ISRAEL MEDIA REACTION

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SUBJECT: ISRAEL MEDIA REACTION

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SUBJECTS COVERED IN THIS REPORT:
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Mideast

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Key stories in the media:
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Major media reported that former PM Ehud Barak regained the
chairmanship of the Labor Party following his victory in the party's
run-off primary. Barak obtained 51.3 percent of the votes and
Knesset Member Ami Ayalon 47.7 percent. In his victory speech,
Barak pledged to strengthen the IDF and restore Israel's deterrence.
Media reported that PM Ehud Olmert wants Barak to join his
government as soon as possible. Yediot wrote that Olmert will offer
Barak the defense portfolio.

All media prominently reported on the ongoing clashes between Hamas
and Fatah militants in the Gaza Strip, in which at least 31 people
were killed and 75 wounded on Tuesday and this morning. Leading
media reported that Hamas controls most of the Strip -- or most of
its northern part. Leading media reported that Fatah suspended
participation in the Palestinian national unity government. The
Jerusalem Post bannered: "Gaza on Verge of Becoming Hamastan."
Yediot quoted the heads of Egyptian and Jordanian intelligence as
saying that Al-Qaida terrorists are becoming involved in the bloody
fighting in Gaza. Israel Radio reported that senior Egyptian
officials blame Iran for the violence. Israel Radio reported that
the US-based organization Human Rights Watch accused Hamas and Fatah
of war crimes against the Palestinians.

Media quoted PM Olmert as saying: "If the Gaza Strip falls
completely into the hands of Hamas, this will have regional
implications." Israel Radio quoted him as saying that Israel will
not enter the Gaza Strip to fight the pragmatic forces' fight
against the extremists. Israel Radio reported that Defense Minister
Amir Peretz and IDF Chief of Staff Gabi Ashkenazi decided on Tuesday
not to intervene in the Gaza Strip. The radio reported that Peretz
warned that Israel would respond seriously if violence spills into
Israel. Leading media quoted Olmert as saying, after a meeting with
visiting Dutch FM Maxime Verhagen, that the deployment of a
multinational force along the "Philadelphi Route" in Rafah should be
seriously considered. Media reported that Olmert expressed his
concerns about the PA's possible collapse.


Leading media quoted Syria's Deputy FM Ahmad Arnous as saying on
Tuesday that Syria is ready to negotiate peace with Israel but that
it refuses conditions on the talks. Israel Radio quoted a source
in Israel's Foreign Ministry as saying that Arnous failed to mention
Israel's offer of direct negotiations, even without US mediation.
In another development, Yediot reported that Syria recently denied
UN observers access to the demilitarized zone on the Golan Heights
to check whether Syria respects the 1974 Separation of Forces
Agreement. Yediot noted that Syria eventually acceded to the UN
demand.

The media reported that the Knesset will elect Israel's next
president in three rounds today. Maariv defined Vice PM Shimon
Peres' bid as his "last attempt" to win a top national post. The
media noted that the race between Peres and former Knesset speaker
Reuven Rivlin (Likud) is tight.

The Jerusalem Post reported that on Monday Riyad Mansour, the
Palestinian Observer Mission's ambassador to the UN, called for a
cease-fire with Israel in both the Gaza Strip and the West Bank,
saying the quiet would strengthen moderates seeking a political
agreement. Mansour also backed a cease-fire between warring
Palestinian factions. The Jerusalem Post reported that, despite the
talk of cease-fires, Jeremy Issacharoff, Deputy Chief of Mission at
the Israeli Embassy in Washington, warned that there could be an
increase in the fighting.

Leading media reported that on Tuesday the Winograd Commission
probing the Second Lebanon War released the testimony of
Transportation Minister -- and former defense minister and former
chief of staff -- Shaul Mofaz before the commission. Mofaz was
quoted as telling the commission that each time he tried to
intervene during the course of the war, his view that the IDF should
heavily strike Hizbullah was rejected.

Yediot, The Jerusalem Post, and Israel Radio reported that the State
Department released its 2007 Trafficking in Persons Report, which
states: "The Government of Israel does not fully comply with the
minimum standards for the elimination of trafficking; however, it is
making significant efforts to do so." Yediot and Israel Radio cited
the satisfaction of Justice Minister Daniel Friedmann and his
ministry over the report.

Makor Rishon-Hatzofe reported that, as part of a debate at the
Knesset's Constitution, Law and Justice Committee, the Israeli
defense establishment and the Justice Ministry are preparing a
campaign to fight what they say is the World Bank's hostile and
erroneous report on the territories.

The Jerusalem Post reported that the Civil Administration in the
territories has threatened to seal off four rooms that abut two
Jewish-owned apartments at the edge of Hebron's Avraham Avinu
neighborhood. The newspaper quoted a Civil Administration spokesman
as saying on Monday that Jewish families had illegally expanded into
the premises.

Israel Radio reported that over 250 British academics have placed a
paid ad in the British daily The Times to protest the boycott of
Israeli universities, saying that the union of lecturers that
recommended it is small, unrepresentative, and harms academic
freedom and Britain overall.

Ha'aretz reported that the Jerusalem Municipality will invest 6
million shekels (around USD 1.433 million) in various improvements
around the walls of the Old City.

The Jerusalem Post reported that the city of Tel Aviv has been
ranked as one of the world's top 50 centers of commerce by the new
MasterCard Center of Commerce research index of leading cities that
influence the global economy and drive global commerce. The
Jerusalem Post also wrote that Israeli real estate attracted a
record USD 209 million in foreign investment in May as French and US
Jews purchased second homes in the country.

Yediot reported that, ahead of the 2008 Olympic Games, the Beijing
Municipality has granted honorary citizenship of the Chinese capital
to 15 people from around the world, including former Israeli
ambassador to China Ora Namir.

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Mideast:
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Summary:
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Washington correspondent Shmuel Rosner wrote in the independent,
left-leaning Ha'aretz: "The Secretary of State and her assistants
will now make do with outlining a path of "American realism," which
is now being translated into spoken Arabic in the smoking alleys of
the Gaza Strip."

Military correspondent Alex Fishman wrote in the mass-circulation,
pluralist Yediot Aharonot: "In the end we won't have any choice. We
will have to go [into the Gaza Strip] to disassemble the ticking
bomb that is being built in front of our very eyes."

Military correspondent Amos Harel and Palestinian affairs
correspondent Avi Issacharoff wrote in Ha'aretz: "The outcome [of
the intra-Palestinian fighting] in the offing will have far-reaching
implications not only for the future of the Palestinian Authority,
but also for its relations with Israel, and perhaps for the entire
region. The old Palestinian dream of a real state is fading fast."

Former Mossad director Ephraim Halevy wrote in the editorial of
Yediot Aharonot: "The turn of daily events in the Palestinian
territories does not leave us with more than just a few weeks to
grab the bull by the horns."

Zalman Shoval, a senior Likud member and former ambassador to the
US, wrote in Yediot Aharonot: "Bush and Olmert [might decide] to
skip over the first two stages of [the Roadmap] and go straight to a
permanent status arrangement based on the Saudi initiative --
perhaps with light cosmetic changes."

Assad Ghanem, a lecturer at the University of Haifa, wrote in
Ha'aretz: "[A] stable binational state ... is the only option that
can still represent an alternative to the current harsh reality."


Block Quotes:
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I. "American Realism in the Alleys of Gaza"

Washington correspondent Shmuel Rosner wrote in the independent,
left-leaning Ha'aretz (6/13): "[Secretary] Rice, who, [like
President Bush], is in favor [of a two-state solution], is preparing
the ground for a predictable disappointment. It is true, she will
be able to claim when the time comes, that no state was established;
but Bush succeeded in bringing about a critical change in public
opinion. And meanwhile ... the Secretary of State and her
assistants will now make do with outlining a path of "American
realism," which is now being translated into spoken Arabic in the
smoking alleys of the Gaza Strip. That is the political philosophy
with which she will explain the efforts to strengthen the status of
Fatah, which lost the elections, at the expense of Hamas, which won
them legitimately. That is also the theory that will justify the
renewed reliance on oppressive regimes such as Egypt, deceitful ones
such as Saudi Arabia, and autocratic ones such as Jordan -- pursuing
what is desirable, and making do with what exists."

II. "Concern that Israel Might Be Forced to Enter Gaza"

Military correspondent Alex Fishman wrote in the mass-circulation,
pluralist Yediot Aharonot (6/13): "Israel is a sovereign state that
has become embroiled -- or embroiled itself -- in an impossible
situation in which it lives beside a large neighborhood of Baghdad.
There, on the far side of the fence, there is a slew of factions....
If up until a few weeks ago, in the sixth round of violence since
Hamas rose to power, we still wanted to believe that this was an
internal, political battle, today, in the seventh round, no one
harbors doubts any more: This is a brutal civil war with short
breaks for each side to lick its wounds and regain its strength.
All the mediation efforts are for appearanceQs sake only. The
military wings on both sides have already made their strategic
decision. Hamas has decided to eradicate Fatah by force and to
dissolve its security services. Fatah has decided to topple Hamas
from power. These rounds of violence could very well continue for a
long time to come.... The attacks on Israel will, ultimately, come.
In order to close Palestinian ranks there will be a Qassam rocket
attack, and the small terror organizations will make concerted
efforts to execute terror attacks and kidnap soldiers. The clashes
in Gaza might also set the West Bank on fire. There are already
signs of that. And we haven't even begun to talk about the
humanitarian crisis on our doorstep. The systems in Gaza have
already begun to collapse. Schools arenQt open, stores are open
only partially, the foreign welfare agencies have left, and some of
the hospitals have become battlegrounds. The world will point the
accusatory finger at Israel. In the end, we won't have any choice.
We will have to go in there to disassemble the ticking bomb that is
being built in front of our very eyes."

III. "Hamastan, Fatahstan"

Military correspondent Amos Harel and Palestinian affairs
correspondent Avi Issacharoff wrote in Ha'aretz (6/13): "Yasser
Arafat must be turning in his grave. Barely two and a half years
have gone by since his death and already his movement, Fatah, is
steadily losing its last strongholds in the Gaza Strip.... The
outcome in the offing will have far-reaching implications not only
for the future of the Palestinian Authority, but also for its
relations with Israel, and perhaps for the entire region. The old
Palestinian dream of a real state is fading fast. The speech that
President George Bush is scheduled to deliver on June 24 (the fifth
anniversary of his speech laying out a two-state vision for the
Middle East) will have to undergo substantial revision. Hamas's
takeover of Gaza, which seemed closer than ever on Tuesday, is
destined to split the territories into two entities that are
politically and even culturally separate: Hamastan (the Gaza Strip)
and Fatahstan (the West Bank). Anyone on the Israeli side still
contemplating the question of a Palestinian partner might also need
to do some rethinking. In Gaza, at least, it seems there is nobody
left for Israel to talk to."

IV. "Is Arab Unity to Our Benefit?"

Former Mossad director Ephraim Halevy wrote in the editorial of
Yediot Aharonot (6/13): "[The] Arab world considers the turn of
Palestinian events as a grave threat to the stability of life
throughout the Muslim world, and that is why Saudi Arabia has
intervened in the inner workings of the Palestinian government and
has tried to manage the infighting between Fatah and Hamas. That is
why the Arab world has organized to engage in negotiations with
Israel, in the course of which it might expropriate the management
of those negotiations Qom the Palestinians and seize it for itself.
It is a complex challenge for Israel to prepare for dialogue of
that sort. The Arab world's demands are difficult and, in some
cases, patently unacceptable. But we do need to notice that while
in the past we believed, and justly so, that the Arabs, when
unified, would toe the most radical line, now we have an opportunity
to examine whether circumstances have not changed and it is the
moderate majority that will force the extremists to toe its line.
The Mecca agreement, which Hamas was forced to accept, and the
Riyadh summit in which the Arab peace initiative was ratified with
the attendance of the Fatah-Hamas national unity government, create
the tools for the Israeli government to engage in some daring and
creative diplomacy. This opportunity will not be here forever. The
turn of daily events in the Palestinian territories does not leave
us with more than just a few weeks to grab the bull by the horns."


V. "The Gospel According to Washington"

Zalman Shoval, a senior Likud member and former ambassador to the
US, wrote in Yediot Aharonot (6/13): "Washington, naturally, is well
aware of Olmert's weaknesses, but precisely this situation appears
to it to be particularly suitable to achieve results.... The
intention of the Arab rulers who convened a few months ago in Riyadh
[was] to offer Israel the poisoned candy of relations (not
necessarily peace),on condition that it bow to the dictate of a
prior withdrawal from all the territories, including Jerusalem, and
that it agree, in one way or another, to the demand to let refugees
return -- not in the framework of negotiations, but as an ultimatum.
It could be that Olmert will tell President Bush that he is now
willing to accept the Arab ultimatum at least partially: not yet in
the matter of the refugees, but on the territorial issues and in the
matter of Jerusalem. Therefore, it will not be surprising if the
following 'gospel' emerges this coming week from Washington: since
there has been no progress according to the original outline of the
Roadmap, Bush and Olmert decided to skip over the first two stages
in it and go straight to a permanent status arrangement based on the
Saudi initiative -- perhaps with light cosmetic changes. Indeed,
everything is politics."

VI. "One State Is Enough"

Assad Ghanem, a lecturer at the University of Haifa, wrote in
Ha'aretz (6/12): "The present situation does not allow a logical
separation between two states, but it also appears that there is
neither the political will nor the ability to implement that
separation.... Israel and the Palestinians must change directions.
The option of a stable binational state, on the basis of
self-determination for both nations in one common state, agreeing on
the partition of power and political positions in an egalitarian
way, is the only option that can still represent an alternative to
the current harsh reality."

JONES