LIVNI HAS LESS THAN TWO WEEKS TO FORM A

C O N F I D E N T I A L SECTION 01 OF 02 TEL AVIV 002370

SIPDIS

E.O. 12958: DECL: 10/22/2018
TAGS: PREL PGOV PINR IS
SUBJECT: LIVNI HAS LESS THAN TWO WEEKS TO FORM A
GOVERNMENT, AND MAY NEED ALL OF IT

Classified By: Political Counselor Marc J. Sievers. Reason 1.4 (B/D)


1. (C) Summary: Tzipi Livni's target of producing a
coalition by the date the Knesset reopens for its winter
session on October 27 lost momentum when Shaul Mofaz (Kadima)
and Rafi Eitan (Pensioners) decried the idea of a "narrow
coalition" comprising just 59-60 MK's of Kadima, Labor,
Meretz and the Pensioners. Kadima insiders believe Livni's
"narrow coalition" gambit was merely a tactical threat to
demonstrate strength and determination vis a vis Shas
negotiators, but the suggestion of a Kadima "rebellion"
destroyed Livni's leverage and the likelihood that she will
be able to showcase a new coalition on the day the Knesset
reopens. Although the press reports that Mofaz has held
"secret" meetings with Shas leaders, Livni's allies in Kadima
do not view Mofaz as a real rebel. Despite Livni's tactical
setback, the odds are still better than even that she will
form a broader coalition that incorporates Shas, Meretz, most
of the pensioners and perhaps even the Degel Hatorah faction
of United Torah Judaism (UTJ) parliamentary group before
November 3, when her last two weeks' of coalition-building
time is up. End Summary.

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SHAS
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2. (C) Shas continues to demand upwards of one billion
shekels for "kitzba'ot" or "family allowances" as the price
that will bring them into the coalition. Livni has
reportedly offered 600 million NIS to date, but a Kadima MK
told poloff October 22 that there is little doubt within the
party that she will ultimately meet Shas' demand. For the
moment, Kadima negotiators have reportedly sought to package
the allowances as a lump sum that will be made to families
with more than four children. Kadima would condition this
allowance solely on the salary of the father, a condition
that would reduce the benefit to large Arab families, whose
male head-of-household typically earns a salary while the
ultra-Orthodox males who study Torah do not. Shas spiritual
leaders are reportedly in favor of doing a deal now on this
basis rather than wait for the results of new elections that
could weaken their political leverage; however, Shas
political leaders are wary of serving as the arbiter of a
coalition that leans to the left (when their constituency
tends to the right). Moreover, a Likud contact told poloff
that Netanyahu, should he win early elections, is prepared to
restore allowances for large families provided the additional
money is allocated on an equal basis (i.e., the same amount
of money per additional child). In the past, Netanyahu's
reforms as finance minister curtailed allocations that
increased disproportionately with each additional family
member. Nonetheless, the Likud remains a "more natural fit"
for Shas, in the words of a Kadima MK. Rabbi Ovadia Yosef
will make the ultimate decision.

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MERETZ
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3. (C) Meretz will likely join the coalition even if Shas
comes on board making various stipulations about Jerusalem,
according to Meretz contacts. The same Meretz contacts think
Jerusalem will most likely be the excuse Shas uses to explain
why it does not join a coalition if it does not win the
budgetary concessions it has demanded. Meretz Party leader
Haim Oron is often a sounding board for Livni on financial
matters and on the Palestinians, and she would welcome his
presence in the coalition, according to one Meretz source.
Meretz MK Yossi Beilin would like to be considered a
replacement for Justice Minister Friedmann, but neither Barak
nor Livni appear ready to push Friedmann out.

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PENSIONERS
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4. (C) The Pensioner Party leader, Rafi Eitan, remains eager
to strengthen his hand following his efforts to restore unity
to the Pensioners, a party that split into two factions
earlier this year. His efforts are complicated by
personality conflicts and residual legal challenges to
restoring the party structure, but ultimately he will bring
six, if not seven, MK's to the coalition, according to a
Pensioners staffer. Since Ehud Barak already wrung some
pro-pensioner concessions from Kadima, the Pensioners bloc is
now looking for additional health benefits for the elderly as
its price for joining the coalition.

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