This record is a partial extract of the original cable. The full text of the original cable is not available.

"S E C R E T SECTION 01 OF 02 TEL AVIV 000145 
 
SIPDIS 
 
CODEL 
 
DEPARTMENT FOR H 
 
E.O. 12958: DECL: 01/11/2016 
TAGS: PREL PGOV IR IS KPAL PINR ELECTIONS GOI INTERNAL ISRAELI PALESTINIAN AFFAIRS GOI EXTERNAL
SUBJECT: PERES TELLS CODEL BAYH THAT OLMERT WILL BE NEXT 
PRIME MINISTER 
 
Classified By: Political Counselor Norman H. Olsen.  Reason 1.4 (B/D). 
 
 ¶1. (C) SUMMARY: In a January 6 meeting, former Vice Premier 
Shimon Peres told Senator Evan Bayh, that Prime Minister 
Ariel Sharon's chances of returning to political power are 
""nil,"" and that Alternate Prime Minister Ehud Olmert will be 
the next Prime Minister of Israel.  Peres discussed the 
future of Kadima in positive terms, citing the need for such 
a new party to bring about peace.  Peres said that he 
believes privatization of the economy can aid the peace 
process.  He expressed pessimism about the outcome of the 
Palestinian elections, noting that he could not identify a 
strong Palestinian interlocutor for peace.  Peres emphasized 
the need for the United States to stay the course in Iraq, 
but he predicted that having Shiite parties in power, 
together with a weak and divided Iraqi military apparatus, 
would support Iranian aspirations and terrorism in the 
region, and instability in Iraq.  Peres also offered an 
analysis of the current situation inside Iran, which, he 
said, outlines the need for the U.S. and Europe to take a 
three-pronged strategic approach using political, 
psychological and economic pressures.  Peres stressed 
internal vulnerability in Iran, based on Israeli analysis. 
END SUMMARY. 
 
------------------------------------------- 
Peres: You Need a Third Party to Make Peace 
------------------------------------------- 
 
¶2. (C) Peres expressed regret that Sharon had lost his 
capacity to govern, and assessed that Sharon's chances of 
returning to political power are ""nil.""  Kadima will still 
receive the largest number of votes in the March elections, 
he predicted, and Alternate PM Ehud Olmert will become the 
next prime minister.  Peres asserted that Kadima's role in 
Israeli politics is essential to the peace process, adding 
that Kadima has filled a political ""vacuum"" brought about by 
the increasing radicalization of the right.  Sharon's 
disengagement plan made Sharon a hero, ""even in the eyes of 
Europe,"" but this same policy alienated Sharon from the far 
right, Peres said. 
 
¶3. (C) Peres said that his personal agenda is to promote 
Israeli economic interests and companies abroad as a means to 
promote peace.  He said that he believes this strategy has 
worked for the United States and China, and that it could do 
the same for Israel.  He also said thriving private sectors 
are critical to moderating the Arab world.  Peres highlighted 
his current book, ""The Privatization of Peace,"" in which he 
lays out these concepts. 
 
------------------------------------------ 
Dire Predictions for Palestinian Elections 
------------------------------------------ 
 
¶4. (C) Peres was pessimistic about the January 25 Palestinian 
Legislative Council elections, estimating that the struggle 
between Hamas and Fatah, and within Fatah, will continue 
after elections.  This internal struggle could potentially 
produce ""something positive,"" Peres said, but added that, at 
present, a viable Palestinian interlocutor for peace does not 
exist.  He characterized Hamas and Palestinian Islamic Jihad 
-- not Israel -- as the greatest enemies of the Palestinian 
cause.  Peres remarked, ""When a cat is chasing a mouse, there 
is no chance the mouse will get a ceasefire."" 
 
--------------------------------------------- ----------- 
Iraq: You Can't Leave a Patient in the Middle of Surgery 
--------------------------------------------- ----------- 
 
¶5.  (C) Peres strongly emphasized the need for the United 
States to stay the course in Iraq, likening the situation in 
Iraq to a patient on a surgeon's table.  ""A surgeon cannot 
simply leave a patient in the middle of surgery,"" he said. 
According to Peres, the repercussions of leaving Iraq affect 
not only the United States and its partners, but also Arab 
countries with Sunni majorities that are vulnerable to 
terrorist attacks, such as Saudi Arabia and Jordan. 
 
¶6.  (S) The terrorists, Peres said, are Shiite Muslims who 
are infiltrating Iraq through the Iranian border and 
destabilizing the country.  Peres suggested that the U.S. 
work more closely with the Iraqi military to learn their 
culture and language, and offered that Iraqis could learn 
American self-assurance on the battlefield.  Senator Bayh 
agreed with this assessment, noting the additional challenge 
of an Iraqi army divided into Kurd, Shiite, and Sunni 
elements.  Peres also cautioned that the methods the U.S. is 
pursuing in its push for democratic reforms have put majority 
Shiites in political power, and that ""democratic processes do 
not always yield democratic results.""  Another Shiite 
country, Peres said, is what Iran wants. 
 
-------------------------------------- 
Iran: An Israeli Intelligence Analysis 
-------------------------------------- 
 
¶7.  (S) Peres thanked Senator Bayh for his position on 
speaking out against Iran, but urged that the United States 
pay more attention to what is going on inside that country. 
Peres pointed to a lengthy profile of Iran produced by what 
he said was Israeli intelligence on the ground, using it to 
justify a three-pronged strategic approach -- political, 
psychological and economic -- toward the Iranian regime. 
Peres claimed that Iran's population has doubled to 72 
million from 30 million since the first U.S. strike against 
Iraq in 1991 and has brought about a major increase in 
poverty and crime.  He claimed that Tehran alone now has 
900,000 prostitutes.  Overall, he said Iran has 3 million 
drug addicts, 18 percent inflation, and 15-17 percent 
unemployment.  Since the election of the new regime, Peres 
added, the stock exchange has dropped 30 percent.  He claimed 
that some 200,000 Iranians, including some clerics, are 
leaving annually, that there are 100,000 anti-regime 
websites, in a variety of languages, and that the number of 
executions of journalists and dissidents is increasing. 
 
¶8.  (S) Peres assessed that a majority of Iranians support 
regime change and engagement with the West. He cited a June 
9, 2005 poll, which shows that 70 percent of Iranians believe 
a U.S. presence in the Middle East increases the chances for 
democracy in Iran.  Peres acknowledged that the United States 
cannot achieve its objectives alone, noting that Iran will 
continue to ""play"" the international community unless the 
United States, Europe, and Russia show a unified front. 
Peres assessed that if Europe and the United States can agree 
on their political, psychological and economic approach 
toward Iran's regime, Russia will follow suit.  Time is of 
the essence, he underlined, since Iran will complete R&D for 
its nuclear program ""in a matter of months."" 
 
¶9.  (S) Peres suggested a range of steps to implement his 
strategy on Iran.  The United States could organize its 
Iranian diaspora population to help lead a human rights and 
freedom campaign against the Iranian regime, he suggested. 
The Iranian diaspora should understand that the international 
community is not criticizing Iran as a whole, Peres said, but 
rather the current Iranian regime and radical Islam.  The 
U.N. Security Council could make demands of Iran that are not 
necessarily tied to its nuclear ambitions, Peres said; for 
instance, Peres continued, Israel would like to see Iran 
abandon its long-range missile program. It is essential, 
Peres added, that the international community push for a 
document outlining ""punishment"" for any Iranian use of 
nuclear weapons.  Noting the statistics he had earlier 
highlighted on the Iranian economy, Peres assessed that 
economic sanctions could have a greater impact than imagined. 
 Peres said that he believes this three-pronged approach will 
prevent the need for military action.  He encouraged Senator 
Bayh to continue speaking out against the regime, but to 
equally state his support for the people of Iran. 
 
¶10. (U) Senator Bayh's delegation cleared this cable. 
 
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JONES 
"