ISRAEL MEDIA REACTION

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SUBJECT: ISRAEL MEDIA REACTION

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SUBJECTS COVERED IN THIS REPORT:
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1. PM Olmert's Alleged Corruption Affair


2. Mideast

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Key stories in the media:
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All media led with Defense Minister Barak's call for PM Olmert to
"detach himself from the day-to-day leadership of the country."
Media reported that Barak made the announcement after consulting
with a small group of advisors while leaving others in his Labor
party surprised and angry. Ha'aretz reported that Olmert urged
Kadima ministers to give him time to prove his innocence. Yediot
quoted him as saying that he is being lynched. Maariv reported that
in private conversations with Kadima members Olmert requested an
honorable exit. The media reported that FM Tzipi Livni refrained
from relating directly to this week's events (Talansky's testimony
and Barak's statements). However, she was quoted as saying
yesterday: "The state has a vision and values that obligate its
citizens and also its leaders." She added: "Before we can be a
light unto the nations, it is appropriate that we act within our own
house to show the light." Yediot reported that she told associates
in private that "Olmert has lost his moral authority." While a few
Kadima MKs, such as Zeev Elkin and Marina Solodkin, demanded
Olmert's ouster, most, including all senior ministers have taken a
wait and see approach. Associates to Olmert were quoted in Ha'aretz
as saying that Barak learned nothing from Livni (referring to her
call for Olmert to resign after the Winograd report) and that nobody
in Kadima would taken any action against him. . The media cited
various senior politicians from different factions as saying that
the affair will end in early elections being held between November
2008 and January 2009. Maariv noted that an overthrow of Olmert is
almost impossible under Kadima's rules.

All media reported that today Attorney General Menachem Mazuz is
likely to urge the police and senior Justice Ministry officials to
step up the corruption investigation against Olmert. Ha'aretz
quoted sources close to the probe as saying that money laundering --
an offense that carries a maximum sentence of 10 years in prison --
appears to be the primary focus of the investigation.. The sources
were quoted as saying that an indictment on this charge would also
lead to indictments on fraud and breach of trust because of Olmert's
status as a public official. Ha'aretz wrote that the police are
also seeking to establish a basis for a bribery charge based on the
timing of money Morris Talansky said he gave Olmert and alleged
steps Olmert took to further Talansky's business interests.
Ha'aretz reported that the police and the State Prosecutor's Office
have said over the past few days that they have significant evidence
against Olmert that has not yet been made public.

Speaking on IDF Radio yesterday, Olmert adviser Tal Zilberstein --
previously Barak's assistant -- said that Barak was not entitled to
make his remarks, to which Barak replied during his press conference
that he was recommending that Zilberstein turn to the police with
relevant files. Like other media, Maariv reported that former
prime ministers Barak, Sharon, and Netanyahu used the same "cash
machine" (gift practice) as Olmert.

Israel Radio quoted Palestinian officials as saying last night that
they intend to continue negotiations with Prime Minister Olmert's
government at least until Olmert's political fate is decided. They
also expressed fears that new elections in Israel would lead to a
freeze in the talks. The Jerusalem Post reported that senior Hamas
leader Mahmoud Zahar told a Post reporter and other Israeli
journalists in Qatar that Israel is now responsible for holding up
deals for a Gaza cease-fire, Gilad Shalit's release, and an
arrangement to open the Rafah crossing.

Ha'aretz cited a report yesterday by Cham-Press, an independent
Syrian news agency affiliated with the Damascus regime, according to
which Israel and Syria are expected to resume the Turkish-brokered
talks within a few days. Citing Syrian sources, Cham-Press said
Damascus is examining the results of the first round of indirect
talks in Istanbul last week. Damascus assumes that the talks will
be in the same format as before, with Turkish mediation. Israel
Radio cited the London-based Al Hayat quoting Syrian sources as
saying that if Olmert overcomes his problems, the talks will resume
next week.

Ha'aretz reported that Nobel Peace Prizewinner Archbishop Desmond
Tutu criticized Israel's refusal to allow him entry to the country,
in his role as head of the UN special committee to investigate the
November 2006 incident in Beit Hanun where 19 Palestinians were
killed by Israeli fire. In a telephone interview with Ha'aretz
after he met with Hamas PM Ismail Haniyeh in Gaza, Tutu was quoted
as saying that he was disappointed that he was not allowed to visit
Sderot and meet the victims of the Qassam rocket attacks there.

The Jerusalem Post reported that tapes of former U.S. President
Lyndon Johnson's Oval Office conversations, released to the public
for the fist time yesterday, reveal that LBJ had a "personal and
often emotional connection to Israel."

The media reported that yesterday the Knesset's House Committee
nixed the agreement between tycoon politician Arkady Gaidamak and
the Knesset members who split from the Pensioners' Party.

Ha'aretz reported that unemployment in Q1 was at its lowest since
1995 -- 6.3%.

Ha'aretz and The Jerusalem Post reported that Israel has dispatched
a third disaster relief team to areas of Myanmar devastated by
Cyclone Nargis earlier this month.

Israel Hayom printed the results of a New Wave Research poll
conducted last night among 500 members of the Hebrew-speaking Jewish
population:

Q: On the assumption that Ehud Olmert resigns his post, what would
you preferQforming a new government in the current Knesset without
elections, or going to new elections?
New elections: 62%; new government: 25%; undecided: 13%.
Q: In your opinion, should Prime Minister Ehud Olmert resign his
post?
Yes: 70%; no: 17%; undecided: 13%.

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1. PM Olmert's Alleged Corruption Affair:
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Summary:
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Political and parties columnist Sima Kadmon wrote in the
mass-circulation, pluralist Yediot Aharonot: "This time, it would
appear, nothing will help. Even if Olmert brings comprehensive
peace with Syria and Iran together, itQs a done deal. We are going
to elections."

The independent, left-leaning Ha'aretz editorialized: "Narrow
partisanship and personal considerations about who will gain and who
will lose from Livni (or any other Kadima representative) becoming
prime minister until the elections must be pushed aside in favor of
what is best for the state."

The conservative, independent Jerusalem Post editorialized: "This
newspaper stands by its oft-stated belief that Olmert should have
vacated the Prime Minister's Office in the wake of the Second
Lebanon War.... The fact that he is now deeply implicated in an ugly
corruption scandal ... only further disqualifies him from that most
critical of offices."

Editor-in-Chief Amnon Lord wrote in the editorial of the
nationalist, Orthodox Makor Rishon-Hatzofe: "[Ehud] Barak [may have]
made a small step that could herald a giant stride for Israel."

Block Quotes:
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I. "A Done Deal"

Political and parties columnist Sima Kadmon wrote in the
mass-circulation, pluralist Yediot Aharonot (5/29): "Barak refrained
from saying even a single word about the severe things revealed in
TalanskyQs testimony, and did not comment at all on the public and
moral aspects barring the prime minister from continuing in his
post.... Barak also failed to set a timetable.... But he knows full
well that he will not be given any rest.... To Barak's credit, it
can be said that elections are the last thing he needs now.... When
he says that he will not stand with a stopwatch, he means that he
will give the members of Kadima time to choose their leadership and
present an alternative government.... [But] not everyone in the
Labor Party agrees that replacing Olmert with Livni is the right
move. Why enthrone Livni and give her eternal life, people there
argue. After all, these are two rival parties. Besides, everyone
realizes that there is no real peace process on the table. This is
not an opportunity for a peace agreement that the Labor Party would
be accused of missing. And if so, there is no reason not to go for
elections now. What does all this mean? Very simple: elections in
November. Why? Because the Prime Minister does not intend to take
leave, resign or declare incapacitation.... This time, it would
appear, nothing will help. Even if Olmert brings comprehensive
peace with Syria and Iran together, itQs a done deal. We are going
to elections."

II. "After Olmert"

The independent, left-leaning Ha'aretz editorialized (5/29): "Ehud
Olmert's term as prime minister, which began with Ariel Sharon's
coma, is about to end with Morris Talansky's testimony.... Olmert
can no longer stand at the helm of Israel's government. The
practical question that must now be asked is: What will come after
Olmert?.... Yesterday the chairman of the Labor Party, Ehud Barak,
gave political validity to the discussion of alternatives to Olmert,
by saying that the ball is now in Kadima's court. The alternatives
include setting up another government with the participation of
Labor but with another Kadima representative at its head, or holding
early elections. A third alternative, setting up a completely
different government in the current Knesset, is not realistic
because 61 Knesset members will not vote for it. Barak is right to
prefer the first alternative. Political and governmental stability
benefit Israel more than premature elections.... [An] orderly move
would be a transfer of the premiership to Livni [she is noext in
line] as Kadima prepares to elect a permanent leader, especially
because a temporary incapacitation and an interim prime minister are
effective only for three months.... Narrow partisanship and personal
considerations about who will gain and who will lose from Livni (or
any other Kadima representative) becoming prime minister until the
elections must be pushed aside in favor of what is best for the
state."

III. "Further Disqualification"

The conservative, independent Jerusalem Post editorialized (5/29):
"Having survived the Winograd Commission report, which exposed his
government's mishandling of the Second Lebanon War, and having held
on as one perturbing investigation after another raised questions
about his personal and professional probity, that our tenacious
prime minister will hang on a while longer is a possibility which
cannot be discounted.... A prime minister whose flaws were bitterly
exposed by the stewardship of the Second Lebanon War ought to have
stepped down in the wake of that war's failures. That he has
subsequently become embroiled in an accumulation of corruption
investigations only further depletes his ability to safeguard the
nation in this most demanding of jobs.... This newspaper stands by
its oft-stated belief that Olmert should have vacated the Prime
Minister's Office in the wake of the Second Lebanon War. Needless
to say, therefore, the fact that he is now deeply implicated in an
ugly corruption scandal, and is not doing everything he can to
ensure all evidence is made available as rapidly as possible to
clear his name, only further disqualifies him from that most
critical of offices."

IV. "Whatever May Be, Barak Is No Leader"
Editor-in-Chief Amnon Lord wrote in the editorial of the
nationalist, Orthodox Makor Rishon-Hatzofe (5/29): "It is likely
that in spite of everything, [Ehud] Barak made a small step that
could herald a giant stride for Israel.... Those who believe in the
response of Israel's body politic to Barak's announcement yesterday
must understand that there still is hesitation to explicitly say
that Olmert must go home. Instead words such as 'leave,'
'incapacitation' or 'suspension' are used.... At the end of the day
there will be no choice for Israeli politics other than early
elections at the soonest possible moment."

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2. Mideast:
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Summary:
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Maj. Gen, Danny Rothschild, President of the Council for Peace and
Security, wrote in the conservative, independent Jerusalem Post: "A
peace accord is our most important strategic asset... We need peace
with security and for that we also need statesmen who can think
strategically."

Very liberal columnist Meron Benvenisti, deputy mayor of Jerusalem
from 1971 to 1978, wrote in the independent, left-leaning Ha'aretz:
"The system of divide and conquer ... will enable Israeli control
over the long term. Its cornerstone is the isolation of Gaza. This
is the way to view the cease-fire in Gaza, and then we will see who
is the true right or left."

Block Quotes:
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I. "Peace Could Be Our Strategic Asset"

Maj. Gen, Danny Rothschild, President of the Council for Peace and
Security, wrote in the conservative, independent Jerusalem Post
(5/29): "A government with a vision would understand that there is
no future for separate bilateral negotiations and would publicly
suggest entering an all-inclusive peace process based on the Arab
League's peace initiative, one of whose principles is to involve
those in the secular Arab world who are concerned about the
strengthening of radical Islam. It is high time that we stopped
getting dragged in and start initiating.... Whatever we fail to do
today we will regret in just a few years from now. Just as we
understand today that the gratuitous obstinacy we displayed with
Hafez Assad during the final years of his rule and with Mahmoud
Abbas four years ago have brought about less than desirable terms
for negotiations today, in three or five years from now we will
regret missing the window of opportunity that presented itself in

2008. A peace accord is our most important strategic asset, and the
strong peace with Egypt and Jordan proves this. But instead of
promoting that trend, it appears the current decade will be the
first in three where the Israeli public will not even be able to
dream of peace, and this period will be remembered as a missed
opportunity to live at peace with our neighbors. We need peace with
security and for that we also need statesmen who can think
strategically."

II. "A Lull of No Return"

Very liberal columnist Meron Benvenisti, deputy mayor of Jerusalem
from 1971 to 1978, wrote in the independent, left-leaning Ha'aretz
(5/29): "[Gaza's] accessibility to the outside world, by land and
sea, and an efficient and uncorrupt government are likely to turn
that piece of land into the Palestinian state. The other
Palestinian canton, whose area is getting smaller and smaller due to
the spread of the settlements, now has 2 million people and is
considered the heartland of the Palestinian people. But it is
quickly turning into an adjunct of Israel for all practical
purposes, and it is experiencing political processes similar to
those experienced by Israeli Arabs since 1948. These processes will
be exposed when the Palestinian Authority falls apart on its own,
once the Gaza cease-fire gives it a fatal blow. This is the system
of divide and conquer that will enable Israeli control over the long
term. Its cornerstone is the isolation of Gaza. This is the way to
view the cease-fire in Gaza, and then we will see who is the true
right or left."

JONES