SCENESETTER FOR PRESIDENT BUSH'S VISIT TO ISRAEL

S E C R E T SECTION 01 OF 03 TEL AVIV 001005

SIPDIS

NSC FOR ABRAMS AND PASCUAL

E.O. 12958: DECL: 05/06/2018
TAGS: PREL PGOV MASS IS XF
SUBJECT: SCENESETTER FOR PRESIDENT BUSH'S VISIT TO ISRAEL

Classified By: Ambassador Richard H. Jones, Reason 1.4 (b) (d)


1. (C) Israel is preparing to celebrate the sixtieth
anniversary of its declaration of independence on May 8 with
a characteristically Israeli mix of pride in their
achievements and worry about the future. One point that
unites virtually all Israelis -- except for the extreme left
and right -- is their appreciation for President Bush's
friendship and support throughout his two terms. When the
President arrives here next week, he will be greeted warmly
as a friend not just by Israel's political and military
elite, but also by the vast majority of its seven million
people. As one average Israeli who wrote to the Ambassador
put it, the silent majority of Israelis want to thank the
President for sharing with them the celebrations marking
Israel's sixtieth year.

Israeli Pride Justified
--------------


2. (C) Israelis' sense of pride in their achievements is
fully justified. The vision of a strong, democratic Jewish
state that would be a haven for Jews everywhere started as a
desperate dream, as Israel's fledgling army was bolstered by
the arrival of tens of thousands of Holocaust survivors and
hundreds of Jewish WW II veterans who arrived just in time to
help counter the invasion of the new state by the armies of
Egypt, Syria, Iraq, Jordan, and Lebanon, not to mention the
Palestinians' irregular forces. Today, Israel is very much a
reality, with a vibrantly original Hebrew-speaking cultural
life, a Tel Aviv skyline dominated by gleaming skyscrapers, a
booming high tech-based economy, and the strongest army in
the Middle East. Israel at sixty is firmly Western in its
values but also more diverse ethnically and culturally, less
Europe-oriented, and decidedly more capitalist than the
Israel founded largely by East European-born socialists. For
all of its problems with finding the right electoral formula
to bring about stable governments, Israel's democracy is also
a thriving reality. Israel is the only Middle Eastern
country in which its citizens take for granted the peaceful
transfer of political power via the ballot box.

And Anxieties are Real
--------------


3. (S) Yet this year's celebrations are also tinged with
anxiety. The looming threat of a nuclear-armed Iran, whose
leaders constantly declare their determination to wipe Israel
off the map, weighs heavily on the minds of Israelis, who
regard their country not only through the prism of the
Holocaust but also as the only UN member-state to be
routinely threatened with annihilation. Iran's success in
projecting power directly into the core of the Arab-Israeli
conflict through its ties to Syria, Hizballah and Hamas
compounds the sense of threat. Despite the great diplomatic
achievements represented by the peace treaties with Egypt and
Jordan, Israelis worry about the frayed nature of their
relations with Egypt and are unsure about the outlook of the
Egyptian leadership that will follow Mubarak. Israel enjoys
excellent relations with the Jordanian royal palace and
security services, but virtually no contact with Jordan's
largely Palestinian civil society, most of which boycotts any
connections to Israel. Israelis are watching carefully to
see how the U.S. manages the next few years of our
involvement in Iraq and whether we can succeed in stabilizing
Iraq in a way that avoids its becoming either an Iranian
client state or a source of instability that overwhelms
Jordan's fragile balance.

Changing Views on Palestinians
--------------


4. (S) Closer to home, Israelis' views of their relations
with their Palestinian neighbors are changing as well. In
the aftermath of the Second Intifada, a solid majority of
Israelis has come to accept the need for a Palestinian state
and for Israel to relinquish control of most of the West Bank
(although the exact percentage is still a topic for
discussion, as are the timing and circumstances under which
this would occur). Gone are the days when many Israelis
questioned the existence of a Palestinian national identity,
and today only a small minority -- though still an outspoken
and determined one -- continues to articulate a demand to
retain control of all of the West Bank for
religious/historical reasons. Prime Minister Olmert and
Foreign Minister Livni, both of whom grew up and began their
political careers as strong advocates of Israel's historic
right to all of Jerusalem and the West Bank, are among the
leading examples of Israelis who have become convinced that
only a two-state solution and painful territorial compromise

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will enable Israel to preserve its identity as a democratic,
Jewish state. The growing assertiveness of Israel's large
Arab minority, now about twenty percent of the total
population, is both a further source of concern and an
additional impetus to create a Palestinian state.


5. (S) One problem, however, is the lack of a broad-based
Israeli confidence in the Palestinians' capacity to hold up
their end of the land-for-peace bargain. Olmert publicly
stresses his confidence in Mahmoud Abbas' determination to
achieve peace, and virtually all Israeli leaders tell us how
much they respect Salam Fayyad, yet few believe that Abbas or
Fayyad enjoy much popular legitimacy among Palestinians. The
public generally accepts the admonitions of Defense Minister
Barak and those of the leaders of the IDF and Israel's
security services that the Palestinian Authority Security
Forces lack the determination to stand up to Hamas if push
comes to shove. The precedent set by Gaza is one that no one
wants to see repeated in the West Bank. The IDF's strategic
concept is heavily rooted in the absolute need to prevent the
hills of the West Bank from becoming sites from which rockets
could be launched at Israel's heavily populated central
plain. Hamas' control of Gaza and the daily rain of rockets
from Gaza on southern Israel pose another kind of problem.
The political leadership is grappling with whether an
Egyptian-negotiated ceasefire in Gaza would calm the
situation or make it worse by strengthening Hamas politically
and militarily while undermining Abbas. The only other
options on the table involve a broader armed conflict with
Hamas, but Israel is constrained by the potential for high
casualties, international condemnation, and most of all, the
lack of a good exit strategy should it decide to invade Gaza
to topple the Hamas regime there. All of these calculations
could be upset at any time by a rocket from Gaza that strikes
a busy school or hospital, thus forcing the Israeli
leadership to order massive retaliation. Israel is working
with us on missile defense options, but their preferred
system will not be operational for two years. One way we
could help would be by offering to provide the kinds of
short-range defenses against rockets that we are using in
Iraq.

Inertia Favors Settlers
--------------


6. (S) Another outstanding issue is how and when to confront
the settler movement and get serious about outposts and
settlements. Inertia is on the side of the settlers. Even
if they no longer have the sympathy of the Israeli public,
they have powerful allies in the bureaucracy, wealthy backers
in Israel and abroad who are willing to fund the settlement
enterprise, and an IDF that will not challenge the settlers
without clear instructions from the political echelon (and
even then may drag its feet). Barak, Deputy PM Ramon, and
others are engaged in discussions with the settler
leadership, and after Secretary Rice's latest visit the PM's
office leaked to the media that he has discussed with Abbas
moving 60,000 settlers out of the West Bank. If true, this
is a dramatic development. Olmert's need to retain the
support of the Shas Party and his political ups and downs
have so far resulted in the settler leadership being much
more determined to hold on than the GOI is to start moving
them out.

Olmert's Political Woes Return
--------------


7. (S) Even as we finalize the preparations for the
President's visit, Prime Minister Olmert is once again facing
a political crisis. Having survived the Winograd Committee's
final report and weathered four separate, interminable
corruption investigations, in the past few weeks Ehud Olmert
appeared to have regained his political footing and was
openly declaring his plans to run for reelection, possibly in
early 2009. Then suddenly last week, the media was full of
reports that the Attorney General had authorized the police
to initiate a fifth criminal investigation of Olmert. At the
same time, the Attorney General imposed a gag order that
prevented the public from knowing the specifics of the
charges and barred the Prime Minister from mobilizing a
public defense against them. We do not know the details,
though leaks in the media indicate that an American investor
may be involved with the PM in alleged financial misdeeds
sometime before Olmert became Prime Minister. And although
Olmert has survived the four previous investigations,
informed Israelis are suggesting that this time he may be in
much more serious trouble.


8. (S) Labor Party insider and Minister of Infrastructure
Fuad Ben Eliezer told the Ambassador May 6 that, according to

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his information, the nature of the charges is such that
Olmert may be forced to resign in the near future. Ben
Eliezer echoed comments from other political analysts that if
Olmert resigns, the most likely scenario will be for Livni to
become interim Prime Minister and head of the Kadima Party.
If Livni becomes PM, Ben Eliezer was confident that Barak
would keep Labor inside the Coalition and that elections
could be delayed until some time next year. As Ben Eliezer
put it, the political weakness of the constituent members of
the coalition is the key to its strength, since none of them
have an interest in early elections. At this point, we
cannot predict how accurate Ben Eliezer's prediction is
likely to be, and no one should discount Ehud Olmert's
determination to hold on. But at a minimum, the latest
charges represent an exceptionally unwelcome cloud over
Olmert's head as he prepares to greet the President.

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