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FM AMEMBASSY TEL AVIV
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RUEHC/SECSTATE WASHDC IMMEDIATE 6600
INFO RUEHXK/ARAB ISRAELI COLLECTIVE PRIORITY

S E C R E T SECTION 01 OF 03 TEL AVIV 001005 

SIPDIS 

NSC FOR ABRAMS AND PASCUAL 

E.O. 12958: DECL: 05/06/2018 
TAGS: PREL PGOV MASS IS XF
SUBJECT: SCENESETTER FOR PRESIDENT BUSH'S VISIT TO ISRAEL 

Classified By: Ambassador Richard H. Jones, Reason 1.4 (b) (d) 

¶1. (C) Israel is preparing to celebrate the sixtieth 
anniversary of its declaration of independence on May 8 with 
a characteristically Israeli mix of pride in their 
achievements and worry about the future. One point that 
unites virtually all Israelis -- except for the extreme left 
and right -- is their appreciation for President Bush's 
friendship and support throughout his two terms. When the 
President arrives here next week, he will be greeted warmly 
as a friend not just by Israel's political and military 
elite, but also by the vast majority of its seven million 
people. As one average Israeli who wrote to the Ambassador 
put it, the silent majority of Israelis want to thank the 
President for sharing with them the celebrations marking 
Israel's sixtieth year. 

Israeli Pride Justified 
----------------------- 

¶2. (C) Israelis' sense of pride in their achievements is 
fully justified. The vision of a strong, democratic Jewish 
state that would be a haven for Jews everywhere started as a 
desperate dream, as Israel's fledgling army was bolstered by 
the arrival of tens of thousands of Holocaust survivors and 
hundreds of Jewish WW II veterans who arrived just in time to 
help counter the invasion of the new state by the armies of 
Egypt, Syria, Iraq, Jordan, and Lebanon, not to mention the 
Palestinians' irregular forces. Today, Israel is very much a 
reality, with a vibrantly original Hebrew-speaking cultural 
life, a Tel Aviv skyline dominated by gleaming skyscrapers, a 
booming high tech-based economy, and the strongest army in 
the Middle East. Israel at sixty is firmly Western in its 
values but also more diverse ethnically and culturally, less 
Europe-oriented, and decidedly more capitalist than the 
Israel founded largely by East European-born socialists. For 
all of its problems with finding the right electoral formula 
to bring about stable governments, Israel's democracy is also 
a thriving reality. Israel is the only Middle Eastern 
country in which its citizens take for granted the peaceful 
transfer of political power via the ballot box. 

And Anxieties are Real 
---------------------- 

¶3. (S) Yet this year's celebrations are also tinged with 
anxiety. The looming threat of a nuclear-armed Iran, whose 
leaders constantly declare their determination to wipe Israel 
off the map, weighs heavily on the minds of Israelis, who 
regard their country not only through the prism of the 
Holocaust but also as the only UN member-state to be 
routinely threatened with annihilation. Iran's success in 
projecting power directly into the core of the Arab-Israeli 
conflict through its ties to Syria, Hizballah and Hamas 
compounds the sense of threat. Despite the great diplomatic 
achievements represented by the peace treaties with Egypt and 
Jordan, Israelis worry about the frayed nature of their 
relations with Egypt and are unsure about the outlook of the 
Egyptian leadership that will follow Mubarak. Israel enjoys 
excellent relations with the Jordanian royal palace and 
security services, but virtually no contact with Jordan's 
largely Palestinian civil society, most of which boycotts any 
connections to Israel. Israelis are watching carefully to 
see how the U.S. manages the next few years of our 
involvement in Iraq and whether we can succeed in stabilizing 
Iraq in a way that avoids its becoming either an Iranian 
client state or a source of instability that overwhelms 
Jordan's fragile balance. 

Changing Views on Palestinians 
------------------------------ 

¶4. (S) Closer to home, Israelis' views of their relations 
with their Palestinian neighbors are changing as well. In 
the aftermath of the Second Intifada, a solid majority of 
Israelis has come to accept the need for a Palestinian state 
and for Israel to relinquish control of most of the West Bank 
(although the exact percentage is still a topic for 
discussion, as are the timing and circumstances under which 
this would occur). Gone are the days when many Israelis 
questioned the existence of a Palestinian national identity, 
and today only a small minority -- though still an outspoken 
and determined one -- continues to articulate a demand to 
retain control of all of the West Bank for 
religious/historical reasons. Prime Minister Olmert and 
Foreign Minister Livni, both of whom grew up and began their 
political careers as strong advocates of Israel's historic 
right to all of Jerusalem and the West Bank, are among the 
leading examples of Israelis who have become convinced that 
only a two-state solution and painful territorial compromise 

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will enable Israel to preserve its identity as a democratic, 
Jewish state. The growing assertiveness of Israel's large 
Arab minority, now about twenty percent of the total 
population, is both a further source of concern and an 
additional impetus to create a Palestinian state. 

¶5. (S) One problem, however, is the lack of a broad-based 
Israeli confidence in the Palestinians' capacity to hold up 
their end of the land-for-peace bargain. Olmert publicly 
stresses his confidence in Mahmoud Abbas' determination to 
achieve peace, and virtually all Israeli leaders tell us how 
much they respect Salam Fayyad, yet few believe that Abbas or 
Fayyad enjoy much popular legitimacy among Palestinians. The 
public generally accepts the admonitions of Defense Minister 
Barak and those of the leaders of the IDF and Israel's 
security services that the Palestinian Authority Security 
Forces lack the determination to stand up to Hamas if push 
comes to shove. The precedent set by Gaza is one that no one 
wants to see repeated in the West Bank. The IDF's strategic 
concept is heavily rooted in the absolute need to prevent the 
hills of the West Bank from becoming sites from which rockets 
could be launched at Israel's heavily populated central 
plain. Hamas' control of Gaza and the daily rain of rockets 
from Gaza on southern Israel pose another kind of problem. 
The political leadership is grappling with whether an 
Egyptian-negotiated ceasefire in Gaza would calm the 
situation or make it worse by strengthening Hamas politically 
and militarily while undermining Abbas. The only other 
options on the table involve a broader armed conflict with 
Hamas, but Israel is constrained by the potential for high 
casualties, international condemnation, and most of all, the 
lack of a good exit strategy should it decide to invade Gaza 
to topple the Hamas regime there. All of these calculations 
could be upset at any time by a rocket from Gaza that strikes 
a busy school or hospital, thus forcing the Israeli 
leadership to order massive retaliation. Israel is working 
with us on missile defense options, but their preferred 
system will not be operational for two years. One way we 
could help would be by offering to provide the kinds of 
short-range defenses against rockets that we are using in 
Iraq. 

Inertia Favors Settlers 
----------------------- 

¶6. (S) Another outstanding issue is how and when to confront 
the settler movement and get serious about outposts and 
settlements. Inertia is on the side of the settlers. Even 
if they no longer have the sympathy of the Israeli public, 
they have powerful allies in the bureaucracy, wealthy backers 
in Israel and abroad who are willing to fund the settlement 
enterprise, and an IDF that will not challenge the settlers 
without clear instructions from the political echelon (and 
even then may drag its feet). Barak, Deputy PM Ramon, and 
others are engaged in discussions with the settler 
leadership, and after Secretary Rice's latest visit the PM's 
office leaked to the media that he has discussed with Abbas 
moving 60,000 settlers out of the West Bank. If true, this 
is a dramatic development. Olmert's need to retain the 
support of the Shas Party and his political ups and downs 
have so far resulted in the settler leadership being much 
more determined to hold on than the GOI is to start moving 
them out. 

Olmert's Political Woes Return 
------------------------------ 

¶7. (S) Even as we finalize the preparations for the 
President's visit, Prime Minister Olmert is once again facing 
a political crisis. Having survived the Winograd Committee's 
final report and weathered four separate, interminable 
corruption investigations, in the past few weeks Ehud Olmert 
appeared to have regained his political footing and was 
openly declaring his plans to run for reelection, possibly in 
early 2009. Then suddenly last week, the media was full of 
reports that the Attorney General had authorized the police 
to initiate a fifth criminal investigation of Olmert. At the 
same time, the Attorney General imposed a gag order that 
prevented the public from knowing the specifics of the 
charges and barred the Prime Minister from mobilizing a 
public defense against them. We do not know the details, 
though leaks in the media indicate that an American investor 
may be involved with the PM in alleged financial misdeeds 
sometime before Olmert became Prime Minister. And although 
Olmert has survived the four previous investigations, 
informed Israelis are suggesting that this time he may be in 
much more serious trouble. 

¶8. (S) Labor Party insider and Minister of Infrastructure 
Fuad Ben Eliezer told the Ambassador May 6 that, according to 

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his information, the nature of the charges is such that 
Olmert may be forced to resign in the near future. Ben 
Eliezer echoed comments from other political analysts that if 
Olmert resigns, the most likely scenario will be for Livni to 
become interim Prime Minister and head of the Kadima Party. 
If Livni becomes PM, Ben Eliezer was confident that Barak 
would keep Labor inside the Coalition and that elections 
could be delayed until some time next year. As Ben Eliezer 
put it, the political weakness of the constituent members of 
the coalition is the key to its strength, since none of them 
have an interest in early elections. At this point, we 
cannot predict how accurate Ben Eliezer's prediction is 
likely to be, and no one should discount Ehud Olmert's 
determination to hold on. But at a minimum, the latest 
charges represent an exceptionally unwelcome cloud over 
Olmert's head as he prepares to greet the President. 

********************************************* ******************** 
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********************************************* ******************** 
JONES