Israel Update for October 2008

David Dolan

Israeli prime minister designate Tzipi Livni announced on October 26 that she had failed to put together a new coalition government after struggling to do so for over one month. This came soon after President Shimon Peres granted her a two week extension to form a government. When her coalition building efforts fell apart, Livni called for new national elections to be held within three months time, meaning sometime early next year.

Despite signing a preliminary coalition accord with the 19 seat Labor party, the five week negotiating period proved insufficient to forge a majority 61 seat government after the 12 seat Sephardic Orthodox Shas party balked at joining her dovish government. This came in the wake of outgoing Premier Ehud Olmert's controversial revelation in late September that Kadima party leaders are prepared to hand over the eastern half of Jerusalem and most of Judea and Samaria to the Palestinians as part of a final peace deal.

Understanding that their religious rank and file would fiercely resist such a handover, Shas politicians announced on October 24 they would not join a Kadima-led coalition, and would instead work to hold new Knesset elections. Most public opinion surveys predict a fresh national vote will bring opposition Likud party leader Binyamin Netanyahu back to power. Analysts said Livni's apparent failure to form a viable government spelled the end of the Bush administration's frenetic efforts to push through a final Israeli-Palestinian peace deal before George W. Bush leaves office next January.

Livni's efforts were earlier frustrated when a small party she thought was in the bag-the seven seat Pensioners party-suddenly pulled out of coalition negotiations, saying Kadima's offers were not sufficient to make them jump on board. Representing Israel's growing retired population, the party's legislators complained they had not received the benefits promised them by Olmert when they joined his coalition in 2006.

Meanwhile most Israelis continued to focus on the growing international financial crisis during the month as the Tel Aviv stock market echoed all others around the globe in losing substantial value. Officials warned that thousands of jobs will probably be lost in the country as the crisis deepens, especially in the tourism and high tech fields.

A Palestinian Hamas terrorist stabbed an elderly Jerusalem resident to death late in the month after wounding a local policeman in an attack in the southern Gilo neighborhood. In the Gaza Strip, Hamas officials vowed again to violently oust Palestinian Authority leader Mahmoud Abbas if he does not voluntarily give up his presidential post next January.

Tensions remained high along Israel's northern border with Lebanon as the extremist Hizbullah movement again threatened to attack the Jewish State. Further east, Iran's Shiite fundamentalist leaders indicated they might take preemptive military action against Israel if they determine that the Jewish state is preparing to launch an assault on their internationally outlawed nuclear program.

Shas Says No To New Government

Just days after signing a preliminary coalition agreement with the Labor party, Kadima party leader Tzipi Livni was shocked when the Orthodox Shas party announced it would not join her government. Analysts agree it would be impossible for Livni to form a stable, long lasting coalition without Shas support. Both Labor and Shas had been the mainstays of outgoing Prime Minister Olmert's coalition, formed in May 2006.

Shas spokesman Roy Lachmanovich issued a statement on October 24 saying his party was unable to reach agreement with Livni over two main issues-the future status of Jerusalem and social welfare benefits for the poor. "Shas has asked for only two things: real financial help for the weak in Israeli society, and protection for Jerusalem, which is not some merchandise for sale," the statement said. Party leader Eli Yishai later said the decision to stay out of a Livni coalition was final.

Senior aids to the new Kadima party leader denounced the Shas action, claiming that Foreign Minister Livni had offered increased child allowances for the poor that Shas leaders had initially accepted. After she told Peres she had failed to form a new government, Livni told the media that "I was willing to make sacrifices to build a coalition government, but I was unwilling to pawn Israel's financial and political future to do so."

The Foreign Minister's advisors said that on the explosive issue of Jerusalem, Kadima had suggested that Shas legislators issue a letter stating their main objectives concerning the final status of Judaism's most sacred city on earth, which would then be "taken into account" as negotiations continue with the Palestinian Authority. But Shas leaders apparently saw this as a ruse, knowing full well that Kadima intends to offer full sovereignty to the Palestinians over the hallowed Temple Mount in Jerusalem's Old City, as Olmert openly stated in a media interview to mark the Jewish New Year in late September.

In the wake of the Shas action, most political pundits now expect new Knesset elections to be held before March of next year, and possibly as early as the end of January. Under Israeli law, they must occur within three months of any final failure to form a new government, meaning they will probably take place in mid to late February. Polls show Likud leader Netanyahu somewhat ahead of Livni, with Labor leader Ehud Barak substantially behind both of them. Shas would probably maintain its current Knesset strength, along with most other smaller parties.

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