KADIMA AND LABOR PLEDGE COALITION PARTNERSHIP:

C O N F I D E N T I A L SECTION 01 OF 04 TEL AVIV 002339 SIPDIS E.O. 12958: DECL: 10/15/2018 TAGS: PREL PGOV PINR IS SUBJECT: KADIMA AND LABOR PLEDGE COALITION PARTNERSHIP: NEXT STEP SHAS? Classified By: Political Counselor Marc J. Sievers. Reason 1.4 (B/D) ¶1. (C) Summary: Kadima and Labor negotiators reached a draft agreement October 13 that would allow Tzipi Livni to form a new coalition with Ehud Barak. After marathon negotiations, Labor obtained several commitments from Kadima: 1) full partnership in the Syrian and Palestinian negotiations; 2) modest budgetary commitments for pensions and commitments not to reduce defense spending or increase university tuition. Barak obtained status as the "senior Deputy PM" and a laundry list of commitments spelling out what this will mean in the day-to-day management of the government. Now that Livni has Barak on board, she is focusing on bringing Shas, and perhaps Meretz and UTJ into the coalition as well. Livni has deployed Shaul Mofaz to court Shas, but she'll need her checkbook too, as Shas is seeking a minimum of 800 million to 1 billion shekels (NIS) for family allowances as their price for entry. Livni's first 28-day time period for forming a coalition is due to expire on October 20, and most insiders predict she will request from President Peres the additional 14 days that are permitted by law. There is also speculation that Livni may instead decide to go to early elections. Meanwhile, Olmert continues as caretaker PM. End Summary. -------------- LIVI AND NETANYAHU COURT SHAS -------------- ¶2. (C) The Kadima-Labor agreement paves the way for Livni to ramp up her efforts to bring the Shas Party on board as the next step in her effort to put together a viable coalition. Opposition leader Netanyahu (Likud) has rebuffed Livni's reiterated offer to join the government unless and until there are early elections. On October 13, Netanyahu met with Shas spiritual leader, Rabbi Ovadia Yosef, to urge Shas not to join a Livni government and to support early elections. Although Shas political leader Eli Yishai has not yet engaged in negotiations with Livni despite her phone calls and an invitation to discuss terms during the Jewish holiday week of Sukkot, it appears from press reports that two trusted advisors of Rabbi Yosef are in contact with Kadima -- an indication that Shas has yet to decide which way it will go. Reports that Kadima has dangled offers of 400-500 million NIS for family allowances have been countered by Shas resistance to begin dealing about terms that are below 800 million NIS. On October 16, Kadima deployed Shaul Mofaz to contact Yishai and Mofaz reportedly told Yishai that Shas would be a "strategic partner" in the coalition. Kadima contacts have told poloff that they do not think it will be possible to form a viable coalition without Shas. Opposition contacts made a similar point to Pol/C, noting that a narrow coalition without Shas would be unstable and unlikely to last a year. -------------- UTJ WILL PROBABLY STICK WITH SHAS, WHILE MERETZ AND THE PENSIONERS TALK TO KADIMA -------------- ¶3. (C) Although a "narrow" government of just 60 MK's comprising Kadima (29),Labor (19),the Pensioners (7) and the left-wing Meretz Party (5) is unlikely, Livni's team is nonetheless reaching out to Meretz as well as United Torah Judaism (UTJ),the ultra-Orthodox Ashkenazi party that has six seats. Most observers think it is unlikely that UTJ will do a separate deal absent Shas. In fact, one of UTJ's spiritual leaders, Rabbi Yosef Shalom Elyashiv, has flagged a potentially bigger, theological problem in having ultra-Orthodox (Haredi) parties serve in a government led by a woman. Meretz Party leader Haim Oron acknowledged in a recent radio interview that "if the government decides not to address the subject of Jerusalem, (then) it is clear to us that we won't join (it)." The Meretz position is squarely at odds with the Shas position that Jerusalem should be excluded from negotiations with the Palestinians. Meanwhile, Pensioner leader Rafi Eitan stated publicly that he is skeptical of Livni's chances to bring the ultra-Orthodox parties on board, and assumed "that we're headed towards elections." -------------- BIBI STILL WANTS ELECTIONS, BUT OPEN TO NUG AFTERWARDS -------------- ¶4. (C) A key Likud advisor told POL/C October 15 that Netanyahu supports elections as early as possible since Likud does not believe Livni will have a genuine popular mandate if she manages to form a government. The advisor also argued that setting a date for elections now or in the near future would enable Israel to have a new government around the time TEL AVIV 00002339 002 OF 004 that the new U.S. administration takes shape, making it easier for the two to "deal with critical issues" such as Iran together. Netanyahu supports a national unity government after elections, and would be willing to work with Livni and Barak. Such a government could expect to serve three years and bring stability to Israeli policy, in the Likud view. The advisor commented that Netanyahu does not believe his own polls and concedes the possibility that Livni might beat him in an election, but he would still be prepared to join her coalition once it has a popular mandate. The Likud advisor noted that a senior Livni political advisor, Eyal Arad, maintains a channel with Likud and has advocated that Livni should go to early elections. -------------- DETAIL ON LABOR-KADIMA AGREEMENT -------------- ¶5. (SBU) Barak's negotiator, former Labor MK Efi Oshaya, and Kadima MK Tzachi Hanegbi concluded marathon negotiations and signed a coalition agreement for the 32nd government between their two respective parties on October 13. The agreement they signed will, according to the text, "supersede any subsequent agreements" between Kadima and other potential coalition members. It will serve as a supplement to the coalition guidelines that were agreed by Olmert and his coalition partners in May 2006. ¶6. (C) The key elements of the six-page-long Kadima-Labor agreement are as follows: -- Labor ministers will continue serving in their current positions and Labor will maintain its positions and chairmanships within the Knesset and within ministerial committees. (Comment: This proviso will make it difficult for Livni to entice UTJ to join the coalition, as they seek the chairmanship of the Knesset Finance Committee, which is currently held by Labor.) -- The Labor Party chairman, Ehud Barak, will be the "senior deputy prime minister" and will have a higher "rank" than any other minister, regardless of their title. (NB: Labor MK Ophir Pines-Paz criticized this point, noting that by law the "Acting PM" position, currently held by Livni, is the one who fills in when the PM is absent or incapacitated.) Should the PM or the Vice Premier be absent, then Barak can chair cabinet meetings. -- Labor and Kadima will work in full harmony, mutual respect and consultation, to include regular weekly meetings. (NB: This is not new, but it maintains a precedent: Olmert and Barak met weekly as well even when their relationship was rocky.) -- The PM will not use the authority vested in her by law to fire any Labor minister unless the Labor chairman agrees. As a corollary, if Barak asks the PM to fire a Labor minister, then the agreement obliges her to do so. (Comment: This proviso addresses a fear Barak had in June, when Olmert could have dismissed Labor ministers for voting against the coalition.) -- If the PM sees a need to dissolve the Knesset, then she will have to inform Barak with "appropriate notice." If the Labor chairman is opposed to dissolving the Knesset, then the PM will hold off doing so for seven days. If there is still disagreement, then the PM can do as she sees fit. (Comment: This proviso partially addresses Barak's fear that a Livni government will be short-lived and leave Labor in the lurch with snap elections.) -- The coalition will seek legislation specifying that the leader of the opposition need not be a Member of the Knesset. (Comment: This move is destined to fail, as it controverts the basic premise of the Israeli parliamentary system: that one must be a member of the Knesset to function within it. It is akin to Barak's insistence that his party recommend his name to the President as the person best suited to be Prime Minister -- even though the law requires that the PM be a sitting member of the Knesset. One journalist honed in on this proviso as indicative of Barak's paranoia about entering Livni's government. End Comment). -- Before the Cabinet Secretary determines the agenda (of cabinet meetings),the PM will consult Barak to fully coordinate issues -- with as much lead time as possible. If Barak asks the PM to remove an issue from the agenda, she'll put off raising it for 14 days. If the two can't agree on controversial issues, then Labor can ask the ministerial committees on national security affairs or social welfare affairs to consider it first. If cases where an issue has TEL AVIV 00002339 003 OF 004 already been discussed, Barak can ask the cabinet not to hold a vote on it. Labor and Kadima must agree on a date for a vote, but if there is not agreement, then the PM must wait at least 14 days before setting a date for a vote. However, if the PM is convinced of the need for an emergency vote, she can do so. As a corollary, the PM and Barak need to agree on the agenda for the ministerial committee on national security affairs. They will establish a "framework" for consultations on sensitive political and security issues to guarantee their secrecy. -------------- FRIEDMANN KEEPS HIS JOB, BUT POWER CIRCUMSCRIBED -------------- ¶7. (SBU) On the judiciary, the Kadima-Labor agreement did not provide Labor will an explicit veto over controversial judicial reforms that have been initiated by Justice Minister Friedmann, but it does proscribe detailed arrangements for all matters pertaining to policy in his arena: -- Any change in the basic law or a constitution must be mutually agreed by all coalition factions. Any legislation regarding the judicial system (e.g., the Supreme Court) requires agreement between Labor and Kadima. The government will oppose any private member bills on these issues unless previously agreed. The parties to the agreement will act to guarantee the independence of the Israeli judicial system and Supreme Court and oppose changes that undermine its status. -------------- PARTNERS IN PEACE NEGOTIATIONS WITH PALESTINIANS AND SYRIA -------------- ¶8. (U) On the peace process, the Kadima-Labor agreement underscore that: -- the parties commit to reach peace and security agreements with all neighbors and agree that no negotiations or political initiatives by any ministers in the coalition will be undertaken without prior approval and coordination with the PM. Barak will be the PM's senior partner in promoting all diplomatic initiatives. There will be "complete transparency and coordination." Responsibilities and the framework for these negotiations will be agreed by Livni and Barak after a government is formed. Labor MK Pines Paz, a Barak rival, complained to the press that the Barak's agreement made no explicit mention of Annapolis or the voluntary West Bank settler evacuation/compensation law, but it did provide broad policy guidelines and goals for Labor and Kadima cooperation. -------------- MODEST BUDGET INCREASES -------------- ¶9. (U) On financial issues, Labor won some modest commitments from Kadima: -- Pensions will be increased by 150 million NIS in 2009 and another 400 million NIS in 2010. -- The parties agree not to touch the defense budget; decisions made by the previous government remain valid. -- The PM will act to insure that higher education fees do not rise and the PM will work with the finance ministry to close the budget gaps to guarantee this goal. -- Smaller sums will be allocated in the budget to daycare (20 million NIS); 160 million NIS for wastewater treatment; 100 million NIS for natural disaster insurance and agricultural investments (Comment: these appear to be budgetary bones that Barak can through to his senior Labor allies, Herzog, Ben-Eliezer, and Simchon, respectively.) -- These agreements will be introduced into the 2009 budget proposal between the first and second readings of the bill and Labor and coalition parties will vote in favor. Within two weeks of a new government, a detailed agreement on working procedures to ensure coalition discipline will be outlined. ********************************************* ******************** 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 TEL AVIV 00002339 004 OF 004 Classified SIPRNET website. ********************************************* ******************** CUNNINGHAM