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. Iran


2. Mideast

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Key stories in the media:
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Major media (lead story in The Jerusalem Post) reported that PM Ehud
Olmert will be replaced as Kadima leader in mid-September, barring
unforeseen circumstances, after the Kadima council received the
necessary votes yesterday to initiate a party leadership primary.
Channel 2-TV reported that Olmert allegedly called FM Tzipi Livni in
private a "backstabbing liar," due to his reported belief that she
lied to the Winograd Commission that investigated the Second Lebanon
War. Yediot quoted the State Prosecutor's Office as saying that
Olmert will soon be indicted. Maariv cited the belief of Kadima
members that Olmert will resign before he is indicted. Ha'aretz and
other media cited the police's suspicion that Olmert may have paid
for dozens of family flights with money he received via the Rishon
Tours travel agency.

Ha'aretz reported that the U.S. security coordinator for the
Israeli-Palestinian conflict, retired Maj. Gen. James Jones, is
preparing a critical report of Israel's policies in the territories
and its attitude toward the Palestinian Authority's security
services. However, American and Israeli sources were quoted as
saying that Jones also had some criticism for Washington saying that
U.S. efforts to reform the PA security services fell short and that
USG agencies are not coordinating their assistance for these forces.
In addition, he reportedly concluded that the PA forces are not yet
capable of effectively enforcing the law in the West Bank. Ha'aretz
said that the harsh criticisms contained in the executive summary
are reportedly upsetting the Bush administration. According to
Ha'aretz, some senior U.S. officials are demanding that the full
report not be published, so as not to create a storm in advance of
the presidential elections. Jones, however, is apparently insisting
that his full report be published, just as the report he issued last
year on the Iraqi security forces was. Ha'aretz reported that
officials at the U.S. Embassy in Tel Aviv declined to comment.
Ha'aretz also quoted Israeli officials as saying that senior
officials in the State Department, including Secretary of State

Condoleezza Rice, have repeatedly complained to Israel recently over
"relatively minor" Palestinian issues that would have been ignored
until a few months ago.

Leading media reported that this week Assistant Secretary of State
David Welch will meet with Riad Daoudi, the Syrian Foreign
Ministry's legal counselor and lead Syrian negotiator for the
ongoing indirect talks with Israel, as well as fellow Syrian
advisers and analyst during their visit to Washington. The
Jerusalem Post quoted an Israeli diplomatic official as saying that
any U.S. interest in establishing contact with Syria was likely
linked to the fact that Syrian President Bashar Assad had broken out
of his isolation. The official also suggested that contacts with
the Syrians could be connected to the U.S. elections.

Leading media reported that yesterday, during the fourth day of his
cross-examination, prosecution witness Morris Talansky told Olmert's
lawyer, Navot Tel-Tzur, that he could not remember the details of a
$400,000 transfer only a few months after the event. The media
reported that it was one of many lapses of memory that Talansky
claimed to suffer. Yediot reported that Olmert's defense team
hinted that Talansky may have laundered money through a trustee
account held by former Olmert associate Attorney Uri Messer.
Talansky hinted that Messer may have kept the money to himself. The
media reported that yesterday Olmert lodged a complaint with
Attorney General Menachem Mazuz after details of the police
investigation into his finances were leaked to the press.

Israel Radio quoted Shin Bet head Yuval Diskin as saying that Hamas
is taking advantage of the truce to build rockets that could reach
Kiryat Gat and probably Ashdod.

Israel Radio reported that the IDF soldier who was filmed shooting a
bound and handcuffed Palestinian with a rubber bullet at point blank
range two weeks ago was released. The media reported on a
controversy surrounding whether his commander had ordered him to
shoot.

Maariv reported that yesterday explosions caused by one or two
rockets were felt in the vicinity of West Bank Palestinian illages.
It is suspected that rockets were fird by settlers. Yesterday, at
about 14:00, there as a report of two rockets that hit fruit trees
long the road south of the Hawara roadblock.

In n interview broadcast last night on Channel 2-TV, ohn McCain
pledged that the U.S. will not allow second Holocaust. Makor
Rishon-Hatzofe reported that Israel's leaders will pressure Barack
Obama to promise during his one-day visit to act against Iran.

Major media quoted the London-based Al-Hayat and other Arab sources
as saying Egyptian sources as saying that Israel is prepared to free
Fatah/Tanzim leader Marwan Barghouti, but not PFLP leader Ahmad
Saadat, in exchange for Gilad Shalit. Israel Radio cited Israel's
denial of the report.

All media reported that in the first-ever Knesset address by a
British prime minister, Gordon Brown condemned Iranian President
Mahmoud Ahmadinejad's call for the destruction of Israel as
"abhorrent," and vowed that Tehran's bid to acquire nuclear weapons
would not be allowed to pass. The media noted Brown's exceptionally
Israel-friendly speech

Major media reported that today, for the fist time ever, President
Shimon Peres will host Palestinian President Mahmoud Abbas and
Palestinian negotiator Saeb Erekat in his official residence.
Maariv reported that they will discuss the advancement of the
Israeli-Palestinian peace process, the geopolitical conditions in
the region, and the implementation of joint economic initiatives to
strengthen the peace process.

Leading media reported that yesterday in the Knesset the government
coalition was defeated in three Shas-backed no-confidence votes.
However, they were not supported by majorities of 61 Knesset members
and therefore did not qualify to topple the government. Ha'aretz
reported that the Knesset will vote tomorrow on a bill that will
allow the Knesset plenum to require the suspension of the Prime
Minister for reasons of illness or police investigations. Ha'aretz
nonetheless reported that there is no chance that the bill will be
passed into law before the Knesset recesses next Wednesday for its
summer vacation.

Yediot quoted the German weekly Der Spiegel as saying that Hizbullah
is activating sleeping cells against Israeli targets in North and
South America.

Makor Rishon-Hatzofe reported that following an appeal by 170
Jordanian public figures, Jordan's King Abdullah II is considering
pardoning the terrorist who killed seven schoolgirls at Naharayim
along the border with Israel in May 1996.

Maariv reported that a symposium on the history of Lebanese Jewry
took place in Beirut yesterday. Muslim scholars also attended the
meeting.

The Jerusalem Post reported that yesterday in Jerusalem, Bank of
Israel Governor Stanley Fischer told a group of British business
executives led by Trade Minister Digby Jones that a slowdown in the
rate of manufacturing growth in the March-May period is the first
indication that economic expansion is beginning to ease.

Ha'aretz and Yediot reported that the State Prosecutor is leaning
toward indicting former president Moshe Katsav on two counts of
rape, according to sources in the prosecution.

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1. Iran:
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Summary:
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Diplomatic correspondent Aluf Benn wrote in the independent,
left-leaning Ha'aretz: "The American public currently has no taste
for another war, and the army is opposed to opening a 'third front'
in Iran, after Afghanistan and Iraq.... Jerusalem must now also
change its approach."



Block Quotes:
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"An American Slap in Israel's Face"

Diplomatic correspondent Aluf Benn wrote in the independent,
left-leaning Ha'aretz (7/22): "Israel was caught unprepared as the
United States' Iran policy shifted. The Bush administration did not
consult Israel before it decided to bring a senior American diplomat
to the talks that the Europeans conduct with the Iranians, and did
not let Israel share its initiative to open an interests section in
Tehran.... Israel's leadership still hopes that not all is lost,
that this is a tactical move -- a diplomatic bait doomed in advance
to an early failure in order to pave the road to an offensive. But
this is an illusion. The American public currently has no taste for
another war, and the army is opposed to opening a 'third front' in
Iran, after Afghanistan and Iraq.... Jerusalem must now also change
its approach. Instead of delving in false hopes about bombing Iran,
it would be worthwhile to see the positive sides of the American
dialogue with Iran and to insist on maintaining Israel's interests
-- first and foremost, preventing any linkage between the disarming
of Iran's nuclear capability and the closing of the Dimona reactor
as well as the harming of Israeli deterrence. Furthermore, one
should demand the absolute termination of the centrifuges, and in
case Iran manages to duck out of it, security compensation from the
U.S. and advanced anti-missile technologies. Contrary to fighter
pilots, diplomats do not get medals of valor, but they must be
granted a chance to prevent Iran from going nuclear, as was done
with Libya and North Korea."

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2. Mideast:
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Summary:
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Chief Economic Editor Sever Plotker opined in the mass-circulation,
pluralist Yediot Aharonot: "Israel must play the mind games against
Hamas with completely open cards and capitalize on its advantage as
an open democracy. Only by doing so will we regain the initiative
and Hamas will have to respond."


Block Quotes:
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I. "Negotiations by Daylight"

Chief Economic Editor Sever Plotker opined in the mass-circulation,
pluralist Yediot Aharonot (7/22): "In the negotiations to release
Gilad Shalit, ideas and proposals from the Egyptian government, from
former U.S. President Jimmy Carter, from the European Union, and
from Hamas, are given prominent coverage. But what does Israel
propose?.... Official Israel has imprisoned and handcuffed itself in
the mistaken concept of conducting secret negotiations whose details
do not reach the public until everything is sewn up, and sometimes
even not then.... Let's even assume that the negotiations with
Hizbullah required a degree of secrecy; this is not the case for
Gilad Shalit. Israel must play the mind games against Hamas with
completely open cards and capitalize on its advantage as an open
democracy. Only by doing so will we regain the initiative and Hamas
will have to respond. Practically, Israel must make it clear to all
parties involved in the negotiations for Gilad Shalit's release that
all concrete proposals for a 'deal' be reported and placed before
Israeli, Palestinian and world public opinion. Nothing must be done
any longer in secrecy, far from the eyes of the media. At the end
of every round of talks, the person conducting negotiations on the
Israeli side should hold an international press conference and
divulge the smallest details of the talks and the proposals.
Keeping the negotiations on Shalit transparent will serve Israel and
put it in a position of strength -- because in this case,
transparency is power. We have nothing to hide here. Hamas does....
The talks in the dark have failed. From now on, only the light of
the sun will return Shalit home."

II. "Good for Israel"

Peres Center President and Oslo Accords architect Uri Savir wrote in
Yediot Aharonot (7/22): "Democratic Party presidential candidate
Barack Obama is to arrive in Israel this evening.... It took George
Bush and the U.S. administration seven years to be involved in the
peace process with the Palestinians, and to this day, they are not
involved in the peace process with Syria.... Israel needs an
American president who will follow the peace process closely, and
this includes setting timetables for progress on a final status
arrangement, holding summits and appointing a permanent envoy to the
Middle East, as Dennis Ross was. Israel needs active American
involvement on the Syrian track. Today there is a real chance of
starting to crumble the unholy alliance between Syria, terror, and
Iran, and reaching an Israeli-Syrian peace agreement that would be a
basis for regional peace. Despite our neutrality as Israelis toward
the U.S. elections, there is no question that our interest is in the
Middle East external policy of the next administration. Based on
the Republican record of recent years, on the one hand, and on
Obama's world view on foreign policy, security, and the Middle East
on the other hand, it seems that our interests, mainly in the
context of the peace process, will be served very well by the
Democratic candidate. Moreover, ObamaQs election to president will
be a positive turning point in the United States' world image,
including in our region. We must therefore relate seriously to his
upcoming visit to Israel."

MORENO