WILL OLMERT WEATHER THE STORM?

C O N F I D E N T I A L SECTION 01 OF 02 TEL AVIV 000803 SIPDIS SIPDIS E.O. 12958: DECL: 03/13/2012 TAGS: PGOV IS SUBJECT: WILL OLMERT WEATHER THE STORM? Classified By: Ambassador Richard H. Jones. Reason 1.4 (b/d) ¶1. (C) Summary: Israeli media March 13-14 were saturated with the announcement by the Winograd Commission charged with investigating the failures of last summer's Lebanon war that it would issue its interim report in mid-April, and that the report would include "personal conclusions" regarding the decisions of Prime Minister Olmert, Defense Minister Peretz, and former IDF COGS Halutz. Combined with Olmert's continued collapse in the polls (the latest showed public confidence in him at 2%),pundits are rushing to examine scenarios for replacing the Prime Minister. Israeli politicians contemplate several scenarios should the Winograd report or the outcome of several, onging corruption investigations result in a groundswell of public calls for Olmert's resignation. Those close to Olmert say he is unlikely to resign, even if Winograd fingers him for poor performance in last summer's Lebanon War. Public pressure, however, will likely mount, particularly if any one of the several iQestigations into Olmert and his allies, such as Finance Minister Hirchson result in indictments. Even inside Kadima and the coalition, support for Olmert is waning. His coalition leader in the Knesset, MK Avigdor Yitzaki openly discussed on Israeli television March 13 a scenario for preserving the coalition by having Foreign Minister Livni replace Olmert. End Summary. -------------- Scenario 1 - Olmert Holds On -------------- ¶2. (C) The interim Winograd report, which Commission members have made known will "draw personal conclusions," is now anticipated to be released after the April 2-9 Passover holidays. Should Olmert clear this hurdle, the next critical date is the May 28 Labor Party election. If this results in a predicted trouncing of Defense Minister Amir Peretz, Olmert stands to benefit from a new political relationship with either of the two front-runners, Ami Ayalon or Ehud Barak -- both of whom are more centrist than Peretz, and both of whom have extensive security credentials. Such a result will likely extend Olmert's chances of survival, albeit making Kadima much more dependent upon Labor. Finally, the Winograd Commission plans to release its final report in July, according to press reports -- precisely at the one year anniversary of the Lebanon War. If Olmert's standing has not improved by then, we anticipate public pressure will ramp up, and could result in new fractures in his party and/or coalition. The parallel many Israelis are making is with the Agranat Commission that investigated the failures surrounding the 1973 Yom Kippur War. Prime Minister Golda Meir resigned under the combined pressure of the Agranat report and demonstrations by war veterans and bereaved families. -------------- Scenario 2 - Voluntary Resignation -------------- ¶3. (C) Under this scenario, Olmert resigns and his designated Alternate PM, Tzipi Livni, takes over. FM Livni remains the most respected Israeli politician in government, according to opinion polls, but public support will not necessarily translate into political support in the Knesset. She would have to withstand the opposition efforts to collapse the coalition via a no-confidence motion, something that even Kadima Party operatives are not confident she could do. Vice Prime Minister and veteran politician Shimon Peres is another possible inside-Kadima alternative to Olmert, but he would also be vulnerable to opposition efforts to bring down the government (see below). Olmert is even more likely to resign voluntarily if he were also indicted on corruption charges. Otherwise, he could face impeachment proceedings in the Knesset. -------------- -- Scenario 2 bis - Party Leaders Force Olmert Out -------------- -- ¶4. (C) Created as a vehicle for then-PM Ariel Sharon's reelection campaign, Kadima has no party mechanism to force a change in the party leader who has lost the confidence of his/her party in the absence of general elections. Similarly, the PM cannot be removed unless he/she loses a vote of no confidence in the Knesset -- and, should Kadima members allow this to happen, they would risk facing early elections rather than an opportunity to reconstitute a Kadima-led coalition government. Alternatively, there is a complicated legal procedure, with a precedent, for a party effort to rid itself of undesirable members. In such a scenario, a majority of Kadima members could create a new breakaway faction and take the Kadima name and funding with them, leaving Olmert and any remaining allies stuck with a TEL AVIV 00000803 002 OF 002 rump faction and no political support. But the rebels, even if they constituted a majority of the Kadima party, would still have to muster 61 votes in the Knesset to remain in power (and appoint a new PM). This scenario is probably even less likely than the scenario of a voluntary Olmert resignation. -------------- -------------- Scenario 3 - Kadima Collapses and Likud Lures MKs -------------- -------------- ¶5. (C) Opposition leader Binyamin Netanyahu has called publicly for early elections. At the same time, he is encouraging former Likudniks who are now members of Kadima to come back to Likud, enticing them with the prospect of slots on the Likud Party list in the next election. If one-third of the Kadima Party MKs leave, they have the option of forming their own faction (albeit with a new name),and can bring some party financing with them. This is the most attractive option for the MKs, as they would not have to abandon their Knesset seats at this time. If fewer than 10 jump ship, they would be required to quit their Knesset seats and hope that Netanyahu's call for early elections comes to pass. Without new elections, Netanyahu could face serious difficulties putting together a new coalition, especially since Likud currently only has twelve seats in the Knesset. ¶6. (C) Comment: While we cannot rule out the possibility that Olmert and even Peretz will survive into the summer, it is difficult to see how they could hold on beyond July absent a major stroke of good fortune. Given the multiple threats facing ISRAEL and the resultant need to make tough decisions, the plummeting public confidence in the country's leadership is an increasingly serious problem. For the next few months, internal political wrangling will dominate Israel's national agenda. ********************************************* ******************** Visit Embassy Tel Aviv's Classified Website: http://www.state.sgov.gov/p/nea/telaviv You can also access this site through the State Department's Classified SIPRNET website. ********************************************* ******************** JONES