A Digest of debkafile Round-the-Clock Exclusives in Week Ending December 2, 2004:

Reciprocal Boosts for Israel and Italy in Joint Weapons Production

27 November: The Bush administration has approved cooperation arrangements between Israeli and Italian military, aircraft and electronic industries in the manufacture of weapons systems for electronic warfare and surveillance based partly on American technology.

1. Washington is intent on deploying a new US-Italian-Israel front before Europe steps into the peacemaking initiatives projected for 2005 and 2006.

2. Rome, rather than the EU, figures on the Bush game board as foremost bulwark of America’s long-range strategic plans for East Europe, chiefly Poland, after the relocation to that country of US bases evacuated from Germany. Rome is also down as the hub for channeling and supervising Polish interchanges with Israel

3. The Bush White House wants to see Italian military and intelligence players in Palestinian areas alongside the British, who are already setting up security operational centers and organizing Palestinian intelligence bodies on the West Bank and Gaza Strip.

4. By promoting Israel-Italian military industrial collaboration, Bush applies a much-needed stimulant to the Italian and Israeli economies alike.

On November 18, Israeli defense minister Shaul Mofaz met Italian prime minister Silvio Berlusconi and defense chief Antonio Martino. They announced the joint allocation of $181 million for “the development of a new electronic warfare system designed to disable enemy aircraft over a wide swath of airspace.” Another key clause provides for close intelligence collaboration in combating terrorism.

The partnership deal will have an impact beyond the purely industrial. It carries great potential for enhancing Italy’s economic and political profile inside Europe and tilting the continental balance of military and industrial power in its favor

DEBKA-Net-Weekly’s military experts say the partnership could open out to embrace Germany and alleviate its economic problems. Berlusconi has strong influence over German leader Gerhard Schroeder, but the politically weak chancellor may be wary of cultivating too close a relationship with one of Washington’s best friends in Europe.

The Sharon government, which is plagued by high unemployment, is more than willing to work with Italy on joint military industrial development.

Horse-trading Begins behind the Sharon-Abbas Charm Offensives

28 November: Saturday, November 28, Mahmoud Abbas took off for a round tour of Arab capitals to elicit public recognition. Even before he left, Abu Mazen began rounding up sponsorships from Persian Gulf Emirs. He needs political and moral legitimacy from the two Arab rulers, but Gulf emirates’ smiles would translate into financial pledges, a winning ticket for the poverty-stricken Palestinian electorate.

debkafile‘s Palestinian sources have learned how the incoming Palestinian leader perceives the post-election period. He is telling his confidants:

Let Israel go ahead with its planned evacuation of the Gaza Strip and Gush Katif. I have no objections. It’s not our affair and we won’t interfere with the process. But as soon as the elections are behind us, we’ll go straight to Stage B of the road map, a Palestinian state inside a year within temporary borders. Abbas notes that even after 56 years of independence, the Jewish state still has no permanent frontiers either.

Our debkafile‘s Palestinian sources take this to mean that Abbas wants no hand in Sharon’s disengagement and settlement removal plan. Abbas, unlike his predecessor, believes he can count on American, European and world backing for a Palestinian state by the end of 2005.

His acceptance of temporary borders is based on his judgment that the Palestinians have no chance of satisfying all their demands in negotiations with the Israelis; such issues as the 1948 refugees’ return to their old homes and the recognition of Jerusalem as Palestinian capital will be left outstanding. But Palestinian statehood need not be delayed. He also figures that by accepting half a loaf, the Palestinians can demand that Israel reciprocate and make do with temporary arrangements, such as the continuation of Palestinian terror and incitement to hatred and violence, notwithstanding Sharon’s stipulations for dialogue.

Above all, Abu Mazen is counting on the goodwill lavished on him by Washington and Jerusalem carrying over beyond January 9 and placing the Palestinians in position to redouble their demands. Abu Mazen believes he is empowered not only to sterilize the Sharon disengagement plan by shrugging off a Palestinian role, but also to scupper Sharon’s long-term objective to draw a line on the Gaza and northern West Bank pullbacks and make them Israel’s last territorial concessions. Playing down Sharon’s disengagement is Abbas’s way of minimizing its significance in the larger scheme of major territorial concessions to the Palestinian state.

Strange Bedfellows Bid to Rescue Sharon Government

30 November: The Sharon government’s permanent crisis peaked again this week over the insufficiency of parliamentary votes to get the 2005 state budget through its first reading Wednesday, December 1. The acrobatic wheeling and dealing for a majority has accelerated the break-up of government and national mainstream parties and created incongruous juxtapositions. The far-left Yahad promised to vote for an anti-social budget to help the prime minister last long enough to achieve withdrawal from Gaza and the northern West Bank. The treasury claims there is no money for the poor, the elderly, the handicapped and the jobless, yet it stumped up the round sum of NIS.290 million (US$65 m) for the Torah Judaism’s five votes for the budget. In protest, the four Shinui (Change) ministers and its 15 Knesset members announced they would vote against the budget draft. The prime minister retorted that any minister failing to back the budget would be fired.

Shinui’s departure would bring the government down and force an early election barring a quick remedy. In a race to hold his disintegrating government together for long enough to execute disengagement, the prime minister has begun coalition talks with the opposition Labor party (22 MKs). Last week, Sharon and the sympathetic Labor leader Shimon Peres, himself a former prime minister, reached a quiet understanding to buy time by four steps:

1. Scare tactics against Likud anti-disengagement rebels to impress on them that if the government falls now, their own future and that of the party is fraught with uncertainty.

2. To co-opt Labor to the government coalition without assigning ministerial portfolios. Likud ministers may buy this lease of life if at least one religious party is brought in as well.

3. To execute disengagement by the end of 2005. With Labor, Sharon would be sure of majority cabinet support.

Heedless of these considerations, the various parties are already acting as though the election campaign was upon them. Vital government business is left in midair as the factions make a show of flexing muscles over the budget and other urgent issues instead of giving them serious parliamentary attention.