KADIMA AND SHAS BRINKMANSHIP

C O N F I D E N T I A L TEL AVIV 002391 SIPDIS E.O. 12958: DECL: 10/24/2018 TAGS: PREL PGOV PINR IS SUBJECT: KADIMA AND SHAS BRINKMANSHIP Classified By: Ambassador James B. Cunningham. Reason 1.4 (B/D) ¶1. (C) Summary: Late on October 23, Kadima Party leader Tzipi Livni issued an ultimatum to the Shas Party. Kadima reportedly offered Shas some 650 million NIS (approximately 170 million USD) for family allowances, and Livni told party activists that it was now time for Shas to decide. She also indicated that she had requested a meeting with President Peres on October 26 to brief him on whether she is able to form a coalition or not. On October 24, Shas announced its rejection of Kadima's offer and its decision not to enter Livni's government. These latest examples of political brinkmanship may not be the last, as there remain "38 hours" in the words of one Kadima aide before Livni is slated to see President Peres and convey her assessment of whether she has a coalition or not. If she does not, Peres could intervene and urge Kadima and Shas to make a last-ditch effort to forge a compromise. If not, then early elections are in the offing, as Livni is unlikely to opt to try to form a narrow government, according to Kadima contacts. End Summary. -------------- SHAS DECIDES NOT TO ACCEPT KADIMA OFFER -------------- ¶2. (U) On October 24, the Shas Party replied formally that the party was unable to reach agreement with Kadima on two issues: Jerusalem and family allowances for the poor. Consequently, the party's spiritual leader, Rabbi Ovadia Yosef, decided not to continue coalition talks, according to Shas spokesman, Roei Lachmanovich. Shas Party leader Eli Yishai gave a news conference in which he elaborated the Shas position: -- "More than a year ago a decision was taken that if Jerusalem came up for discussion we would leave the government and the rabbi (Ovadia Yosef) said that as long as there was no commitment not to discuss Jerusalem we could not join the government. Jerusalem is not for sale." -- "Back in July (2008) we said that if the issues of the poorer sectors and child welfare benefits were not dealt with seriously then we would support dissolution of the Knesset." Yishai concluded that Shas had been consistent on these principles, adding that "the moment these two principles were not accepted (by Kadima),the Council of Sages under its chairman Rabbi Ovadia Yosef conducted a telephone consultation and took a decision that Shas will not enter the government." (Note: Shas officials have demanded a minimum of one billion NIS -- approximately, 265 million USD. End Note.) -------------- --- ... BUT A WINDOW REMAINS BEFORE LIVNI SEES PERES -------------- --- ¶3. (C) FM Livni's Foreign Policy Advisor, Tal Becker, told POL/C on October 23 that he was not overly optimistic about her chances and complained that the Israeli public has not made more of a fuss about Shas' financial demands, since a public backlash would help Livni hold the line. The political advisor to the Kadima Faction head, MK Yoel Hasson, told POLOFF October 24 that Livni's predicament did not look good at this juncture. He assessed that the probability of early, general elections was greater than her stated option of forming a narrow government without Shas. Nonetheless, Hasson's aide underscored that "38 hours is a long time in Israeli politics," and he observed that the Shas decision to reject the Kadima bid today, October 24, meant that time remained for the two parties to come back from the brink and resume negotiations on the morning of October 26 (after Shabbat). Should the parties make headway, President Peres always has the option to postpone meeting Livni and making an appeal for Kadima and Shas party leaders to take another stab at forming a coalition for the sake of political stability in Israel. At that point, Livni would still have a full week left, according to Israeli law, to form a government. ********************************************* ******************** 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. ********************************************* ******************** CUNNINGHAM