RESHUFFLE KERFUFFLE

C O N F I D E N T I A L SECTION 01 OF 02 TEL AVIV 001530 SIPDIS E.O. 12958: DECL: 07/15/2013 TAGS: PGOV PINR IS SUBJECT: RESHUFFLE KERFUFFLE Classified By: A/PolCouns Peter H. Vrooman. Reason 1.4 (B/D) ¶1. (C) Summary: On July 14, PM Olmert's coalition experienced political tremors as Labor and Kadima jousted over the terms of the latest government reshuffle. The Likud Party attempted to capitalize on intra-coalition squabbling by requesting that the Knesset plenum votes on the appointments of MK Eli Aflalo as Minister of Immigrant Absorption and MK Ruhama Avraham as Minister of Tourism constitute votes-of-no-confidence in the government. Olmert managed the crisis remotely from Paris, winning both votes even though most Labor MK's voted against the appointments in protest of the perceived waffling in the Kadima leadership's support for the appointment of Labor MK Avishai Braverman as Chairman of the Knesset Finance Committee. No further shake-up is expected to result from this latest Labor-Kadima crisis, but there will be an economic aftershock, as the government's cost for buying opposition MK's support could amount to eight billion shekels in allowances to pensioners and forgiven municipal debts to Arab constituencies, according to Knesset contacts. End Summary. -------------- Belated Reshuffle Results in Kerfuffle -------------- ¶2. (C) PM Olmert has been looking for an opportunity to reward his political allies and placate potential foes ever since the Yisrael Beiteinu Party left the coalition in January 2008. The release of the second Winograd report in late January and the Talansky affair in April delayed such moves, but the prospect of Kadima Party primaries in September 2008 hastened Olmert's action. After defusing the Kadima-Labor coalition crisis in late June, Olmert moved ahead with his third significant reshuffle since taking office in 2006. (NB: the first major change followed Yisrael Beiteinu's joining the coalition in the fall of 2006. The second major reshuffle was orchestrated by Olmert in the summer of 2007 to minimize the political fallout from the first Winograd report and to fill slots vacated by several Labor resignations.) ¶3. (C) On July 6, Olmert won cabinet backing for naming Eli Aflalo Minister of Immigrant Absorption (hiving this portfolio from Minister Jacob Edery's job description),a move which enabled Olmert to upgrade his loyal coalition whip, MK Yoel Hasson, to become chairman of the coalition and the Kadima faction in the Knesset. Ruhama Avraham, who organized Israel's 60th anniversary celebrations, received an upgrade from her "Minister-without-portfolio" post to fill the Ministry of Tourism slot left vacant following Yisrael Beiteinu's departure. Olmert reportedly assured Labor Party Chairman Ehud Barak that MK Avishai Braverman would be named Chairman of the important Knesset Finance Committee. On July 14, Kadima failed to address the concerns of Labor's Knesset faction chairman, Eitan Cabel, regarding the moves required to insure Braverman's appointment to the position currently held by Yisrael Beiteinu MK Stas Misezhnikov, according to Labor and Meretz party Knesset staffers. ¶4. (C) Labor-Kadima distrust combined with rumors that Olmert would bow to pressure from the Shas, which objected to Braverman's appointment in favor of one of its own, led to the mini-crisis in the plenum late on July 14, according to multiple Knesset contacts. Likud MK Gideon Sa'ar took advantage of this intra-coalition conflict to transform the plenum vote on ministerial appointments into a vote of no confidence, a move that is the prerogative of any Knesset faction but only engenders serious consequences if it has the support of 61 members of the 120-member Knesset. Sa'ar violated a coalition-opposition understanding that no-confidence motions will only be initiated when the Prime Minister is in-country. -------------- No-Confidence Motion Fails -------------- ¶5. (C) Olmert managed to contain the crisis without renewing his threat to dismiss the Labor ministers who vote against the coalition. He won the vote for Aflalo and against the no-confidence motion 47-42, and for Avraham by a 45-42 margin. But Olmert was forced to make significant economic promises to the three-member "Justice for the Elderly" faction (formerly part of the Pensioners Party) that is in the opposition, and to Arab parties, which are seeking financial bailouts for Arab Israeli municipalities. Upon his return from Paris at the end of the day, Olmert actually extended an olive branch to Labor by publicly pledging to support Braverman in his bid to become Finance Committee Chairman -- despite Labor's votes against Aflalo and Avraham. TEL AVIV 00001530 002 OF 002 ¶6. (C) Comment: Knesset staffers expressed incredulity that the coalition had successfully weathered more serious crises over war and corruption only to come to pointless blows over minor political spoils. The cost of Olmert's reshuffle was as unnecessary as it was substantial -- in economic terms at least. Kadima was reportedly forced to pledge nearly eight billion shekels (more than two billion USD) in fiscal policy concessions to the various Pensioner and Arab MK's who came to the coalition's rescue or who abstained from voting. However, Olmert's pledge to support the Braverman appointment may prove to be more of a political curse than a reward, in the view of one Labor Party observer. Labor will now be forced to square off in Knesset budget battles directly with the Shas Party, which was seeking the Finance Committee appointment as a means of advancing its goal of increasing child allowances for large families. Once again, Olmert has outfoxed his adversaries and rewarded his allies. Yet this political chapter will soon be forgotten as the Israeli nation focuses on the return of its missing soldiers from Lebanon on July 16 and the second installment of the Talansky affair on July 17. End Comment ********************************************* ******************** 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. ********************************************* ******************** MORENO