OLMERT SUCCESSION SCENARIOS

C O N F I D E N T I A L SECTION 01 OF 02 TEL AVIV 001694

SIPDIS

E.O. 12958: DECL: 08/04/2018
TAGS: PGOV PINR PINS IS
SUBJECT: OLMERT SUCCESSION SCENARIOS

Classified By: Charge d'Affaires Luis G. Moreno. Reason 1.4 (B/D)


1. (C) Summary: Prime Minister Olmert's surprise
announcement July 30 that he intends to resign his office
when Kadima elects a new chairperson coincided with the very
end of the summer session of the Knesset, a time when FM
Tzipi Livni, DefMin Ehud Barak and Minister of Transportation
Shaul Mofaz were in Washington. This cable outlines several
scenarios for what will follow the September 17 Kadima
primary in which Livni, Mofaz, as well Minister of Interior
Meir Sheetrit and Minister of Public Security Avi Dichter
will compete. If no one wins a majority in the first round
of the Kadima primary, a second round will be held on
September 24. Olmert has stated that as long as he serves as
Prime Minister -- which could be anywhere from three-to-six
months, he will "attempt to continue bringing the
negotiations between ourselves and our neighbors to a
successful conclusion." On July 31, Olmert accepted the
resignation of his Chief of Staff, Yoram Turbowicz on July
31, but Turbowicz will continue to play a diplomatic role as
special advisor. End Summary.

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Primaries - September 17 and 24
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2. (C) On July 30, PM Olmert announced that he had decided
not to compete in the Kadima Party primaries, now scheduled
for September 17. He added that he had no intention of
interfering in those elections and pledged to "resign my post
as prime minister in order to allow the elected chairperson
to assembly another government swiftly and efficiently."
Livni and Mofaz are the clear front-runners, and each has
hired high-profile strategists to advise their campaigns --
with Eyal Arad and Reuven Adler (formerly advisors to PM
Sharon) on Livni's team, and Arthur Finkelstein (formerly
advisor to PM Netanyahu) working for Mofaz. After the first
round of the Kadima primaries, Dichter is likely to rally
with Livni due to his dislike of Mofaz. Sheetrit is likely
to rally with Mofaz, or may return to the Likud Party from
whence he came. Olmert, despite his pledge not to interfere,
will do all he can to support Mofaz, who has remained loyal
to him throughout the past 30 months in the view of many
Israeli analysts.

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SCENARIO I - NEW PRIME MINISTER
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3. (U) Once Olmert resigns, President Shimon Peres will
consult with party factions in the Knesset and must, within
seven (7) days, assign the task of forming a government to
the MK who has notified him that s/he is prepared to do so.
That person has 28 days to form a government, a period of
time that can be extended by as much as another 14 days. If
this MK fails to form a government within 42 days, then the
President may assign the task to another MK, who, in turn,
has a maximum of 28 days to form a government. (There are
complex provisos for a third attempt, but such a scenario is
unlikely.) Olmert will remain in power as the caretaker PM
to insure continuity of government throughout this process,
which is likely to come to a head after the Jewish holidays
in mid-October. (Note: the holidays do not formally affect
the prescribed timetable for government formation, but they
will make it unlikely that a Kadima leader will be able to
construct a coalition before the end of October when the
Knesset begins its winter session.)


4. (C) If elected to head Kadima, Minister Mofaz has
publicly stated his intent to form a national unity
government before the November 11 municipal elections.
However, Opposition leader Netanyahu (Likud) has reportedly
stated his unwillingness to serve in any Kadima-led coalition
before general elections. Mofaz has reached out to Shas MK's
in an effort to cultivate their pivotal support, but Shas
spiritual leader Ovadia Yosef embraced Netanyahu on August 3,
a signal that many pundits have interpreted as a political
nod in favor of the Likud preference for general elections.
Labor Party Chairman Barak once served as Mofaz' commander
and would not be thrilled to serve in a Mofaz-led government,
according to one Labor insider. Moreover, many Labor MK's
would not want to serve in a right-leaning government whose
leader is not publicly committed to active negotiations with
the Palestinians.


5. (C) FM Livni is likely to try to form a centrist
government with Labor, and she too has hinted at a national
unity government with the Likud, a scenario that is unlikely
absent a major national security crisis given Netanyahu's
current stance. Shas will prefer not to participate in a
Livni-led government, but could be swayed by commitments to
restore child allowances, an issue which will become central
to the political debate of the coming months. Barak will

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strongy favor a Livni-led government in which he will apear
to be the strongman. This option is the bes one open for
him, as he is not a MK and thus canot serve as prime
minister. (Barak's popularityhas dropped significantly in
the year since he joined the government -- an anomaly for
Israeli defense ministers, who usually enhance their
political stature in this job.) An interim, alternative
government with Livni at the helm positions him best for
scheduled, general elections in the fall of 2010.

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SCENARIO II - EARLY ELECTIONS
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6. (U) Popular sentiment favors new elections over a
reshuffle, according to several recent polls. The current
Kadima faction leader, MK Yoel Hasson, has said that chances
of the party forming an alternative government are slim --
but he favors Livni as the Kadima leader with the best chance
of competing against Netanyahu in elections. If no MK is
able to bring a majority of Knesset members to support
his/her government, then the Knesset will be considered to
have dispersed. New elections will be held on the last
Tuesday in the 90 days that follow (i.e. sometime in the
January-March 2009 timeframe depending on when the final
failure to form a reshuffled government occurs). Olmert
remains the caretaker PM during this period.


7. (SBU) Likud is the front-runner in polls should early
elections come about, but a Livni-led Kadima Party is a close
second (and beats Likud in some polls). Should Mofaz head
Kadima, Netanyahu's Likud Party will outdistance Kadima and
Labor by substantial margins. In such a scenario, Netanyahu
will be tempted to create a right-wing government, but will
be under popular pressure to create a broad, national unity
government. Alternatively, Barak's Labor Party and a
Livni-led Kadima could join forces, a move that could give
them the nod to form a government.

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BUDGET BATTLES IN THE OFFING
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8. (SBU) Even if Livni or Mofaz succeeds in forming an
alternative government this fall, the knives will be out in
budget battles that follow. Normally, the government must
approve a budget by December 31. Reconciling the competing
promises made to prospective coalition partners will be a
costly enterprise that could lead to the early demise of any
coalition. A budget must be agreed no later than March 31.
Failing that, elections are in the offing 90 days thereafter.
While this scenario has never transpired, the circumstances
of Shas, Pensioner or Labor demands could be the proximate
cause of a coalition rupture.

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COMMENT
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9. (C) Comment: Olmert may yet wring a policy victory out
of the end of his political career no matter who wins the
Kadima primary. Olmert continues to pursue peace talks with
Syria -- and his erstwhile Chief of Staff, Yoram Turbowicz,
is staying on to pursue this initiative on a "volunteer"
basis -- not unlike the role played by his predecessor, Dov
Weissglas. Current negotiations with Syria do not involve FM
Livni, who remains engaged in the more complicated and
politically trying dossier of Palestinian negotiations.
Syria talks would undoubtedly displease Mofaz, who is rumored
to be considering settling in the Golan Heights. Olmert
could also decide to press ahead with the Palestinian agenda
to which he has devoted enormous energy, leaving the
political costs of these negotiations to his successor. End
Comment.

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