ISRAEL MEDIA REACTION

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SUBJECT: ISRAEL MEDIA REACTION

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SUBJECTS COVERED IN THIS REPORT:
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1. Mideast


2. Iran


3. U.S.-Israel Relations

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Key stories in the media:
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Major media (banner in HaQaretz) reported that yesterday the police
national fraud squad announced that it had enough evidence to
recommend indicting PM Ehud Olmert for fraud and breach of trust in
the investment center case. Investigators said the probe's findings
reveal Olmert had "deep" conflicts of interest as industry, trade
and employment minister, because he did not disqualify himself from
making decisions on projects represented by his associate, attorney
Uri Messer. The investigators were also quoted as saying that
Olmert did not report his conflicts of interest or his relationship
with Messer before making decisions on these projects. HaQaretz
quoted the attorneys of Morris (Moshe) Talansky, an American Jewish
businessman who testified against Olmert, as saying yesterday that
Israel did not honor its promises to him. The attorneys were quoted
as saying that an investigation of Talansky in the U.S. was being
conducted based on material provided by the Israeli authorities,
despite assurances that this would not happen. Yediot reported that
Talansky demands that the file against him be closed before he
returns to Israel.

The Jerusalem Post quoted a Qwell-placed political source
confirming long-standing speculation that Shas made a deal with
Likud Chairman Benjamin Netanyahu to prevent Kadima leader Tzipi
Livni from forming a coalition in October. In return for forcing
the February 10 elections, Netanyahu promised Shas Chairman Eli
Yishai the Interior Ministry and 2 billion shekels (around $550
million) worth of allowances, according to the source. The
Jerusalem Post reported that demands by the five government
coalition partners now total nearly 10 billion shekels (around $2.5
billion). Israel Radio quoted Labor Chairman Ehud Barak as saying
that Netanyahu has not seriously suggested that he join the
government.

Pressing socio-economic problems continued to engage the Israeli
media. Netanyahu was quoted as saying in an interview with Yediot
that he will not allow dismissals of workers and that he will rescue
enterprises.

HaQaretz reported that Avigdor Lieberman, who emerged yesterday as
the most likely candidate to replace Tzipi Livni as Israel's foreign
minister, intends to demand that Netanyahu grant him "full autonomy"
in the new post. HaQaretz quoted a source involved in talks between
Yisrael Beiteinu and Likud said that "Lieberman wants to make sure
that Netanyahu doesn't let another minister receive tasks that
belong to the Foreign Ministry." The source was quoted as saying
that "Lieberman wants to ensure that Netanyahu doesn't let [former
FM] Silvan Shalom handle negotiations with Syria in order to placate
Shalom."

The Jerusalem Post reported that yesterday Secretary Clinton
proposed holding a regional conference on Afghanistan on March 31
that would likely include Iran. The newspaper reported that former
national security advisor Zbigniew Brzezinski maintained, in
testimony to the Senate Foreign Relations Committee, that the U.S.
faced more of an existential threat from the Soviet arsenal when he
was in the White House, in the 1970s, than Israel does now, and that
deterrence proved effective in that case.

Leading media reported that yesterday Ambassador to the U.S. Sallai
Meridor tendered his resignation to Netanyahu and FM Tzipi Livni.
The Jerusalem Post quoted Meridor as saying that he was concerned
about his influence waning under Netanyahu. HaQaretz reported that
in mid-August, during DM Ehud BarakQs visit to Washington, Meridor
was not invited to Barak's meeting with the U.S. National Security
Adviser. In a sharply worded letter to Barak, copies of which were
sent to Livni and PM Olmert, Meridor said the Defense Minister's
conduct had "greatly impaired Israel's ability to impact processes
in the U.S. capital." This week, during Secretary of State Hillary
Clinton's visit to Israel, Meridor was asked to leave the room where
Clinton was meeting with Netanyahu. HaQaretz reported that one name
rumored to replace Meridor is Netanyahu's strategic adviser, Ron
Dermer, who until about a year ago served as Israel's economic
attache in Washington, and who has accompanied Netanyahu on all his
trips to the United States in recent years. For its part, Yediot
reported that former ambassador to the UN Dore Gold and former
consul-general in New York Alon Pinkas are candidates for the post.
All media reported that two police officers were lightly wounded in
Jerusalem yesterday afternoon when a Palestinian bulldozer driver
who resided in east Jerusalem overturned their police car and rammed
it into a bus, before being shot by police and a taxi driver. He
later died of his wounds.

Yediot reported that following pressure by Livni, Italian FM Franco
Frattini canceled a scheduled trip to Iran.

Major media reported that relations between Israel and Turkey have
thawed, following a meeting between FM Livni and Turkish FM Ali
Babacan at NATOQs Brussels HQ yesterday.

The media reported that yesterday Palestinians fired an anti-tank
missile at an IDF patrol in central Gaza. Leading media reported
that yesterday Palestinians fired five Qassam rockets and three
mortar shells at Israeli communities. A Grad rocket landed in the
empty courtyard of a Netivot synagogue.

HaQaretz and The Jerusalem Post reported on a new initiative by
members of the U.S. Congress seeking to condition the transfer of
the $900 million for the Palestinians on an end to rocket fire on
Israel from Gaza, and the release of Gilad Shalit. Leading media
reported that next week ShalitQs family will erect a protest tent
outside the PMQs Residence.

The Jerusalem Post reported that Israeli defense officials expressed
satisfaction yesterday with news that Lt. Gen. Keith Dayton., U.S.
Security Coordinator in the PA, would be staying on in his position
for an additional two years.

Maariv reported that a 32-year-old computer programmer from
Beersheva was arrested yesterday on suspicion of planning, together
with others to blow up American embassies around the world. The
suspect was angry at the U.S. administrationQs support for Israel
during QOperation Cast Lead.

Maariv reported that HamasQs security apparatus arrested Ahmad
Salah, a Hizbullah envoy. The newspaper said that the Hamas regime
is trying to show Hassan Nasrallah who is the boss in Gaza.

Israel Radio reported that the Council of the Chief Rabbinate has
decided to allow non-Jewish couples to marry in Israel. The
arrangement will not be valid for mixed couples. If the religious
partiesQ representatives accept the proposal, the Chief Rabbis and
the representatives of the Council of the Chief Rabbinate will ask
to meet with Yisrael Beiteinu Chairman Avigdor Lieberman in order to
convince him to accept their position.

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1. Mideast:
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Summary:
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The independent, left-leaning Ha'aretz editorialized: QIt was enough
to hear U.S. Secretary of State Hillary Clinton say that the
demolition of houses [in east Jerusalem] is clearly Qnot in keeping
with the obligations entered into under the RoadmapQ to understand
that the Jerusalem Municipality is pulling Israel onto a collision
course with the new U.S. administration.

Jewish affairs writer Anshel Pfeffer wrote in HaQaretz: QThe major
Jewish organizations' policy of supporting Israel's democratically
elected government while remaining loyal to their home countries
could be sorely tested in the coming months.

Liberal Hebrew University Professor of Political Science Zeev
Sternhell wrote in HaQaretz: QThe danger of the break-up of
democracy lurking behind a Likud-Yisrael Beiteinu-National Union
government is far greater than the pull to the right that Kadima
would risk in a Benjamin Netanyahu-Tzipi Livni government.



Block Quotes:
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I. "DonQt Demolish Houses"

The independent, left-leaning Ha'aretz editorialized (3/6):
QYesterday's bulldozer attack shows that the level of tension and
rage among Palestinians from East Jerusalem and the West Bank has
not abated.... Ostensibly, the claim that [88] homes [in the village
of Silwan that the Mayor of Jerusalem has instructed to destroy] are
illegal seems well-founded. However, when the city does not grant
building permits because of the lack of a master plan, or halts the
construction of new buildings for political reasons, it pushes
Palestinians, who for decades have owned the land on which they want
to build, to break the law.... It was enough to hear U.S. Secretary
of State Hillary Clinton say that the demolition of houses is
clearly Qnot in keeping with the obligations entered into under the
RoadmapQ to understand that the Jerusalem Municipality is pulling
Israel onto a collision course with the new U.S. administration.

II. "Hillary Is Around"

Shmuel Rosner wrote in the popular, pluralist Maariv (3/6):
QSecretary ClintonQs visit conveyed mixed messages. ON one hand, a
tough approach vis-`-vis Hamas that is not substantially different
that the outgoing Bush administration. On the other hand, a promise
to pour into Gaza huge sums that might help the miserable
Palestinians but would annoy Israel: Next time it attacks
[Palestinian] targets, it might have to check twice before it
destroys projects with the money of the American tax-payer.

III. QObama-Brown versus Netanyahu-Lieberman

Jewish affairs writer Anshel Pfeffer commented in HaQaretz (3/6):
QObama and team are going to be bullish about pressing Israel to
withdraw from the West Bank and the Golan. This new tune is being
taken up by other governments that portray themselves as friendly to
Israel. The major Jewish organizations' policy of supporting
Israel's democratically elected government while remaining loyal to
their home countries could be sorely tested in the coming months.
The problem is likely to be exacerbated by Netanyahu's foreign
minister -- who is likely to be Avigdor Lieberman. He would be the
first senior Israeli minister whom most of the American and European
Jewish leadership will shun -- passively, at least. If the
Obama-Clinton team succeeds in preserving its Israel-friendly image
by getting tough on Iran, while pressuring Israel on the Palestinian
and Syrian issues, and if the Netanyahu-Lieberman coalition
steadfastly maintains its current positions, we could see an
increasing number of Jewish leaders breaking ranks. Forced to
choose between an increasingly isolated Israeli leadership and an
administration aggressively pushing for peace, it will be
interesting to see which ties are looser.

IV. QKadima to DemocracyQs Rescue

Liberal Hebrew University Professor of Political Science Zeev
Sternhell wrote in HaQaretz (3/6): QThe danger of the break-up of
democracy lurking behind a Likud-Yisrael Beiteinu-National Union
government is far greater than the pull to the right that Kadima
would risk in a Benjamin Netanyahu-Tzipi Livni government....
[Avigdor] Lieberman, [far-Right Knesset Member Michael] Ben Ari, and
Shas leader Rabbi Ovadia Yosef at Netanyahu's side are the most
destructive lineup Israeli politics has ever known.. Israeli
society must not be allowed to become accustomed to a reality in
which its face is that of Lieberman and Ben Ari. Instead of relating
to them and their people as legitimate partners in government, we
must brand a mark of shame on their forehead. This is not a matter
of our image abroad and relations with the United States, but rather
of our children's souls.

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2. Iran:
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Summary:
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The conservative, independent Jerusalem Post editorialized: Qthe
longer Obama takes to crystallize his policy, the harder it will be
to stop the Iranian bomb. No wonder [IranQs Supreme Leader
Ayatollah Ali] Khamenei feels optimistic.

Block Quotes:
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"Optimism in Tehran"

The conservative, independent Jerusalem Post editorialized (3/6):
Q[On Wednesday, in his address to the Fourth International
Conference for Support of Palestine in Tehran, IranQs Supreme
Leader Ayatollah Ali] Khamenei professed to be in an optimistic
mood following the Qamazing military and political defeatsQ Israel
suffered in the Second Lebanon War and more recently in Gaza.
Still, he was bitter about what the QZionist criminalsQ did -
Qimpaling of infantsQ for instance. Fortunately, he noted,
Qadvances in technologyQ (read Al-Jazeera) have exposed the
QmagnitudeQ of Israel's atrocities.... This week, Saudi Arabia's
Foreign Minister Prince Saud al-Faisal urged the Arabs to come
together in the face of the QIranian challenge.Q Palestinian
leader Mahmoud Abbas told Iran to stop interfering in Palestinian
affairs. While the Arabs fret about the instability wrought by
Tehran in Gaza, Iraq, Lebanon and Afghanistan they, like Europeans
and Africans, are hedging their bets. So the longer Obama takes to
crystallize his policy, the harder it will be to stop the Iranian
bomb. No wonder Khamenei feels optimistic.

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3. U.S.-Israel Relations:
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Summary:
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Senior columnist Nahum Barnea wrote in the mass-circulation,
pluralist Yediot Aharonot: QIn BushQs time, the burden of proof
rested completely upon the Arab side. In ObamaQs period, the burden
of proof will be placed to a large degree on the shoulders of
IsraelQs prime minister.

Military correspondent Alex Fishman wrote in Yediot Aharonot: QMs.
ClintonQs smiles notwithstanding, Israeli officials understand full
well that we can expect a hard time with the new U.S.
administration.

Block Quotes:
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"A Different Us"

Senior columnist Nahum Barnea wrote in the mass-circulation,
pluralist Yediot Aharonot (3/6): QSince the elections, [outgoing
Israeli Ambassador to the U.S. Sallai Meridor] has been explaining
to his interlocutors in Washington that the government that will be
formed is not necessarily what they think.... PR is one thing and
trust another. Meridor decided to vacate his seat for whomever
should win the trust of Netanyahu and his new foreign minister,
whether it is Lieberman or someone else. There is not a bit of
protest in his act: he does not think that ambassadors have the
right to protest against their governments.... Israel will face a
different Washington. The talk about the eternal alliance with
Israel will be as warm as in the past, but something basic will
change in the order of priorities, the gut feelings, and the public
atmosphere. In BushQs time, the burden of proof rested completely
upon the Arab side. In ObamaQs period, the burden of proof will be
placed to a large degree on the shoulders of IsraelQs prime
minister.

II. "Echelon and Rank"
Military correspondent Alex Fishman wrote in Yediot Aharonot (3/6):
QThe central message that the new U.S. Secretary of State Hillary
Clinton tried to convey after the Sharm el-Sheikh conference was
clear: The U.S. would not permit a single dollar to enter the Gaza
Strip if Salam Fayyad of the PA did not head the unity government
between Hamas and Fatah and were not in charge of the Gaza
rehabilitation process. This is a ridiculous attempt to square the
circle, but more than this, it is another sign that the Obama
administration may adopt a naove Middle East policy, to say the
least. Israeli officials did not know whether to laugh or cry when
they read the reports sent by the Americans after the meeting held
by Acting Assistant Secretary of State Jeffrey Feltman with the
Syrian ambassador to Washington. The Americans explained to us that
this meeting was not intended to embrace the Syrians.... In general,
Israeli officials have not yet recovered from the messages that
Democratic Senator John Kerry sent after his visit to Gaza. He
wrote there explicitly: with all due sympathy for the State of
Israel, it is impossible to ignore what you have done in the Gaza
Strip. There is no choice, you will have to pay for it. In Israel,
for some reason, reports were published that the senator complained
about pasta shipments to the Gaza Strip that Israel was holding up.
This was an underhanded attempt to diminish the SenatorQs message,
in order to make it look as if the relations between us and the
Americans were being conducted as usual.... Ms. ClintonQs smiles
notwithstanding, Israeli officials understand full well that we can
expect a hard time with the new U.S. administration.

CUNNINGHAM