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C O N F I D E N T I A L SECTION 01 OF 03 TEL AVIV 001114 
 
SIPDIS 
 
CODEL 
SIPDIS 
 
H PLEASE PASS TO REPRESENTATIVE ACKERMAN 
 
E.O. 12958: DECL: 04/17/2017 
TAGS: PREL PGOV KNNP EFIN IR KPAL IS
SUBJECT: CODEL ACKERMAN'S MEETING WITH OPPOSITION LEADER 
BINYAMIN NETANYAHU:  ECONOMIC SQUEEZE ON IRAN AND HAMAS; 
SCENARIOS FOR A NEW GOVERNMENT; RIGHT OF RETURN AS ACID 
TEST OF ARAB INTENTIONS 
 
REF: TEL AVIV 1086 
 
Classified By: Ambassador Richard H. Jones, Reason 1.4 (b) (d) 
 
¶1.  (C) Summary.  Representative Gary Ackerman (D, New York), 
Chairman of the Middle East and South Asia Subcommittee of 
the House International Relations Committee, accompanied by 
the Ambassador, met with Opposition Leader Binyamin Netanyahu 
at the Knesset April 11.  The discussion covered Netanyahu's 
ideas on how to pressure Iran in order to block its nuclear 
program and topple President Ahmadinejad; Netanyahu's views 
on dealing with the Palestinians; his critique of Prime 
Minister Olmert's handling of the Second Lebanon War; and 
Netanyahu's analysis of Israel's domestic political 
situation. On Iran, Netanyahu advocated intensified financial 
pressures, including a U.S.-led divestment effort focused 
largely on European companies that invest in Iran, as the 
best way to topple Ahmadinejad.  On the Palestinians, 
Netanyahu did not object to supporting President Abbas but 
said Israel and the U.S. should first focus more on 
"strangling" Hamas.  Netanyahu asserted that Israel's 
mishandling of the Lebanon war had strengthened Israel's 
enemies.  He predicted that Olmert would not be able to stay 
in power much longer, then described several different 
mechanisms for forming a new government.  Netanyahu expressed 
confidence that the Israeli public recognized that he had 
been right, that unilateral withdrawals were a mistake, and 
that the priority now must be stopping Iran.  Netanyahu noted 
that he thought dropping the "right of return" was the acid 
test of Arab intentions and insisted that he would never 
allow a single Palestinian refugee to return to Israel.  End 
Summary. 
 
¶2.  (U) House Middle East and South Asia Subcommittee 
Chairman Gary Ackerman, accompanied by the Ambassador, Pol 
Couns, Subcommittee Staff Director David Adams, and Staff 
member Howard Diamond called on Opposition and Likud Party 
Leader Binyamin Netanyahu at the Knesset April 11.  Netanyahu 
was joined by foreign policy adviser Dore Gold and MFA North 
American Department Congressional liaison Eyal Sela. 
 
Toppling Ahmadinejad 
-------------------- 
 
¶3.  (C) Representative Ackerman told Netanyahu that in his 
meeting the day before with Egyptian President Mubarak, he 
had asked Mubarak if military action were necessary to 
prevent Iran from obtaining a nuclear weapon, should the 
strike be carried out by the U.S. or Israel?  Mubarak had 
responded that if it came to that, the U.S. should do it and 
Israel should stay out.  Netanyahu said he took Mubarak's 
point, but commented that he thought the Iranian regime, or 
at least President Ahmadinejad, could be toppled by economic 
pressure, including a divestment campaign. Noting that 
economic sanctions lose their effect over time, but can be 
powerful in the short term.  The goal should be to encourage 
Ahmadinejad's political rivals to remove him from power. 
Afterward, if the pressure could be maintained it might be 
possible to bring down the entire Iranian regime, but that 
would also entail identifying alternative leaders.  The idea 
was to use economic pressure to create a public sense of 
regime failure.  Netanyahu said he had consulted with noted 
historian Bernard Lewis, who believed that Iran would be less 
dangerous once Ahmadinejad was removed. 
 
¶4.  (C) Netanyahu said there were three bills in Congress 
designed to divest U.S. pension funds from investing in about 
300, mostly European, companies currently doing business in 
Iran.  Divestment would immediately bring down the credit 
ratings of these companies, thus forcing them to respond. 
Netanyahu urged Congress to support the divestment 
legislation, adding that he also planned to use a visit to 
the U.S. to raise the issue with Wall Street fund managers. 
His approach was to tie in Darfur to expand the scope of 
anti-genocide divestment and link it to U.S. policy goals. 
Netanyahu said he was unsure that financial pressures would 
be enough to stop Iran's nuclear program, but he was 
confident they would succeed in bringing down Ahmadinejad. 
He commended Dore Gold's efforts to put Ahmadinejad on a 
genocide watch list as part of a broader effort to 
delegitimize the Iranian President.  Asked about the quality 
of U.S. and Israeli intelligence on Iran, Netanyahu said his 
nightmare was that we had missed part of the Iranian program. 
He added that if the current intelligence was correct, it 
would take Iran a few more years to develop a nuclear weapon. 
 He agreed with Ambassador Jones' assessment that 
 
TEL AVIV 00001114  002 OF 003 
 
 
Ahmadinejad's announcement of a breakthrough in Iran's 
centrifuge program was probably exaggerated.  It would be 
critical, Netanyahu stressed, to target companies investing 
in Iran's energy sector. 
 
Bring Down Hamas 
---------------- 
 
¶5.  (C) Congressman Ackerman asked Netanyahu for his views on 
Palestinian President Mahmoud Abbas.  Netanyahu said Abbas 
was a "nice man who means well," but he added that Israel and 
the U.S. should focus on "bringing down Hamas" through an 
"economic squeeze."  Netanyahu asserted that eight months 
ago, the Hamas government had been on the brink of collapse, 
but had become stronger because Israel became weaker as a 
result of the Lebanon war.  Without elaborating, Netanyahu 
said it would be easier to weaken Hamas than to strengthen 
Abbas. 
 
¶6.  (C) Netanyahu commented that Shimon Peres had admitted to 
him that the Oslo process had been based on a mistaken 
economic premise, and as a result European and U.S. 
assistance to the Palestinians had gone to create a bloated 
bureaucracy, with PA employees looking to the international 
community to meet their payroll.  Netanyahu predicted that 
Palestinians would vote for Abbas if they believe that he can 
deliver the money.  He suggested putting in place an 
"economic squeeze with an address," so that Hamas would 
receive the popular blame.  Asked if Fatah knew how to 
conduct an election campaign, Netanyahu said the Palestinian 
patronage system should be forced to collapse, which would 
have an immediate impact since the entire Palestinian economy 
was based on graft and patronage. Instead, he asserted, the 
opposite was happening.  Hamas was also handling the prisoner 
release issue well since they had created the impression that 
Hamas was in control of the process and "sticking it to the 
Israelis." 
 
¶7.  (C) Congressman Ackerman asked if Abbas would survive 
politically.  Netanyahu said he was unsure, since politics 
were stressful, especially Palestinian politics.  The policy, 
he added, should be to starve the NUG.  If any money is 
given, it should go directly to Abbas.  Netanyahu said it was 
not clear the GOI has a policy, there was a general climate 
of weakness. 
 
Lebanon War Failures 
-------------------- 
 
¶8.  (C) Turning to the Second Lebanon War, Netanyahu said the 
problem was not the war's goals but rather the disconnect 
between goals and methods.  If the IDF had used a flanking 
move by a superior ground force, it could have won easily. 
Instead, Israel "dripped troops into their gunsights," an 
approach he termed "stupid."  The top leadership had lacked a 
sense of military maneuver.  In addition, they had been 
afraid to take military casualties, but instead got many 
civilian casualties.  If Olmert had mobilized the reserves in 
ten days, seized ground, destroyed Hizballah in southern 
Lebanon, and then withdrawn, he would be a hero today. 
Instead, Netanyahu predicted, Olmert will not last 
politically.  Olmert's current public support levels of three 
percent were unsustainable. 
 
A New Government? 
----------------- 
 
¶9.  (C) Netanyahu said the pressure on Olmert was 
accumulating as a result of corruption investigations as well 
as the impending release of the Winograd Commission's interim 
report.  Olmert could be pushed out as a result of a 
rebellion within the Kadima Party.  Kadima members are 
realizing they cannot allow Olmert to stay in power, but 
Kadima itself might collapse since it was a "fake party." 
Netanyahu described several options, including Kadima 
replacing Olmert, a new coalition formed in the Knesset, or 
Netanyahu's preferred option, new elections.  New elections, 
he stated, are supported by sixty-five percent of the public. 
 Netanyahu insisted he was in no rush since he was "enjoying 
the time with his family" and rebuilding the Likud Party. 
Likud was reaching thousands of new supporters, including 
many highly educated professionals and high tech 
entrepreneurs, through the internet. 
 
¶10.  (C) Netanyahu asserted there was a growing sense in the 
public that he had been right in the last election. 
 
TEL AVIV 00001114  003 OF 003 
 
 
Unilateral "retreats" (i.e. such as the withdrawals from Gaza 
and southern Lebanon) were the wrong way to go.  Israel had 
allowed an Iranian enclave to establish itself in Gaza. 
Syria was arming itself for the first time in 20 years, 
Hizballah had rearmed since the war, and Gaza was being 
turned into a bunker.  Egypt was not doing on a twelve mile 
front along the Gaza border what Jordan was doing on a 
150-mile front.  The way out was to stop Iran, thereby 
dealing with the octopus, not just its tentacles. 
 
Right of Return the Acid Test 
----------------------------- 
 
¶11.  (C) Netanyahu stated that a return to the 1967 borders 
and dividing Jerusalem was not a solution since further 
withdrawals would only whet the appetite of radical Islam. 
Ackerman asked if the Palestinians would accept peace based 
on the 1967 lines.  Netanyahu said he would not agree to such 
a withdrawal since the 1967 lines were indefensible, but he 
added that the "right of return" was the real acid test of 
Arab intentions.  Instead of Israel making more step-by-step 
concessions, Israel should insist that further concessions be 
linked to reciprocal steps toward peace.  The Palestinians 
must drop the right of return and accept Israel's right to 
exist.  The Arab initiative did not meet this standard since 
it keeps the right of return open.  Israel will only have a 
peace partner when the Palestinians drop the right of return. 
Asked whether Israel could accept case by case exceptions, 
Netanyahu insisted not one refugee could ever return. Israel, 
after all, was not asking for the right of Jews to return to 
Baghdad or Cairo. 
 
¶12.  (C) Netanyahu said UNSCR 242 was not a bad formula since 
it did not specify precisely from which territories Israel 
would withdraw.  After the withdrawals from Gaza and Lebanon, 
there was deep disillusionment among Israelis about the 
principle of land for peace.  Even the noted Israeli leftist 
writer AB Yehoshua had said in a recent interview that he 
despaired about peace because the Arabs wanted all of Israel. 
 From 1948 to 1967, the conflict had not been about occupied 
territories, but that point had been obscured by "effective 
propaganda."  The root of the conflict was an Arab desire to 
destroy Israel, which had now become part of the larger 
ambitions of radical Islam. 
 
¶13.  (C) The 1967 borders were not the solution since Israel 
was the only force blocking radical Islam's agenda of 
overrunning Jordan and Saudi Arabia.  Netanyahu proposed that 
Israel offer to work with the Saudis against Iran.  If Iran 
was not stopped, there would be no agreement with the 
Palestinians, and the peace treaties with Jordan and Egypt 
would come under tremendous pressure.  There could be no 
deterrence against "crazies" such as Ahmadinejad.  Netanyahu 
advised Congress to expedite the legislative effort for 
divestment.  If that did not work, we could reconsider other 
options. Congressman Ackerman said that if Netanyahu came to 
Washington, he would hold a hearing on divestment. 
 
¶14.  (U) CODEL Ackerman did not have the opportunity to clear 
this message. 
 
 
 
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