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NEWS & COMMENTARY 2008 SPEAKERS 2007 2006 2005

Thursday, March 30, 2006

Israel politics: Olmert's mandate


The Kadima party, founded by Ariel Sharon and entrusted to his loyal deputy, Ehud Olmert, has won just enough seats in the March 28th election to form a coalition government of the centre-left, with Labour as its principal partner. The raison d'ĂȘtre of Kadima is to engineer a final resolution to the conflict with the Palestinians through disengaging from substantial parts of the West Bank, while retaining major settlement blocs. Labour will be willing to subscribe to this plan as long as the way is left open for negotiations with the Palestinians. The Labour party will also be pressing for increases in social spending and further initiatives to alleviate poverty--which was highlighted as a policy priority in a recent IMF report on the Israeli economy.

Kadima emerged as the largest party, with 28 of the 120 Knesset (parliament) seats, but this was short of the target of 35 seats that had been suggested in opinion polls. Labour, under its new leader, Amir Peretz, managed to secure a respectable 20 seats. This was at the lower end of its expectations, but sufficient to ward off a leadership challenge to Mr Peretz. In third place was Shas, the larger of two ultra-orthodox parties, with 13 seats. Shas has reservations about the disengagement plan, but based on previous experience, could be expected to join a coalition in return for pledges on issues relating to religious and social affairs. Other potential supporters of a Kadima-led government include the Pensioners--a new single-issue party led by Rafi Eitan, a close associate of Mr Sharon in the past, which won seven seats--the United Torah Judah religious party (six seats) and the left-win Meretz (four).

The biggest loser in the election was Likud, which trailed in fifth place with 11 seats. The party had been deserted by most of its leading figures when Mr Sharon formed Kadima at the end of 2005 in response to residual opposition in Likud to his Gaza disengagement plan. Binyamin Netanyahu, who took over the helm of Likud, was undermined both by his inconsistency on the Gaza issue and by the unpopularity of his tough fiscal policies during his stint as finance minister. The ultra-nationalist Yisrael Beitenu party secured 12 seats, winning a significant portion of the Russian immigrant vote.

Grand bargain

Mr Olmert has set a goal of defining the permanent borders of the Jewish state by 2010. He has proposed to establish a separation between the Israelis and the Palestinians through withdrawing Israeli troops and settlers from the heart of the West Bank and establishing a new border with the Palestinian territory based on the route of the separation barrier, large sections of which have already been built. Existing concentrations of Israeli settlements around Jerusalem would be consolidated, and Israel would also retain a security corridor along the Jordan Valley. Mr Olmert has made clear that he envisages this being a unilateral process. He does not rule out negotiating with the Palestinian Authority, but these would only be feasible if Hamas, the victor in the recent Palestinian election, were to submit to stringent conditions--recognition of Israel, renunciation of terrorism and disarmament. Mr Peretz has insisted that Israel should base its approach on seeking to negotiate a settlement with the Palestinians, and only fall back on unilateralism as a last resort. He has proposed to offer financial incentives to Jewish settlers to encourage them to move out of their West Bank homes.

The relatively small, eight-seat, gap between Kadima and Labour means that Mr Peretz is in a stronger bargaining position than seemed likely before the election. However, he is expected to focus on socio-economic issues in his negotiations about policy and cabinet position, rather than on the substance of the new government's approach to the Palestinian issue. Labour's principal target will be the finance portfolio. If Mr Peretz succeeds in winning this prize, his scope for major reform will be limited as most of the structural changes carried out by Mr Netanyahu are bedded in, including enhanced powers for the governor of Bank of Israel (central bank), and any increase in spending will be hedged around by the requirement to keep the fiscal deficit below 3% of GDP in order to benefit from US loan guarantees. The budget for 2006 has yet to be approved, because of the dissolution of the Knesset ahead of the election.

Palestinian voices off

The Israeli election coincided with the vote of confidence in the Palestinian parliament for the new government formed by Hamas, the Islamist movement that swept to power in January after inflicting a heavy electoral defeat on Fatah, the party of the Palestinian president, Mahmoud Abbas. Hamas has held out the prospect of negotiating with Israel, but only on the basis of a complete Israeli withdrawal from the territories occupied in 1967. The Islamist party has also refused to provide explicit endorsement of the Road Map for Middle East peace, although the Hamas prime minister, Ismail Haniyeh, has proposed holding discussions with the Quartet (US, EU, UN and Russia), which is the sponsor of this peace plan. The Quartet supported Israel's unilateral withdrawal from Gaza, but Mr Olmert's proposals on the West Bank are much more controversial, as they would entail a significant portion of the occupied territory remaining in Israeli hands.

The international community would clearly prefer the next steps in any resolution of the Palestinian question to involve negotiations rather than unilateral actions that, unlike the Gaza pullout, would be vigorously opposed by the Palestinian government and by most Arab states. The situation is complicated by the split in Palestinian ranks. Mr Abbas maintains that, as president of the PA and chairman of the executive committee of the Palestine Liberation Organisation (PLO), he is entitled to lead negotiations with Israel--he has also left the door open to Hamas to participate. Hamas has questioned the claim of Mr Abbas to derive legitimacy from the PLO. In its government programme it refers to the need to carry out an agreement reached between all Palestinian groups in March 2005 to restructure the organisation, in which Hamas is not represented.

Behind the wall

The Palestinian power struggle clearly makes it easier for Israel to persist in its claim that the lack of a fit negotiating partner leaves it no option but to adopt a unilateral approach. However, Mr Olmert's vision of Israel regrouping behind the walls it is erecting around the Palestinians remains highly problematic. If the proposed withdrawal entails the removal of a significant number of the estimated 240,000 settlers in the West Bank, this would put strains on the coalition, with objections likely to come from Shas as well as from within Kadima. However, if Mr Olmert were to opt for a limited withdrawal, he would have to contend with fierce Palestinian opposition, almost certainly including violence, as well as with international reluctance to provide Israel with the necessary diplomatic cover.

Mr Olmert has pulled off an impressive political feat in guiding Kadima to an election victory without the party's founder and inspiration, Ariel Sharon, being involved. Consolidating that victory and maintaining Kadima's party unity will be an even more demanding challenge.

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