Economy for Netanyahu, Preparation for Iran Conflict by Barak, Detente with Moscow for Lieberman

On the face of it, Israel's incoming prime minister Binyamin Netanyahu will have little choice in his first 100 days in office but to go for another military operation against Hamas in the Gaza Strip, in view of the latest regional developments, culminating in the failure of Israel, Egypt and Hamas to persuade Hamas to accept a prisoner swap for releasing the abducted Israeli soldier Gilad Shalit.

After three years in captivity, the Shalit case tops all other issues for the Israeli public.

Netanyahu, who is just about ready to introduce his government line-up, will shortly settle in the prime minister's office for the second time as Israel's 13th prime minister. This time, according to DEBKA-Net-Weekly's political sources in Jerusalem, he is planning some surprises.

Contrary to conventional wisdom, he is not preparing to embark on an immediate war in Gaza or anywhere else.

In fact, Netanyahu means to concentrate on hauling Israel out of its nascent recession, leaving matters of war and peace to his intended minister of defense, Labor leader Ehud Barak. He will also hand the presumed foreign minister Avigdor Lieberman of Israel Beitenu a very special mission.

At the heart of Israel's political dynamic today is the close alliance of Netanyahu and Barak, entered into secretly six months ago.

The heads of two different parties, Likud and Labor, pledged to act in concert on Israel's primary challenges: the global economic crisis and its impact on Israel and Iran's drive for a nuclear bomb. Barak agreed to defer to Netanyahu on economic matters, while Netanyahu will follow Barak's lead on security.

Barak believes he can overcome the fierce resistance within his Labor party and muster a majority for joining the right-leaning government in the coming days.

The Netanyahu-Barak pact has crept up quietly on mainstream political pundits.

After foreign minister Tzipi Livni declined to bring her Kadima party into the Likud-led government, they predicted the prime minister-in-waiting would be forced to rely on a short-lived right-wing, religious lineup, backed by a slender majority of 61 members of the 120-strong house and gave this administration no more than six months.

Livni told her followers that was why she rejected Netanyahu's offer to join his government. “Why should I join his government, when in a few months, when Netanyahu falls, I can become PM?” she said.


Barak and Netanyahu's own little “big bang”


The Netanyahu-Barak deal would establish a robust administration based on 74 Knesset members, leaving Linvi's Kadima isolated on the opposition benches.

The pair believe it can be clinched by the designated prime minister's offer of five portfolios and disproportionate sweeteners to the Labor party which slumped in the February general election to 13 mandates and fourth place.

Four of the portfolios will be in social and economic spheres, keys to Netanyahu's economic stimulus program. Labor will also win the chairs of two powerful committees, finance and the law and justice. Just as important, the incoming prime minister pledges his future defense minister equal partnership in choosing Israel's next ambassador to Washington.


Lieberman gets to pursue a strategic alliance of his own


As foreign minister, the controversial Israel Beitenu leader Avigdor Lieberman agreed under the coalition terms he signed with Netanyahu to keep his hands off relations with the Barak Obama administration.

Israel's senior diplomat in Washington will defer to Netanyahu and Barak and execute their policies.

Lieberman has been an active partner in the negotiations between the two. As foreign minister he will deal with relations with Europe and Middle East issues and, most of all, focus on his pet subject, the development of strategic ties with Moscow.

Lieberman's in-depth interview to Russian news agency Interfax Wednesday, March 18, the very day the Netanyahu-Barak wagon reached peak momentum, was no accident. He was more forthcoming to Russia than any Israeli politician before him, proposing to develop Israeli-Russian ties as a strategic relationship, on a par with the bonds between the US and Israel:

“I've been saying all along that relations between Israel and Russia must rise to the level of a strategic partnership. This is even more relevant today than previously.”

The same refers to military-technical cooperation between Israel and Russia, he said. “Israel has quite a few things to offer Russia in this sector – from electronic systems for fighter jets to drones,” Lieberman said.

“However paradoxical it may seem, the global economic crisis gives Israel new opportunities to reach the Russian market, after many of the Western companies abandoned it,” the Israeli politician said.

If this policy, endorsed by Netanyahu and Barak, takes off, it would be the first time in Israel's 61 years that Jerusalem has attempted to rebalance its absolute dependence on Washington by developing ties with Moscow as a counterweight.

DEBKA-Net-Weekly's Moscow sources report that Lieberman held talks on these issues with figures close to Russian President Dmitry Medvedev and Russian PM and former President, Vladimir Putin, during a visit to Moscow in the first half of February.


The Netanyahu-Barak pact prepares to confront Iran, lay down terms for Syria and Palestinians


It may be recalled that at the at the start of his political career in the 90's, when Netanyahu served as Israeli ambassador to the UN, and later as deputy foreign minister, he often confided in private conversation – though never in public – that Israel was overly dependent on the United States. This was not healthy either for Washington or Israel, he would say.

When first elected prime minister in 1996, one of his first acts was to forego America's annual civilian aid bill of $2.2 billion to Israel, leaving only the $3 billion dollar military allocation. He argued that most of the aid dollars anyway found their way back to the US market.

As for the new government's plans on security, DEBKA-Net-Weekly's military and intelligence sources disclose the understandings shared by Netanyahu and Barak on key issues:


Iran: The IDF will continue to prepare for a military strike on Iranian nuclear facilities.

While American, European, and Middle Eastern sources seem convinced that an Israeli attack is inevitable, Netanyahu and Barak agree that Israel and the IDF need more preparation.

The former administrations of Ariel Sharon and Ehud Olmert concentrated in 2005-2008 on preparing Israel for defense against attack by Iran, or one of its Middle-Eastern proxies. They placed little emphasis on developing Israel military's long-range strike capabilities.

Only in 2008 did Olmert understand this was a strategic omission and acted to put it right.

Barak and Netanyahu estimate that, barring an unforeseen Middle East crisis or Tehran's tipping over into building nuclear weapons, Israel has a year at least – until March-April 2010 – for completing its strike capability and preparing the home front for retaliatory missile attacks from Iran, Syria and Hizballah.


Syria: Netanyahu and Barak are willing to resume the peace talks started by outgoing Israeli prime minister Ehud Olmert with Syrian President Bashar Assad – but from a different perspective.

Whereas Olmert was willing to talk about Israeli-Syrian relations, Netanyahu and Barak would rather engage Damascus first on regional issues, with the emphasis not necessarily on its relations with Tehran, but rather on Lebanon and Hizballah and the Palestinians, before moving on to other issues..

In other words, both Israeli leaders would want to find out if Assad is keeping faith with Saudi King Abdullah and president Hosni Mubarak of Egypt to collaborate on the general elections in Lebanon in June, where they are working to prevent a Hizballah electoral victory. They also wish to see what Syria is doing to cut Hamas' dependence on Iran.

DEBKA-Net-Weekly notes that in this respect the two Israeli leaders would follow the lead of Cairo and Riyadh on the Palestinians.


Palestinians: Netanyahu has bought the Labor leader's proposition that Israel's support for Saudi-Egyptian steps to form a Palestinian national unity government is the best way to achieve long-term “calm” in the Gaza arena and the release of Hamas-held, abducted Israeli soldier Gilad Shalit.

The Egyptians offer a compromise formula: By power-sharing with Fatah, Hamas will tacitly acknowledge the agreements the Palestinians signed over the years with Israel, including the Oslo Framework Accords. By the same token, Israel should tacitly accept the fact that Hamas is a part of the new Palestinian government which should not be openly boycotted, although Israel will not maintain direct contact with Hamas ministers.

The future prime minister has accepted Barak's proposition on this lines.

In return, the Labor leader has adopted three high points of Netanyahu's Palestinian policy:

  1. Just as the negotiations with Syria will focus only on regional matters at first, so the negotiations with the Palestinians will focus first on developing Palestinian economic infrastructure before touching upon political matters. Barak has accepted Netanyahu's approach that a Palestinian state has no chance of survival without economic institutions. Netanyahu's thesis on this point has been presented personally and through emissaries to the Obama administration.

  2. Israel will cut all ties with the Gaza Strip off from Israel. Other than supplies of gas and oil, the checkpoints connecting Israel with the Strip will be shut down. The transfer of Israeli cash to the Gaza Strip, totaling some NIS 150 million per month, or 450 million dollars per year, will be discontinued.

  3. Rocket fire or acts of terror against Israel emanating from the Strip will be met with a harsh and immediate attacks upon Hamas targets.

  4. Netanyahu intends to adopt the same policy regarding Hizballah.

His economic rescue program focuses on combating unemployment by funding public works; and government spending to buy and re-circulate bonds issued by large private and public corporations, which are in dire financial straits. A collapse of one or more of these conglomerates could mean hundreds of thousands of layoffs, doubling Israel's unemployment rate which currently tops seven percent. Tax relief will be offered to lower and middle income-earners. These measures will be financed by expanding the national budget deficit.

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