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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All media led with Morris Talansky's deposition before the Jerusalem
District Court yesterday. Yediot bannered: "The ATM's Revenge."
Talansky said that over a 14 year period he gave then industry,
trade, and labor minister Ehud Olmert $150,000 in cash, including
$68,000 to help him in the 2002 Likud primary campaign. Talansky
detailed how Olmert asked for all payments to be made in cash and
how he would regularly carry small sums -- between three and eight
thousand dollars -- to Israel to avoid customs declarations.
Besides providing campaign funding, Talansky covered various luxury
items for Olmert including first class airline tickets, nights in
five star hotels, cigars, watches and even advanced him $25,000 for
a family trip to Italy (reportedly this was never repaid). The media
cited the belief of Olmert and his attorneys that Talansky's
cross-examination in July will cancel out his "multi-holed"
deposition.

Last night Israel TV, echoed by most media, reported that Labor
leader Ehud Barak was considering calling on the PM to suspend
himself from office or resign. This morning Israel Radio reported
that last night Barak met with his associate and experienced
advertiser Reuven Adler to discuss the possible formation of a
Likud-Labor national emergency government without Kadima. Maariv
wrote that a Barak-Livni- Dichter post-Olmert alliance is shaping up
behind the scenes.

The Jerusalem Post quoted defense officials as saying yesterday that
a prisoner exchange between Israel and Hizbullah is still far from
being settled. However, a Lebanese parliamentarian told the
newspaper that the new political and regional climate makes the time
ripe for a prisoner exchange. Major media reported that Israel will
release convicted Hizbullah spy Nasim Nisr from administrative
detention and return him to Lebanon on Sunday, as an unofficial
first step in a prisoner swap. Israel has not formally said that
Nasser's release is part of the deal. Nisr, a Lebanese citizen
reportedly born to a Shi'ite Muslim father and Jewish mother, was
sentenced in 2002 to six years in prison for spying for Hizbullah.
He finished serving his sentence early this year, but he was
subsequently held in administrative detention, apparently so that he
could be used as a bargaining chip in a deal for the release of
abducted IDF soldiers Eldad Regev and Ehud Goldwasser. Ha'aretz
quoted Lebanese and Arab media as saying that Hizbullah may present
a document detailing its unsuccessful efforts to locate Israeli MIA
Ron Arad. Ha'aretz quoted the Lebanese media as saying that Israel
has given up its demand to receive information regarding Arad's
fate.

Ha'aretz reported that the Palestinians are proposing that a
multinational force under U.S. command be deployed in the future
Palestinian state, to monitor the implementation of any peace
agreement reached with Israel. Meanwhile, the diplomatic-security
cabinet is slated to meet this morning to discuss which Israeli
security interests must be guaranteed in the framework of a
final-status agreement with the PA. The meeting will be the first
of its kind since the Annapolis conference.

Ha'aretz reported that Hamas is preparing a revised list of
prisoners that it wants Israel to release, in a bid to reach a deal
on freeing Gilad Shalit, as well as an agreement on a cease-fire and
the reopening of the Rafah crossing between Egypt and Gaza. The
list of prisoners will be sent to Israel for review via Egyptian
mediators. Ha'aretz quoted Israeli officials as saying that the new
list has yet to reach Israel. The Jerusalem Post quoted a senior
Hamas official in Gaza as saying yesterday that Hamas is demanding
the release of 1,000 Palestinian prisoners in exchange for Shalit.
Ha'aretz quoted Egyptian officials as saying that Hamas insists on a
fundamental separation between the Shalit deal and the cease-fire,
but that it realizes that Shalit must be released if Israel is to
agree to a truce or the reopening of the crossing. For this reason,
Hamas is expected to accede to Egyptian pressure and agree to a
package deal, in which the agreements on Shalit's release and the
truce would be concluded simultaneously, but neither one would be
conditioned on the other.

Major media reported that yesterday Syria and Iran signed a military
MoU. Ha'aretz reported that Israeli sources told the newspaper this
week that Iran may try to go forward with plans to attack Israeli
targets abroad, in a bid to thwart Israeli-Syrian negotiations. The
newspaper quoted the sources as saying that according to the Iranian
logic, such an assault might change Israel's position, stop the
contacts, and even start a regional conflict. However, the sources
were quoted as saying that other Iranian interests preclude such
attacks. Ha'aretz described the White House's involvement in the
"black channel" between Israel and Syria. The newspaper quoted
incoming CENTCOM commander Gen. David Petraeus as saying at a
Congressional hearing last week that Syrian-Israeli peace can be
encouraged by defeating the Syrian-backed extremist groups and by
stopping the anti-American propaganda spread in the region by the
Syrian regime.

The Jerusalem Post quoted diplomatic officials as saying that in
recent days, a number of meetings have been held in the Foreign
Ministry with the aim of developing a strategy to prevent meetings
between European and Hizbullah ministers. The newspaper quoted an
Israeli official as saying as saying that Israel's concern was the
legitimization of Hizbullah through high-profile political
meetings.

The Jerusalem Post reported that a group of bipartisan U.S.
Congressmen is urging reform in UNRWA, the UN body that deals
exclusively with Palestinian refugees and their descendants, and
calling for alternative solutions to the containment of refugees in
squalid camps.

The electronic media reported that an IDF soldier was lightly
wounded this morning in an operation in the southern Gaza Strip,
west of the Sufa crossing. IDF troops have been operating in that
area since last night. The IAF attacked a Palestinian mortar crew
that fired shells from the southern Gaza Strip into Israel. Pilots
reported that the mortar crew was hit. The mortar shells exploded
in open ground in the western Negev. No one was hurt and there was
no damage.

Leading media reported that dozens of Jewish teenagers assaulted two
Arab teens near a mall in Jerusalem's Pisgat Ze'ev neighborhood in
an unprovoked attack on the eve of Holocaust Memorial Day -- April

30. Footage of the attack from the mall's security cameras was
broadcast on all TV stations yesterday. An indictment was filed two
weeks ago against 11 teenage suspects, eight of them minors. The
boys allegedly responded to an ICQ message calling on those with
"Jewish blood" to "put an end to all the Arabs hanging around"
Pisgat Ze'ev. Commentators noted that only religious Jewish youth
took part in the "lynching" or "pogrom."

Yediot reported that the Jewish Agency's South African branch has
published maps of Israel without the Golan and on which the West
Bank is marked as "Palestine." Faced with anger from the Right, the
Jewish Agency characterized the incident as human error.
Yediot printed a shortlist of candidates for ambassador to the UN
for FM Tzipi Livni's review: Dalia Rabin (the late PM Yitzhak
Rabin's daughter),former IDF spokesman Nahman Shai, former
consul-general in New York Alon Pinkas, former Shin Bet head Yaacov
Perry, and Yossi Gal, Deputy Director General of the Foreign
Ministry. Pinkas is preferred by Olmert, President Shimon Peres,
Knesset Speaker Dalia Itzik, and opposition figures.

Ha'aretz and The Jerusalem Post reported that the Civil
Administration's appeals committee upheld eviction orders yesterday
against two stores in Hebron occupied by Jewish settlers two years
ago. In the interim, the settlers and Yosef Ezra -- heir to the
original pre-1948 owners -- will have an opportunity to apply to the
state for rights to the property.

Makor Rishon-Hatzofe reported on record Q1 sales by Israel Aerospace
Industries (IAI) -- over 1 billion dollars.

Ha'aretz quoted cabinet ministers as saying that the looming water
crisis endangers the local food supply. Other media addressed
different aspects of the crisis.

All media reported that the U.S. dollar tumbled against the shekel
yesterday, after the Bank of Israel lowered Israeli interest rates
by a quarter-percent to 3.5% the night before. The dollar weakened
by 1.44% to 3.285 shekels in the immediate aftermath of the rate
cut.

The Jerusalem Post cited the results of a Keevon Research, Strategy
& Communications poll held May 13-15 among Israelis:

Fifty-seven percent prefer Sen. Hillary Clinton over Sen. John
McCain in November if Clinton ends up as the Democratic nominee.
Only 18% preferred McCain in that race. Twenty-five percent were
undecided. If Sen. Barack Obama gets he Democratic nod, then
Israelis prefer McCain by a wide margin, with 43% saying they would
prefer McCain in that race, 20% supporting Obama, and fully 37%
undecided.

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Mideast:
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Summary:
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The independent, left-leaning Ha'aretz editorialized: "If Olmert
insists on continuing to retain his position at the government's
helm, he is obliged to appear before the public, without delay, and
present his version of the facts."

Liberal columnist and anchor Ofer Shelach wrote in the popular,
pluralist Maariv: "Morris Talansky, a Diaspora Jew who merely wanted
to bask a little in the warmth of his state across the sea, revealed
our nakedness yesterday -- and that is much more important than the
futureless political life of Ehud Olmert."

Columnist and former IDF Intelligence chief Shlomo Gazit wrote in
the popular, pluralist Maariv: "There is of course justification for
the argument that in a military confrontation with Syria, there is a
significant advantage to having the IDF deployed on the Golan....
[But] the continued presence in the Golan ensures with certainty a
military confrontation in the foreseeable future."

Senior military affairs analyst Reuven Pedatzur wrote in Ha'aretz:
"What is truly important is the fact that a former U.S. president
has exposed Israel as a nuclear power.... However, the more
important ramification of Carter's statement is the reinforcement of
Israel's deterrent image."






Block Quotes:
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I. "Explain or Resign"

The independent, left-leaning Ha'aretz editorialized (5/28): "The
behavior attributed to Olmert by Talansky is intolerable, and cannot
represent the Israeli public, which is frequently called upon by its
leaders to make economic and social sacrifices. Talansky's
testimony reveals systematic and prolonged defilement and
corruption. If his allegations do not prove false, then Olmert
demanded favors -- a night in a luxury hotel, or a flight -- whose
price is enough to support an Israeli family for an entire month.
This was all done in a manner that was not only ostentatious, but
also that of a beggar, seeking dollar after dollar from American
Jews who responded to him and were impressed by his high status. In
2000, Ezer Weizman was forced to retire from the presidency because
Elyakim Rubinstein, then the attorney general, stated that taking
money from ... friends ... constituted a substantial ethical
violation. And the Olmert case is more serious than the Weizman
case. It is inconceivable that Olmert should continue to enjoy the
best of both worlds while the police investigation and the
prosecution's preparations for a decision on the case enter a second
or third month. If Olmert insists on continuing to retain his
position at the government's helm, he is obliged to appear before
the public, without delay, and present his version of the facts."

II. "Our Leader"

Liberal columnist and anchor Ofer Shelach wrote in the popular,
pluralist Maariv (5/28): "There is not a single citizen whose ears
did not turn red after hearing Talansky's testimony. More than
exposing the nakedness of one Ehud Olmert, who by a historical
accident became prime minister of Israel, Talansky testified about
us: The leaders we choose, the fact that we pay only lip service to
the war on corruption, even about the way we perceive our lives
here.... Only in a place where there is nothing that is unthinkable,
where the public does not punish for unthinkable acts, can a
minister and mayor dare ask -- demand -- that his bills be paid, his
airline class be upgraded, and he and his wife travel to Italy at
the expense of a stranger and in cash. And don't pin this on Olmert
alone. If he goes, who will stand before us with clean hands?
Benjamin Netanyahu, who holds the laundry bills from [London's]
Connaught Hotel? Ehud Barak? Shimon Peres?.... We humiliated the
morally upright Amram Mitzna in favor of Ariel Sharon, compared to
whom Olmert is only a child in corruption.... Until the day we elect
a morally upright person, until the day we choose a worthy person
and shunt aside the ranks of the past and the intimidation of the
present, that is what we will get. Morris Talansky, a Diaspora Jew
who merely wanted to bask a little in the warmth of his state across
the sea, revealed our nakedness yesterday -- and that is much more
important than the futureless political life of Ehud Olmert."

III. "Suddenly It's Not Legal"

Columnist and former IDF Intelligence chief Shlomo Gazit wrote in
the popular, pluralist Maariv (5/28): "We will not enter into the
question of the media spin that either was or wasnQt carried out by
the Prime Minister. But the arguments against the agreement should
be examined. We will start with the argument of the unlawfulness
and immorality of an evacuation: Such a decision would only be made
after the people have spoken their piece. However, we should recall
how the reality on the Golan was created. Contrary to the cabinet

resolution of June 1967, creeping settlement activity began shortly
afterwards on the Golan. At the time, no one brought before the
people the decision on the initiative, which was aimed at creating a
new reality. No one argued that this was an illegal step with
far-reaching political consequences. No one argued that we were
toying with the fate of innocent people, who were called upon to
settle in the Golan and placed their future in jeopardy. In 1981,
Menachem Begin submitted a draft resolution for applying Israeli
sovereignty to the Golan, which was passed without being brought
before the people for approval. From here we move on to the second
argument, the security danger inherent in the withdrawal. There is
of course justification for the argument that in a military
confrontation with Syria, there is a significant advantage to having
the IDF deployed on the Golan. This argument, however, disregards a
few important facts: The continued presence in the Golan ensures
with certainty a military confrontation in the foreseeable future.
We know that Syria is preparing for this option by means of a
missile array that covers all of Israel's territory. The secret
installation that was bombed in September was apparently intended
for this purpose. Damascus is also conducting a policy of shedding
Israeli blood by proxy -- Hizbullah in Lebanon and the Palestinian
terror organizations. The war two years ago would not have been
possible had there been peace with Syria. And finally, Israel's
goal is not a tahdiya [truce], but a strategic peace with
Damascus."

IV. "Chill Wind from Damascus"

Columnist Calev Ben-David wrote in the conservative, independent
Jerusalem Post (5/28): "There is understandable general skepticism
that the gaps between Israel and Syria, and the respective political
strengths of their two leaders, made this round of talks a
non-starter from the get-go. Even if true, these discussions could
at least help lay a new foundation for future negotiations when
circumstances are more in favor of Jerusalem making a deal. There's
no way, though, the two sides will start talking turkey, if the
chill wind from Syria doesn't ease off, and the tone of the upcoming
discussions in Turkey are not at lease a few degrees warmer than
they were at Madrid or Shepherdstown."


V. "Nuclear Exposure on the Welsh River of Wye"

Senior military affairs analyst Reuven Pedatzur wrote in Ha'aretz
(5/28): "One cannot exaggerate the importance of former American
president [Jimmy Carter]'s statement that Israel has 150 nuclear
bombs. More than all the estimates and leaks about the Israeli
nuclear program over the past five decades, Carter's comments on
Sunday give official cachet to Israel's status as a nuclear
power.... Every American president since [1969], and every senior
administration official who knew the details of the Israeli nuclear
program, kept silent and effectively adopted Israel's official
policy: that it would not be the first to introduce nuclear weapons
into the Middle East. Now Carter comes along and changes the rules
of the game. After all, he doesn't need to rely on foreign sources
or unproven conjecture. When he served as president, he knew
exactly what Israel had in its storehouses. Jimmy Carter is not
guessing or estimating. He knows.... [It can be reckoned that]
Israel has built an estimated 150 more bombs since 1981, putting the
size of Israel's nuclear arsenal at some 300 bombs. But this is
merely an intellectual exercise. What is truly important is the
fact that a former U.S. president has exposed Israel as a nuclear
power. One can assume that Iran will now be able to make use of
Carter's comments in order to point to the double standard of the
Western world, which is prepared to accept a nuclear Israel but
makes a great effort to prevent Iran from going nuclear. However,
the more important ramification of Carter's statement is the
reinforcement of Israel's deterrent image. In the future, if Iran
does acquire nuclear weapons, this image will be of critical
importance in the process of developing mutual deterrence."

JONES