SCENESETTER FOR THE VISIT OF USUN AMBASSADOR SUSAN

S E C R E T SECTION 01 OF 03 TEL AVIV 002283

SIPDIS

E.O. 12958: DECL: 10/16/2019
TAGS: PREL PGOV PHUM KWBG IR TU IS
SUBJECT: SCENESETTER FOR THE VISIT OF USUN AMBASSADOR SUSAN

E. RICE

Classified By: Ambassador James B. Cunningham, Reason 1.4 (b) (d)


1. (S) Summary. Israelis are even more anxious than usual
these days as the Goldstone Report is being discussed in
Geneva and New York. Israeli leaders have developed a
virtually obsessive reaction to the report, which they see as
both an assault on the State of Israel and it's democratic
institutions, and as an attempt to deny their right to
self-defense against terrorism. Tthey will be eager to
discuss how to contain the report's impact on Israel's
standing in the international community. The Palestinian
Authority's handling of the Goldstone Report has greatly
complicated israel's already tense relations with the PA and
threatens to undermine the GOI's plans to cooperate with the
PA to improve conditions in the West Bank. Ongoing
disagreements with the PA over settlements and Jerusalem are
compounded by the impact of Goldstone and a possible
reconciliation agreement between Fatah and Hamas. In Gaza,
Israeli policy is caught on the horns of a dilemma over Gilad
Shalit and the evident consolidation of Hamas' control. The
GOI is on board for our policy of engagement with Iran, but
PM Netanyahu and Defense Minister Barak in particular
continue to regard a nuclear-armed Iran as a dire threat and
will want to discuss the prospects for early and tougher
sanctions. Deteriorating relations with Turkey are also on
their minds, as they see Turkey's Islamist government
distancing itself from Israel while moving closer to Syria
and Iran. On Lebanon, recent evidence of Hizballah activity
south of the Litani has served to underscore the failure of
UNSCR 1701 to stop the flow of arms from Iran to Hizballah
via Syria. Netanyahu's coalition is solid and he is not
under any serious internal political pressure to change
course, but Israelis see a growing questioning of Israel's
legitimacy around the world, for which some blame Netanyahu's
policies. Netanyahu understands the critical importance to
Israel of close relations with the U.S., and is sensitive to
charges that he is mishandling his relationship with
Washington. The question is what is he prepared to do to
advance our relationship. End Summary.

Goldstone at the Top of the Agenda
--------------


2. (C) The Goldstone Report has been a near-obsessive
issue with Israel's senior leadership since its release
September 14. The report infuriated Israelis for a number of
reasons, including its equating of Israel's actions with
those of Hamas during Cast Lead, its failure to address the
context of the thousands of rockets and mortars fired into
southern Israel that led to the GOI's decision to launch the
operation, its dismissal of Israel's investigatory mechanisms
and its suggestion that Israel silenced dissenting views, and
most significantly, the report's sweeping conclusion that the
Olmert Government and IDF leadership conceived and carried
out the operation with the explicit intent of punishing
Gaza's civilian population. As PM Netanyahu said in his
October 12 speech at the opening of the Knesset's winter
session, Goldstone condemned Israel for taking military
action to defend itself following years of attacks on Israeli
civilians by Hamas war criminals. The Israeli bottom line on
the Goldstone Report is that it and the reaction to it
constitutes an attempt by its adversaries and by elements of
the international community to de-legitimize the State and to
deny Israel the fundamental right to self-defense.


3. (C) In the same Knesset speech, Netanyahu reiterated a
warning that he has voiced several times in the past few
weeks: if the international community, as represented by the
General Assembly and/or Security Council, votes to adopt the
report, Israel will not be able to take further risks for
peace. Tthe GOI cannot contemplate ceding West Bank land
without retaining a credible threat to respond to any attacks
from Palestinian territory. In this context, Netanyahu has
also referred to the Goldstone Report as "war by other
means." We anticipate that all of your Israeli interlocutors
will focus in your meetings on how to deal with the report in
both the GA and SC.

Palestinian Dilemmas
--------------


4. (S) It is no secret that Abu Mazen and his key advisers
reacted negatively to Netanyahu's government and would have
preferred Opposition Kadima Party leader Tzipi LIvni as their
negotiating partner. The failure to agree on the terms of a
settlement freeze, as well as ongoing differences over the
parameters of the negotiations, contributed to the Abu
Mazen's reluctance to resume negotiations, but the PA's

TEL AVIV 00002283 002 OF 003


embracing of the Goldstone Report has created a crisis of
confidence with the GOI. Israelis are well aware that Abu
Mazen has been damaged by his October 1 decision to defer
action on the report in the Human Rights Council, but remain
incensed by Palestinian tactics and seem to have few ideas
how to set this aside and move ahead. Netanyahu's plans to
develop security and economic cooperation on the ground, even
in the absence of a political process, risks breaking down
amid the acrimony over Goldstone. So far, the newly
developed security cooperation on the ground between the IDF
and the PA in the West Bank is continuing, but it too may
collapse if political tensions continue to rise. A
Palestinian reconciliation agreement that includes a role for
Hamas in the West Bank would spell the end to the
possibility of security cooperation with the IDF. Well
informed Israeli commentators have started discussing the
possibility of a Third Intifada breaking out soon if a GOI-PA
political dialogue cannot be restored; another Palestinian
uprising would be a disaster for all. Some Israelis say
Netanyahu is comfortable seeing Abu Mazen in a weakened
position, but Netanyahu has told us he sees no alternative to
Abu Mazen and wants him to remain in office.


5. (S) Meanwhile, the GOI is stuck on the horns of a dilemma
in its Gaza policy. As IDF Southern Commander Major General
Yoav Gallant told us recently, Israel's civilian leadership
has not been able to resolve the contradictions between its
short term interest in Hamas being strong enough to impose a
ceasefire on the other Gaza factions, its medium term
interest in preventing Hamas from consolidating its control
of Gaza, and its longer term interest in avoiding Israeli
reoccupation of the Strip. Israeli public opinion puts
pressure on the GOI to keep the Gaza crossings closed except
for humanitarian supplies and a minimal level of commercial
goods as long as Hamas holds Gilad Shalit hostage. It is
unclear whether Netanyahu and his inner cabinet can stomach a
prisoner exchange deal on Hamas' terms, an outcome that would
be a huge victory for Hamas and would impact Abu Mazen.
Indications that Hamas' leadership may see Palestinian
internal politics shifting back in their direction is only
likely to lead the Israelis to hold firm on the crossings.
Quiet counter-smuggling and counterterrorism cooperation with
Egypt has improved considerably this year, but that relative
bright spot on the regional scene is undercut by increasingly
hostile Egyptian public rhetoric.

Iran and Turkey
--------------


6. (S) The GOI is on board with our engagement with Iran and
PM Netanyahu has expressed satisfaction with the President's
overall approach, but they will want to hear your views on
the prospects for early and tougher UNSC sanctions.
Netanyahu and Defense Minister Barak continue to view a
nuclear armed Iran as the gravest threat that Israel faces,
not principally because of the possibility of an Iranian
nuclear strike against Israel, but due to the likely regional
impact of Iran achieving its nuclear goals. Given Iran's
poor economic situation, divisions at the top of the regime,
and the loss of popular legitimacy, they will argue that now
is the best time to step up the pressure on Iran. Some
non-governmental Israeli experts are starting to say that
there is now more time to convince Iran to give up its
weapons program, but Netanyahu and Barak continue to stress
the need to maintain a credible threat of a military option.
The IDF high command asserts that it is confident that Israel
has the capability to significantly set back if not destroy
Iran's nuclear program, and we believe they have prepared
several military options for Netanyahu and his inner
cabinet's consideration.


7. (S) Another new and troubling regional dynamic is the
rapid erosion of Israel's strategic relationship with Turkey.
Turkish PM Erdogan's harsh anti-Israeli rhetoric since the
Gaza operation is finally spilling over into the mil-mil
relationship, as evidenced by Erdogan's decision to reject
Israel's participation in the Anatolian Eagle air exercise,
an annual event for the past eight years involving the U.S.,
Italy and NATO elements as well. The Israelis have expressed
great appreciation for the U.S. decision to withdraw from the
exercise and for U.S. leadership in convincing Italy and NATO
to follow suit, but the fact that the Turkish military was
unwilling or unable to prevent political tensions from
impacting such a high-profile exercise was seen here as a
clear indication of new limits to the Turkish General Staff's
role. Israeli experts on Turkey argue that Israel is
suffering from a shift among Turkish elites away from
identification with the West and a new-found enthusiasm for

TEL AVIV 00002283 003 OF 003


reviving Turkey's Islamic identity. They are deeply
disturbed that a centuries-old Turkish tradition of tolerance
toward Jews is being swept away by a steady stream of
anti-Semitic rhetoric and anti-Israeli propaganda from
Turkey's Islamist political leadership. Increasing Turkish
strategic cooperation with Syria and a soft Turkish line
toward Iran add to Israeli anxieties.

Lebanon
--------------


8. (S) We are still waiting for the GOI to decide what to do
about the northern side of the village of Ghajar. MFA has
informed us that they have advised the cabinet to accept
UNIFIL's plan for replacing the IDF presence on Lebanese
territory, but the cabinet still has to decide on the issue.
The Lebanese border remains generally quiet, but two recent
incidents of explosions of apparent rocket caches in southern
Lebanon have led to Israeli charges to the UN about what the
Israelis insist is UNIFIL's failure to prevent Hizballah from
rebuilding its bases south of the Litani, as well as the
broader failure to enforce the arms embargo provisions of
UNSCR 1701. Minister without Portfolio Benny Begin, a member
of Netanyahu's inner cabinet, speaking on Israeli radio
October 14, accused the international community of failing to
prevent Hizballah's rearmament on such a scale that Hizballah
now possesses a stockpile of 40,000 rockets and missiles,
including advanced Iranian systems capable of striking
anywhere in Israel. Israeli officials have shared with us
their assessment that while Hizballah is not currently
interested in another round with Israel, another large-scale
military confrontation with Hizballah is almost inevitable
sooner or later.

A Time of Anxiety
--------------


9. (C) Netanyahu enjoys a stable coalition and does not
face any significant political challenge from Livni at this
point. Foreign Minister Lieberman may have to resign this
year if he is indicted on money laundering and other charges,
and Ehud Barak presides over a faction-ridden Labor Party and
is coming under public pressure for extravagant expenditures
during a recent official visit to Paris. But neither
Lieberman's indictment nor Barak's unpopularity is likely to
threaten Netanyahu's coalition. The Israeli economy
continues to perform well, the security situation is
excellent, with no Israelis dying from terrorist attacks this
year, and Israelis from all walks of life celebrated the
awarding of the Nobel Prize for science to an Israeli woman
chemist. Netanyahu has skillfully moved to positions which
enjoy broad support, and has succeeded for the time being in
quieting the concerns of the right wings of his party and
coalition over a possible settlement freeze, concessions on
Jerusalem, or large-scale action to remove illegal outposts.


10. (S) Yet Israelis are even more anxious than usual, and
many observers say Netanyahu is failing to offer a positive
vision of where Israel is headed. The breakdown of dialogue
with the Palestinians is one cause for concern, and Israel's
relationship with its neighbors is deteriorating, at least
rhetorically, across the board. The upset of its valued
relationship with Turkey, and increasingly harsh criticism of
Israel in Europe, including calls for boycotts or criminal
prosecutions under universal jurisdiction, are adding to the
sense of foreboding. Influential Ha'aretz columnist Ari
Shavit noted in an October 15 op ed that ninety-two years
after the Balfour Declaration and sixty-two years after the
passage of the UNGA's plan to partition Palestine, the
legitimacy of Israel as a Jewish state is increasingly
challenged around the world. What is worse, Israelis do not
know how to counter it, since very few here believe that
peace with the Palestinians or an end to the occupation are
close at hand. Speaking at the October 12 Knesset opening,
Tzipi Livni squarely placed the blame on Netanyahu, accusing
him of leading Israel down the path to disaster by seeking to
"defeat" President Obama and "humiliate" Abu Mazen, charges
Netanyahu has made clear that he rejects. Netanyahu and his
close advisers understand full well that close relations with
the U.S. are in Israel's vital national interest, and they
seem to believe they are managing the relationship with
Washington, our differences notwithstanding. They are
sensitive to charges they are not. The question remains what
is Netanyahu prepared to do to advance our relationship in
the days ahead.
CUNNINGHAM