SCENESETTER FOR CODEL MCCONNELL'S VISIT TO ISRAEL,

UNCLAS SECTION 01 OF 02 TEL AVIV 000803

SIPDIS
SENSITIVE

STATE FOR H:PRADEMACHER AND LSHANE; PLEASE PASS TO TOM
HAWKINS (SEN. MCCONNELL) AND PHILIP SKUTA (USMC)

E.O. 12958: N/A
TAGS: PREL PGOV KPAL IS
SUBJECT: SCENESETTER FOR CODEL MCCONNELL'S VISIT TO ISRAEL,
APRIL 7-8

REF: TEL AVIV 764


1. (SBU) SUMMARY: Your upcoming visit to the region comes
during a time of transition in Israeli politics.
Prime Minister Binyamin Netanyahu took office April 1 after
assembling the largest government in Israeli history, and
apparently one of the largest in the world. The government
of 30 Ministers, eight deputy ministers, and various
newly-created posts is a product of political wheeling and
dealing that began soon after the February election.
Negotiations with other party leaders had quickly established
a steep cost to secure their participation, but Netanyahu was
intent on a broad government that would give him his best
shot at serving a lengthy term, and succeeded in securing a
74-seat coalition in the 120-seat Knesset. Interactions
between Likud and Labor and Yisrael Beitenu and more
specifically between Netanyahu and Barak and Lieberman, will
be crucial determinants of the success of the new government
as it confronts challenges, such as the peace process, the
global economic crisis, and the threat from Iran. END
SUMMARY.

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BROAD COALITION
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2. (SBU) Although in the February elections former Foreign
Minister Tzipi Livni's centrist Kadima party won 28 Knesset
seats to the center-rightist Likud party's 27 seats,
President Peres deemed Likud leader Binyamin "Bibi" Netanyahu
more likely to succeed in creating a coalition, and tasked
him with forming Israel's 32nd government. Livni refused to
join the Likud-led coalition, preferring for Kadima to lead
the Opposition. The right wing joined the coalition first:
nationalist Yisrael Beitenu ('Israel is our home') brought 15
seats and the ultraorthodox SHAS party contributed 11 seats.
The addition of smaller right-wing or religious parties
(United Torah Judaism, 5 seats; Jewish Home, 3 seats) had the
potential to give Netanyahu control over the Knesset, with 61
seats, but Netanyahu sought a broader coalition.


3. (SBU) Securing the 13 seats of Minister of Defense Barak's
Labor party broadened the base and the resultant 74-seat
coalition provided a healthy cushion against individual
defectors. The agreement with Labor gained Netanyahu not only
a government, but provided him additional international
legitimacy by having the nominally dovish Labor party on
board what would otherwise be a solid right-wing government.
It also gives Netanyahu a Defense Minister in Barak whom the
public largely trusts as Israel faces tough decisions on how
to confront Iran's nuclear ambitions, as well as the
continuing rocket attacks from the Gaza Strip and potential
threats from Hizballah and Syria. Additionally, Labor's
inclusion in the government dilutes some of the bargaining
power of Netanyahu's right-wing partners.


4. (SBU) The large and diverse government is the result of
the high market rate for securing coalition partners. While
the two Vice Prime Ministers are Likudniks, the four Deputy
Prime Minister positions reflect the breadth of the
coalition: Labor's Ehud Barak remains Minister of Defense;
Yisrael Beitenu's Avigdor Lieberman is Foreign Minister;
Likud's Dan Meridor is Minister of Intelligence and Atomic
Energy; and SHAS Eli Yishai is Minister of Internal Affairs.


5. (SBU) The government, though it appears bloated, may
provide Netanyahu with his best hope for long-term stability.
The 74-seat coalition means that any one party, save for
Yisrael Beitenu could leave Netanyahu's coalition without
depriving him of a governing majority. It also provides an
additional buffer should the dissident faction within Labor
(which opposed joining the coalition) split off from, or
assume control of, the party.

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WHERE ARE THE POINTS OF FRICTION?
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6. (SBU) A coalition and government this large can promote
longevity, but it is likely to also be a painful existence.
Netanyahu has good relations with the party heads in his
coalition (most notably, his relationship with Defense
Minister Barak is much better than the relationship between
former Prime Minister Olmert and Barak in the last year of
Olmert's term),but Lieberman's stridently secular positions
could cause significant friction with the ultraorthodox SHAS
and UTJ parties. Barak and Lieberman are neither enemies nor
close friends, but Barak had earlier criticized Netanyahu's

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decision to offer Lieberman, who is under criminal
investigation, control over the Justice Ministry and the
police. Lieberman, for his part, was openly critical of
Barak's execution of Operation Cast Lead, and reportedly
sought to block Netanyahu's plans to bring Barak and Labor
into the coalition. Beyond party disputes, Netanyahu may be
called on to delineate (either explicitly or implicitly) a
clear division of responsibilities and pecking order among
his ministers (some of whose portfolios appear to overlap),
which could spark resentment among those relegated to the
second and third-tiers.


7. (SBU) The disunity in Labor also could pose a challenge to
Netanyahu. Five Labor holdouts did not vote confidence in
his government (note: by not voting they technically did not
break with party discipline, which suggests this is not yet
an all-out rebellion),and they seem intent on ousting Barak
in the next party leadership primary. Netanyahu, though his
large government means he is not beholden to Labor, will have
to be careful to avoid making policy decisions or statements
that further alienate the rebellious faction in that party if
he seeks to keep their 13 seats. Lieberman's hard-line
public statement on assuming control of the Foreign Ministry
the afternoon of April 1, in which he dismissed the Annapolis
process and suggested that only strength, not more
concessions, would bring peace, is likely to add to the
misgivings within Labor about being in a coalition with
Lieberman.

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PRAGMATISM OVER IDEOLOGY
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8. (SBU) Netanyahu is solidly center-right on the political
spectrum. He remains more pragmatic than ideological in most
matters. On the peace process he is keeping all options open
regarding a two-state solution, and may be willing to advance
the process significantly as long as he is not forced to
publicly acknowledge the extent of such progress. To succeed
along such a path we expect him to rely heavily on his
improved skills at political wheeling-dealing to keep the
right flank on board while quietly (but perhaps slowly)
cooperating on the peace process agenda, which he understands
is critical to Israel's relations with the U.S. In his speech
to the last Knesset session of the Olmert Government March
30, Bibi said his government will be willing to offer
"generous concessions" for peace with the Palestinians, and
that his government would "do all in its power to reach peace
with all our neighbors and with the entire Arab world." We
note that while largely non-ideological on the peace process,
Netanyahu does maintain an ideological passion for free
markets, which suggests to us that his commitment to
facilitating investment in the West Bank is more than just
rhetoric and will result in active personal involvement on
his part.

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FOCUSED ON IRAN
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9. (SBU) Netanyahu holds strong views on the Iranian threat.
He believes that Iranian President Mahmoud Ahmadinejad should
be taken at his word when he says Israel should be wiped off
the map, and that deterrence theory does not apply to a
nuclear-armed Iran. Netanyahu argues that Hamas in Gaza and
Hizballah in Lebanon represent Iranian bases surrounding
Israel. While some have suggested that Netanyahu may prefer
to pursue negotiations with Syria rather than deal with the
Palestinian issue, at least so far Netanyahu has consistently
expressed great skepticism about Syria's
willingness to give up its strategic ties to Iran in return
for Israeli withdrawal from the Golan.

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CUNNINGHAM