VZCZCXRO2156
OO RUEHROV
DE RUEHTV #0064/01 0081638
ZNY SSSSS ZZH
O 081638Z JAN 07
FM AMEMBASSY TEL AVIV
TO RUEHC/SECSTATE WASHDC IMMEDIATE 8615
INFO RUEHXK/ARAB ISRAELI COLLECTIVE PRIORITY
RHEHNSC/NSC WASHDC PRIORITY

S E C R E T SECTION 01 OF 03 TEL AVIV 000064 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: DECL: 01/05/2017 
TAGS: PREL PTER PGOV IS KWBG
SUBJECT: SCENESETTER FOR THE SECRETARY'S JANUARY 13-15 
VISIT TO ISRAEL 
 
 
Classified By: Ambassador Richard H. Jones, Reason 1.4 (b) (d) 
 
¶1.  (S) Madam Secretary, internal tensions among GOI leaders 
have intensified since your last visit and have reached the 
point that there appears to be little coordination or even 
dialogue among the key decision makers.  Therefore, we will 
need to be sensitive to perceptions that we are favoring one 
faction over another.  The divisions at the top here are part 
of an increasingly gloomy public mood, with a new corruption 
allegations making headlines virtually daily, and a growing 
sense of political failure despite Israel's strong economy 
and a sustained success rate in thwarting suicide attacks. 
Prime Minister Olmert's approval ratings were only 23 percent 
in the latest poll, and Israeli interlocutors across the 
political spectrum are speaking openly of a crisis of public 
confidence in the country's leadership at a time when 
Israelis feel an urgent need for strong leadership to face 
the threats from Iran, Syria, Hamas and Hizballah. 
 
OPTIMISM ERODING 
---------------- 
 
¶2.  (S) The year 2007 has started off badly for Israelis. 
The good feeling generated by PM Olmert's long-delayed 
December 23 summit meeting with Abu Mazen quickly dissipated 
under the weight of reports of a new settlement in the Jordan 
Valley (now suspended by Peretz), continued Qassam rocket 
attacks on Sderot and neighboring kibbutzim, foot-dragging on 
both sides in implementing the transfer of tax revenues, lack 
of progress on the release of Cpl. Gilad Shalit, and the 
unpleasant atmospherics of the January 4 Olmert-Mubarak 
summit, which was overshadowed by a botched IDF daylight raid 
in the center of Ramallah in which four Palestinians were 
killed. 
 
¶3.  (S) The Ramallah operation, which was authorized by the 
IDF's West Bank commander without informing the Minister of 
Defense, served as a stark reminder of the lack of 
coordination between Israel's military and its civilian 
leadership.  When it comes to Israel's strategy for dealing 
with Palestinians, it increasingly seems that military is 
military, civilian is civilian and never the twain shall 
meet!  Despite Olmert's belated embrace of Abu Mazen as a 
peace partner, there is growing concern that moderate Arab 
willingness to maintain the embargo on Hamas may be eroding, 
and that Fatah may fail to muster the popular support it will 
need to depose Hamas, whether at the ballot box or in the 
streets.  Meanwhile, the upcoming release of the results of 
the Winograd Commission's investigation of the Lebanon war 
hangs like a sword of Damocles over the heads of Olmert, 
Defense Minister Peretz, and IDF Chief of General Staff 
Halutz.  Peretz and Halutz have both publicly stated that 
they will resign if the Commission holds them responsible for 
serious errors in the conduct of the war, but Olmert has 
refrained from public comments.  Olmert is also awaiting the 
results of several separate investigations involving 
corruption allegations, any one of which could further damage 
him severely, if not force his resignation. 
 
¶4.  (S) While Israeli anxiety over a possible dramatic shift 
of U.S. policy as a result of the Iraq Study Group's report 
has been allayed by statements by you and the President, 
there continues to be deep uneasiness here that the 
Baker-Hamilton recommendations reflect the shape of things to 
come in U.S. policy.  Israelis recognize that U.S. public 
support for the Iraq war is eroding and are following with 
interest the President's upcoming articulation of the 
revamped policy, but they are deeply concerned that 
Israeli-Palestinian issues not become linked in American 
minds to creating a more propitious regional environment for 
whatever steps we decide to take to address the deteriorating 
situation in Iraq. 
 
¶5.  (S) Iran's nuclear program continues to cause great 
anxiety in Israel.  Given their history, Israelis across the 
political spectrum take very seriously Ahmadinejad's threats 
to wipe Israel off the map.  Olmert has been quite clear in 
his public comments that Israel cannot tolerate a 
nuclear-armed Iran, a position stated even more emphatically 
by opposition leader Netanyahu, who compares today's Iran to 
Nazi Germany in 1938.  Despite the worst-case assessments of 
Israeli intelligence, however, there is a range of views 
about what action Israel should take.  The MFA and some of 
the think tank Iran experts appear increasingly inclined to 
state that military action must be a last resort and are 
taking a new interests in other forms of pressure, including 
but not limited to sanctions, that could force Iran to 
abandon its military nuclear program.  The IDF, however, 
srikes us as more inclined than ever to look toward a 
military strike, whether launched by Israel or by us, as the 
only way to destroy or even delay Iran's plans.  Thoughtful 
 
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Israeli analysts point out that even if a nuclear-armed Iran 
did not immediately launch a strike on the Israeli heartland, 
the very fact that Iran possesses nuclear weapons would 
completely transform the Middle East strategic environment in 
ways that would make Israel's long-term survival as a 
democratic Jewish state increasingly problematic.  That 
concern is most intensively reflected in open talk by those 
who say they do not want their children and grandchildren 
growing up in an Israel threatened by a nuclear-armed Iran. 
 
LIVNI RISING 
------------ 
 
¶6.  (C) FM Tzipi Livni is frustrated by Olmert's continued 
refusal to coordinate closely, and -- perhaps with an eye on 
polls showing her popularity at over double the level of the 
Prime Minister -- suggested to a Ha'aretz interviewer in late 
December that she would challenge Olmert for the prime 
ministership if he continued not to give her his full 
backing.  In the same interview, Livni provided an outline of 
her thinking, but not a detailed plan, on the way ahead with 
the Arabs, including negotiating an interim agreement with 
the Palestinians in which the separation barrier would serve 
as the border, and refusing to engage with Syria unless Asad 
takes steps to end support for terrorism and distances 
himself from Iran.  Livni's policy adviser has confirmed to 
us that she has engaged in her own discrete discussions with 
Palestinians, but very much in an exploratory mode.  Livni 
told Senators Kerry and Dodd that she doubted that a final 
status agreement could be reached with Abu Mazen, and 
therefore the emphasis should be on reforming Fatah so that 
it could beat Hamas at the polls.  MFA officials tell us that 
Livni is also focused on the need to keep Hamas isolated. 
She and her senior staff have repeatedly expressed concern 
that some EU member-states are wobbly on this point. 
Meanwhile, Livni is keenly aware that unlike Olmert, she has 
little to fear from the Winograd Commission report (nor is 
she tainted by the corruption allegations that dog Olmert). 
Her incipient bid to take Olmert's place could become more 
serious once the report's preliminary conclusions are 
released next month. 
 
SHIFTING VIEWS ON SYRIA 
----------------------- 
 
¶7.  (S) Olmert and Livni agree that negotiations with Syria 
would be a trap that Damascus would use to end the 
international pressure on it and to gain a freer hand in 
Lebanon.  While they see public relations downsides to 
dismissing Syrian peace overtures out of hand, they continue 
to insist that no negotiations will be possible until Syria 
reduces its support for terrorism and/or takes direct steps 
to secure the release of Israeli prisoners held by Hamas and 
Hizballah.  Olmert and Livni are supported in that view by 
Mossad chief Dagan, who takes a dim view of Syrian 
intentions.  A significant part of the security 
establishment, however, appears to be reaching the conclusion 
that it is in Israel's interest to test Asad's intentions -- 
possibly through the use of a back channel contact -- and to 
seek to wean him away from Tehran.  They are joined in that 
view by Defense Minister Peretz, much of the Labor Party and 
the Israeli left, who argue that Israel cannot afford to 
refuse to at least explore Asad's offer to negotiate, often 
comparing that stance to Golda Meir's much-criticized 
decision to spurn Sadat's offer to negotiate, which then led 
to the 1973 Yom Kippur War.  Press reports January 5 stated 
that the defense establishment had recommended to Olmert that 
he open an exploratory channel to Damascus in two months, a 
timeline reportedly linked to the completion of reviews of 
U.S. policy toward Iraq and the Middle East, as well as to 
clearer indications of Abu Mazen's intentions and 
capabilities vis a vis Hamas. 
 
PERETZ-OLMERT TENSIONS 
---------------------- 
 
¶8.  (C) According to leaks from a recent Labor Party 
leadership meeting, Amir Peretz said that he feels completely 
disconnected from Olmert.  Ever since Peretz' telephone 
conversation with Abu Mazen which infuriated Olmert, the two 
reportedly barely speak to each other.  Television news 
reports on January 4 trumpeted rumors that Olmert had decided 
to remove Peretz as Defense Minister and replace him with 
former Prime Minister Ehud Barak, who has already announced 
plans to challenge Peretz for the Labor Party's leadership in 
late May primaries.  Even though the Prime Minister's Office 
almost immediately denied the reports, there is little doubt 
here that someone in the PMO was behind them.  While much of 
the Labor Party feels that Peretz has been a failure, both as 
Defense Minister and as Party Secretary General, and Peretz' 
popularity with the general public has hit rock bottom, Labor 
 
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members widely condemned the media trial balloon, which they 
saw as an unacceptable attempt by Olmert's advisers to 
intervene in their party's leadership contest.  In any event, 
the incident is yet another indication of the intense degree 
of personal rancor and dysfunction prevailing at the top of 
the GOI. 
 
PERETZ AND SNEH OUR AMA PARTNERS 
-------------------------------- 
 
¶9.  (C) Notwithstanding the GOI's internal discord, there is 
some good news in our efforts to nudge the GOI toward 
improvements in Palestinian quality of life issues.  Despite 
his political woes, Peretz has proven himself a serious 
partner in our efforts to implement the Agreement on Movement 
and Access (AMA) and more generally in a slow but steady push 
by the MOD to force a reluctant IDF to accept steps to reduce 
barriers to Palestinian movement and to revive the 
Palestinian economy.  Deputy Defense Minister Efraim Sneh, 
who will likely accompany Peretz to your meeting, has emerged 
as the point man for these efforts.  Sneh shares Peretz' 
conviction that Israel's security stranglehold on the 
Palestinians is "winning the battle but losing the war," but 
Sneh, who in a decades-long career served as a military 
governor of the West Bank, commanded an elite combat unit, 
and took part in the famed Entebbe raid, also has both an 
intimate knowledge of the Palestinians and a combat 
commander's credibility with the IDF that Peretz sorely 
lacks.  Your meeting with Peretz provides an opportunity to 
express appreciation for his and Sneh's efforts and to 
encourage them in their struggle to bring recalcitrant 
elements in the IDF to heel.  The more progress we can 
achieve with them on AMA implementation now, the easier it 
will be to achieve meaningful results with both parties in 
the coming year. 
 
********************************************* ******************** 
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. 
********************************************* ******************** 
JONES