Lieberman has said he believes Iran to
be Israel's sole strategic threat, while other threats posed
by the Arab world are subsidiary to it (ref B). Although
Lieberman remains concerned by the chaotic situation in Gaza
and the potential for the West Bank to follow suit, he has
consistently opposed U.S. initiatives such as the Tenet Plan
(ref D) and Roadmap (ref E),and demonstrated with his feet
his unwillingness to support Israeli initiatives to change
the situation in the Palestinian territories. In 2002, he
quit what he termed Sharon's "Peres-Arafat Coalition" over
his objections to Sharon's willingness to allow Arafat to
leave Ramallah and to permit "negotiations under fire." In
2004, Lieberman again parted ways with former PM Sharon over
disengagement from the Gaza Strip and parts of the West Bank,
moves he felt Palestinians would view as "weakness, not an
effort to compromise" (ref F).


7. (C) Lieberman has advocated a variety of alternative
plans for dealing with Palestinians, ranging from a 2002
proposal to cantonize the West Bank and Gaza and make
residents of these cantons citizens of Jordan (ref E) to his
more controversial 2004 "Separation of Nations" alternative
to disengagement that proposed separating the populations and
territories of Jews and Arabs, including carving off several
Israeli Arab towns along the Green Line, such as Umm Al-Fahm.
Lieberman, who lives in a West Bank settlement, is a staunch
advocate of settlements, and promoted it actively in his
first ministerial portfolio as Infrastructure Minister in
Sharon's first government (ref G). In a March 2006 Ha'aretz
interview, Lieberman proposed forfeiting all of the Israeli
Arab settlements on the seam (Green Line) between Israel and
the Palestinian Authority -- such as Umm Al-Fahm, Baka
al-Garbiyeh and Taibeh -- and exchange them with Jewish
settlements such as Maale Adumin and Gush Etzion.

LIEBERMAN IMPACT ON U.S. POLICY


8. (C) U.S. efforts to implement initiatives to improve the
quality of life of Palestinians living in the West Bank and
Gaza, including the November 15, 2005, Agreement on Movement
and Access (AMA) and demolition of outposts, may well face
new obstacles when Lieberman joins Olmert's government.
Press reports indicate that embattled Defense Minister
Peretz, our key interlocutor on AMA issues, intends to move
ahead with plans to remove illegal outposts in the near
future. By provoking a confrontation with Lieberman on
outposts, Peretz may hope to improve his credibility in the
left. But Peretz has no track record of success on this
issue, merely talk. A showdown that he lost to Lieberman
could further weaken Peretz's institutional support in the
MOD and IDF. More generally, Lieberman does not support the
creation of an independent, viable Palestinian state, and has
already dismissed President Abbas as weakened and corrupt --
not a partner. His own preferred Palestinian interlocutor is
Mohammed Rashid (whom he knows from his days as Netanyahu's
chief of staff in the late 1990's) (ref B).

BIO NOTE:


9. (C) Lieberman immigrated to Israel from Moldova in 1978.
He is a controversial figure among many Israelis due to his
reported history of personally bullying Arabs in fights
during his student days, and politically in the Knesset,
where he recently called for Nuremberg-like trials and
executions of disloyal Arab MKs who consort with enemies of
Israel, such as Syria. A Muslim Arab Knesset staffer told
poloff that Lieberman, despite his public rhetoric, is polite
and friendly with him in person. Lieberman, however,
declines invitations to visit mainly Arab towns (unlike
others on the far-right who have visited mainly Arab or mixed
towns such as Sakhnin or Jaffa to try to provoke
confrontation by calling for transfer of Arab citizens).
Thus, Lieberman lives the Arab-Jew separation that he
believes is the foundation for coexistence at a time of
clashing civilizations.

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