SPECIAL ISRAEL MEDIA REACTION

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SUBJECT: SPECIAL ISRAEL MEDIA REACTION


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SUBJECTS COVERED IN THIS REPORT:
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Secretary Rice to Israel, West Bank, May 3-5, 2008

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Key stories in the media:
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All media led with various aspects of the police probe into Prime
Minister Ehud Olmert's dealings. The Jerusalem Post quoted senior
government officials as saying on Sunday after Secretary Rice held
talks with both Israeli and Palestinian leaders that it is unlikely
that there will be any progress in Israeli-Palestinian talks until
the political uncertainty created by the investigation is cleared
up. Ha'aretz quoted sources involved in the probe, the details of
which cannot be published due to a gag order, as saying yesterday
that it would be clear within a few days whether or not Olmert would
be indicted. All media reported that Olmert told the cabinet
yesterday that he would not let the investigation, which he said has
sparked malicious rumors, prevent him from doing his job. Yediot
Aharonot reported that PM Olmert's bureau chief Shula Zaken, who is
allegedly involved in the same affairs as Olmert, refuses to
cooperate with her police interrogators. Ha'aretz reported that
Olmert used his bureau to promote the artistic career of his wife
Aliza.

Ha'aretz quoted Foreign Minister Livni as saying yesterday that
Israel has "no hidden agenda" regarding West Bank settlements, after
Secretary Rice called Israel's policy in the area "problematic."

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The daily quoted Livni as saying that the settlements would not pose
an obstacle to the implementation of the road map peace plan or to
Palestinian aspirations for a state, saying that the 2005
disengagement from Gaza demonstrated that Israel would stick to its
obligations. After meeting with Palestinian President Mahmoud Abbas
in Ramallah earlier in the day, Rice said a peace agreement between
Israel and the Palestinians was still possible by the end of 2008.
Abbas praised the United States' commitment to the peace process,
despite his very vocal disappointment following his recent trip to
Washington. Ha'aretz reported that earlier yesterday, Rice met
Defense Minister Ehud Barak to discuss removing West Bank
roadblocks. Yediot Aharonot reported that she thanked Barak for the
measures that Israel has taken but emphasized that Israel needs to
do more. Yediot Aharonot also quoted Secretary Rice as saying that
the latest police investigation of Olmert is an internal matter for
Israel.

Ha'aretz quoted Egyptian President Hosni Mubarak as saying yesterday
that Egypt will send intelligence chief Omar Suleiman to Israel soon
to push talks on the Gaza cease-fire. Yediot reported that Israel
has clarified to Egypt that the cessation of terrorist passage
through Sinai is a condition for a cease-fire.

Leading media reported that a Palestinian militant was killed
yesterday during an Israel Air Force strike in southern Gaza. The
media reported that a number of mortar shells and Qassam rockets
were fired at IDF troops and the Sderot area. Ha'aretz reported
that three soldiers were recently charged at the Jaffa Military
Court with assaulting, abusing, and beating a Palestinian civilian
southwest of Jenin in January.

Leading media reported that yesterday border policemen demolished
the Hazon David outpost near Hebron -- only a synagogue was there --
and that settlers took down two caravans at Yatir South in the
southern Hebron hills. The Jerusalem Post reported that the Yatir
South residents plan to rebuild the outpost.

Ha'aretz and The Jerusalem Post quoted the British Sunday Times as
saying that Sir John Scarlett, the head of the British Intelligence
Agency MI6, is expected to visit Israel for talks with his Israeli
counterpart, Mossad chief Meir Dagan. In a bid to step up what
Israeli officials call "strategic dialogue," Dagan is expected to
brief Scarlett on Israel's latest information on the Iranian nuclear
program. Jerusalem sources told the British weekly that Israel
believes that Iran's nuclear capacity is more advanced than Western
intelligence estimates indicate. Ha'aretz cited the hope of Mossad
officials that the unveiling of the new material will persuade the
U.S. to amend its assessment that Iran halted its nuclear weapons
development program in 2003

The Jerusalem Post reported that today a panel of seven High Court
justices is due to hear petitions calling for the nullification of
the most recent provisional law barring Palestinian men aged 18-35
and women aged 18-25 who marry Israelis from living in Israel.

Leading media quoted the chairman of the Social Justice party,
tycoon Arkady Gaidamak, as saying yesterday he would be pleased to
be the minister of diaspora affairs in the Olmert government. The
Jerusalem Post quoted opposition members as saying yesterday that in
light of PM Olmert's latest investigation and the split of coalition
member Gil Pensioners Party, the government's days are numbered.

Ha'aretz and other media reported that Knesset Member Abraham
Hirchson, who was finance minister in 2006 and 2007, will be
indicted on charges of embezzlement, aggravated bribery, corporate
breach of trust, money laundering and falsifying corporate
documents. Hirchson is suspected of stealing 2.5 million shekels
(around $725,000 at today's rate) between 1998 and 2005.

Ha'aretz reported that Sephardic Chief Rabbi Shlomo Amar, acting in
his capacity as president of the Supreme Rabbinical Court, will
attempt to revoke a ruling from last week that invalidated thousands
of conversions carried out in Israel over the past few years. The
Jerusalem Post reported that for the first time in Israel's history,
the state is funding the building of synagogues that will serve
non-Orthodox congregations.

Media reported that Texas Pacific Group (TPG),a private equity
firm, is buying 25% of the coffee subsidiary of the Israeli food
company Strauss for $288 million. The deal values Strauss's global
coffee enterprise at $1 billion. Strauss has invested a total of
$400 million in its coffee subsidiary, and it is now the world's
seventh largest.





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Secretary Rice to Israel, West Bank, May 3-5, 2008:

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Summary:
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Military correspondent Amos Harel and Palestinian affairs
correspondent Avi Issacharoff wrote in the independent, left-leaning
Ha'aretz: "The new police investigation against Prime Minister Ehud
Olmert is expected to have serious implications on the developments
in the diplomatic-security arena, and mainly on the Egyptian effort
to achieve a cease-fire in the Gaza Strip."

The conservative, independent Jerusalem Post editorialized: " Rice
now calls on Israel and the Palestinians to agree 'once and for all'
on final borders. Amen.... It is long overdue for the government of
Ehud Olmert to explain to the world -- and us -- precisely where it
stands, and to seek to galvanize support and understanding for
Israel's positions."

Senior op-ed writer Akiva Eldar commented in Ha'aretz: "If ...
Deputy Prime Minister [Tzipi Livni] bows her head once more, she
will become just another small politician. This time, her
colleagues in Kadima and her partners in Labor are not entitled to
leave her on her own."

Liberal columnist Kobi Niv wrote in the popular, pluralist Maariv:
"Let's admit that at this time not only has the Zionist solution, as
a shield against a Holocaust of the Jews, not succeeded, but that it
has been dealt a resounding blow, despite all the boasting by chiefs
of staff at Auschwitz."

Contributor Gerald M. Steinberg, Executive Director of NGO Monitor
and chairman of the Political Studies Department of Bar-Ilan
University, wrote in The Jerusalem Post: "Israel's major
accomplishment in 60 years of independence is surviving -- staying
on the map as a sovereign state, with equal status among the nations
of the world."

Block Quotes:
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I. "Rumblings of Dissatisfaction"

Military correspondent Amos Harel and Palestinian affairs
correspondent Avi Issacharoff wrote in the independent, left-leaning
Ha'aretz (5/5): "The new police investigation against Prime Minister
Ehud Olmert is expected to have serious implications on the
developments in the diplomatic-security arena, and mainly on the
Egyptian effort to achieve a cease-fire in the Gaza Strip. If
aspects of the criminal investigation come to dominate Israeli
political life -- as they seem to be at this stage -- it will be
difficult for Israel to advance on the Palestinian track, especially
in matters that may require tough concessions.... It is also
possible that Olmert's image in the Arab world, of a survivor, has
led them to conclude that they must continue the talks. But for the
most part, it seems they understood that if the talks cease, only
Hamas would benefit. Hamas, however, also has something to lose.
Most of the senior leadership in Gaza is keen to secure a temporary
cease-fire, a tahdiya. If they learn that Israel is delaying
accepting the Egyptian initiative, they may renew, or even step up
Hamas's role in attacks against Israel. If so, the temptation for
the group is great to carry out a showcase terrorist attack that
would disrupt the 60th Independence Day celebrations. Yesterday
Hamas fired its first -- verbal -- warning. First, some of its
spokesmen threatened that the group would embark on an
'unprecedented escalation' if Israel does not quickly respond
favorably to the proposed tahdiya. Several hours later, a heavy
barrage of Qassam rockets was fired at Sderot -- offering a real
sample of what the group had in mind when it mentioned escalation."

II. "'Once and for All'"

The conservative, independent Jerusalem Post editorialized (5/4):
"The Palestinian leadership, [Salam] Fayyad included -- and
reflexively supported by the international community -- has made an
obsession of complaining about the number of West Bank checkpoints
Israel has yet to remove, with hardly a word of appreciation for
those barriers that are now gone and whose absence could at any
moment allow a terrorist infiltration. The sooner the PA implements
its security obligations under the road map, the sooner it disarms
gunmen and terrorists, the quicker more barriers can be lifted....
While it is too bad that Rice bundles the entire Jewish presence
over the Green Line -- Jerusalem, Ma'aleh Adumim, Ariel, Gush
Etzion, and the Jordan Valley -- under one rubric, she does have a
point about clarity. Jewish claims to Judea, Samaria [i.e. the West
Bank], and Jerusalem are profound and strong. And yet, most
Israelis are prepared to see the creation of a Palestinian state in
the heartland of our patrimony in return for an authentic peace.
Rice now calls on Israel and the Palestinians to agree 'once and for
all' on final borders. Amen. It has long been clear what the
Palestinians, via Abbas, Fayyad, and former PA prime minister Ahmed
Qurei, are demanding: an Israeli withdrawal to the 1949 Armistice
Lines, the division of Jerusalem and the 'right of return' for
Palestinian refugees. These positions are completely unacceptable
to the overwhelming majority of Israelis. And yet the Palestinians
have done a fine job of articulating their grievances and
negotiating goals. It is long overdue for the government of Ehud
Olmert to explain to the world -- and us -- precisely where it
stands, and to seek to galvanize support and understanding for
Israel's positions."

III. "It's Time for Livni"

Senior op-ed writer Akiva Eldar commented in Ha'aretz (5/5):
"According to all surveys (even before the newest investigation
broke),early elections would allow Benjamin Netanyahu to set up a
[right-wing] coalition.... But besides the possibilities of allowing
a prime minister under police warning -- a PM who has lost the
public's trust - to hold on to his seat, or go to early elections
that will bury the fragile negotiations with the Palestinians, there
is another option: Upon the dissolution of the government, the
President could assign Deputy Prime Minister and Foreign Minister
Tzipi Livni the task of forming a new government. Livni has made a
name for herself as a clean and responsible politician. She is
committed to the things she said last July at a Jerusalem conference
- that every day that passes delays the two-state solution and
endangers the existence of Israel as a Jewish democracy. Once,
after the release of the Winograd Commission's interim report, Livni
rescinded her demand that Olmert step down and wasted a significant
part of her reputation. If the Deputy Prime Minister bows her head
once more, she will become just another small politician. This
time, her colleagues in Kadima and her partners in Labor are not
entitled to leave her on her own."

IV. "Is Force the Solution?"

Liberal columnist Kobi Niv wrote in the popular, pluralist Maariv
(5/5): "For over 60 years Zionist leaders, from kindergarten
teachers to IDF chiefs of staff in the 'Marches of the Living' [in
the extermination camps of Auschwitz and Birkenau] have told us that
the only way to prevent the recurrence of the Holocaust is force....
People may reach ... the opposite conclusion. For instance, some
think that the lesson of the Jewish Holocaust is that the plagues of
racism and hatred of foreigners must be fought against and
eradicated. If those had not existed, the Germans and their
Christian brothers throughout Europe would not have risen to murder
Jews, Gypsies, and homosexuals.... Let's admit that at this time not
only has the Zionist solution, as a shield against a Holocaust of
the Jews, not succeeded, but that it has been dealt a resounding
blow, despite all the boasting by chiefs of staff at Auschwitz."


V. "60 Years on the Map"

Contributor Gerald M. Steinberg, Executive Director of NGO Monitor
and chairman of the Political Studies Department of Bar-Ilan
University, wrote in The Jerusalem Post (5/5): "Israel's major
accomplishment in 60 years of independence is surviving -- staying
on the map as a sovereign state, with equal status among the nations
of the world. The many economic and cultural achievements have
helped to contribute to this survival, while the desire for peace
with our neighbors remains unfulfilled, but the triumph is that we
are here.... For the Arab and Muslim 'rejectionists' (including the
Iranians, who are claiming leadership of this group),the idea of
Jewish sovereignty in the 'Muslim Middle East' was and remains
unacceptable.... The delegitimization and demonization of Zionism,
and the singling out of Israel for special treatment, while erasing
the context of Palestinian terrorism and other violent attacks, have
become the modern form of anti-Semitism.... In the face of this
intense and ongoing hostility, Israel's ability not only to survive,
but to thrive, is the main story marking 60 years of independence.
With six million Jewish citizens of Israel, ten times the population
in 1948, the Hebrew language has been reinvigorated, and the Jewish
culture has been preserved. At the same time, progress towards the
acceptance of Jewish sovereignty equality among the nations of the
world is painfully slow, and the struggle has been and will continue
to be exhausting. But there are no better choices -- there are no
alternatives for Israel and the Jewish people."

JONES