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UNCLAS TEL AVIV 000629 
 
SIPDIS 
 
STATE FOR NEA, NEA/IPA, NEA/PPD 
 
WHITE HOUSE FOR PRESS OFFICE, SIT ROOM 
NSC FOR NEA STAFF 
 
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HQ USAF FOR XOXX 
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JERUSALEM ALSO ICD 
LONDON ALSO FOR HKANONA AND POL 
PARIS ALSO FOR POL 
ROME FOR MFO 
 
SIPDIS 
E.O. 12958: N/A 
TAGS: OPRC KMDR IS
 
SUBJECT: ISRAEL MEDIA REACTION 
 
 
-------------------------------- 
SUBJECTS COVERED IN THIS REPORT: 
-------------------------------- 
 
¶1.  Global Stock Market 
 
¶2.  U.S.-Israel Relations 
 
¶3.  Iran 
 
------------------------- 
Key stories in the media: 
------------------------- 
 
All media, except The Jerusalem Post, led with the financial crisis 
on Wall Street and all capital markets, including Tel Aviv Stock 
Exchange, which dropped by 4% on Monday and by 9% over the past 
three days.  Property stocks and banks have been hit the hardest 
with the biggest loser being Bank Hapoalim (it had heavy exposure to 
the U.S. subprime market) which is down 35% this year.  Banners in 
Yediot: "Pressure"; Maariv Collapse; and Israel Hayom: Tsunami on 
the Markets."  Ha'aretz reported that the Israeli market fell mostly 
out of fear and was exacerbated by increasing numbers of mutual fund 
redemption requests.  However, despite the weak dollar hurting 
exporters, high commodity prices and the sluggish real estate 
market, the Israeli economy is still expected to grow 3.5% this 
year.  (This is down from previous estimates of around 5.%.) 
 
Ha'aretz reported that last night Israel and the PA officially 
renewed negotiations on core issues  after two weeks of suspension 
following the Gaza flare up.    Monday's meeting was carried out 
under protest from the Palestinians over Israeli construction in 
Givat Ze'ev and East Jerusalem.  Leading media quoted Qurei as 
saying: "We completely reject the building, not only of one room, 
but of even one brick being laid in any of the Israeli settlements 
in the West Bank and East Jerusalem."  Ha'aretz quoted FM Livni as 
saying, as the two sides prepared on Monday to resume the 
negotiations, that terror could not be used as an excuse to suspend 
talks.  The Jerusalem Post reported that for the first time since 
1998, the IDF Civil Administration hosted a one-day symposium with 
its Palestinian counterparts, bringing together all of the officials 
that coordinate civilian and defense issues between Israel and the 
PA. 
 
Ha'aretz quoted PM Ehud Olmert as saying on Monday, during a press 
conference with visiting German Chancellor Angela Merkel, that "we 
have not stopped, we are not stopping and we will not stop the 
negotiations, until we reach the essential results that we believe 
in."  Olmert said Israel "has no intention of evading or denying its 
obligations but our primary obligation, a prerequisite condition for 
progress, is an end to terrorism.  It is impossible to compare it to 
any of the other commitments on the Roadmap."  Regarding 
construction in Jerusalem, Ha'aretz and The Jerusalem Post quoted 
Olmert as saying that "everyone knows that there is no chance that 
Israel will give up Har Homa, which is part of Jerusalem.  The 
Palestinians know this, and therefore there is no significance to 
one more or less buildings. Everything else is open to 
negotiation." 
 
Israel Radio reported that Egyptian Intelligence Minister Omar 
Suleiman has postponed his visit to Israel, citing Israel's 
"violation of the calm" when it assassinated four Islamic Jihad men 
in Bethlehem. 
 
The Jerusalem Post and Ha'aretz reported that the Shin Bet is 
planning an online recruitment campaign, complete with blogs, at the 
Web address http://www.shabak.gov.il/. 
 
The Jerusalem Post reported that the Palestinian Authority is 
planning to mark Israel's 60th anniversary by calling on all 
Palestinians living abroad to converge on Israel by land, sea, and 
air.  The idea of unilaterally implementing U.N. resolution 194 was 
drawn up by Ziad Abu Ein, a senior member of Fatah, and is 
calculated to embarrass Israel during 60th anniversary celebrations 
by highlighting the issue of "right of return".  The plan calls for 
refugees to peacefully march to Israel's borders with suitcases, 
tents and UN flags with the stated goal of settling in their former 
villages and calls on Israelis to "live together with them in the 
land of peace." 
 
Ha'aretz reported that some people present at a meeting between 
visiting German Chancellor Merkel and PM Ehud Olmert describer her 
remarks about the Iranian nuclear program as being "tough and 
decisive."  All media reported that on Monday a joint meeting took 
place between Israeli and German ministers. 
 
Over the past few days major media reported that Syria may have sent 
peace feelers to Israel.  Some media said that Turkey acted as an 
intermediary. 
 
Senator John McCain, the Republican candidate for president, who is 
due to arrive in Israel today, was quoted as saying in an interview 
with Yediot that he is concerned about the possibility of missiles 
being launched at Israel, and that he wants to explore how it is 
possible to help in the Israeli-Palestinian tension. 
 
All media reported that the elections for chairmanship of Meretz 
will take place today.  The three candidates are Knesset members Ran 
Cohen, Zahava Gal-On, and Haim Oron, who is considered to have the 
highest chances of winning.  If Oron does win, he is expected to 
keep his party in the opposition despite hints in recent months from 
Olmert's associates that if the governing coalition continues to 
fracture over negotiations with the PA, that Meretz may step in as a 
partner.  The party which reached its peak in 1992 with 12 Knesset 
seats has only five in the current parliament. 
 
Israel Radio reported that this morning the head of an ultra-yeshiva 
was stabbed and injured at Jerusalem's Damascus Gate. 
 
Ha'aretz reported that on Monday jailed Fatah/Tanzim leader Marwan 
Barghouti announced that he was considering running for PA 
president. 
 
The media reported that senior police officers, both active and 
retired, are highly critical of the Jerusalem police's conduct on 
Sunday night when they failed to prevent Jewish rioters from pelting 
homes and cars in the East Jerusalem village of the Mercaz Harav 
terrorist.  The police opted to let the Jewish demonstrators vent 
their anger after the terrorist attack at the yeshiva on March 6, in 
which eight youths and young men were murdered by a gunman from the 
village of Jebel Mukaber. 
 
Makor Rishon-Hatzofe reported that some Kadima Knesset members have 
threatened to establish a commission of inquiry if PM Olmert does 
not finally resolve the claims made by the evacuees from Gaza's Gush 
Katif. 
 
Makor Rishon-Hatzofe cited the results of a study conducted by the 
IDFQs Behavioral Sciences Department, according to which the army 
units in which grave defects were found in the security of equipment 
and stores were the same units against which complaints were 
submitted by Palestinians. 
 
Ha'aretz reported that important Israeli businessmen Yitzhak Tshuva 
and Nochi Dankner may delay their planned $7-8 billion investment in 
Las Vegas due to the financial crisis. 
 
Ha'aretz cited CNN Money as saying that that Delek U.S., a 
 
subsidiary of the Israeli energy company Delek, is among three top 
contenders to acquire the refineries from energy giant Valero Energy 
Corp.  The other bidders are Petroplus and Petroleo Brasileiro 
(Petrobras). 
 
Leading media reported that Israeli VIPs flew to Namibia to attend 
the bar-mitzvah of the son of Kobi Alexander, the founder and former 
CEO of Comverse Technology, who is sought by U.S. authorities. 
 
Maariv published the results of a TNS/Teleseker poll: 
Q: If general elections were to be held today and the following 
parties were running, for which party would you vote?  Results in 
Knesset seats.  (In parentheses, results from a previous poll 
conducted on January 31 and current Knesset seats): 
Likud: 30 (30; current strength: 12); Labor Party: 19 (21; current 
strength: 19); Kadima: 15 (11; current strength: 29: Yisrael 
Beiteinu: 12 (10; current strength: 11); Shas: 10 (10; current 
strength: 12); Arab parties: 10 (9; current strength: 10); National 
Union Party and National-Religious Party: 8 (9; current strength: 
9); Meretz: 6 (6; current strength: 5); United Torah Judaism: 5 (5; 
current strength: 6); New party headed by Arkady Gaidamak: 5 (7; 
current strength: 0); Pensioners Party: 0 (0; current strength: 7). 
Q: To what extent, in your opinion, did the affair of Binyamin 
NetanyahuQs trip and expenses in London and the publicity damage 
NetanyahuQs public image? 
Damaged very much/rather a lot: 60.2%; did not damage too much/ 
caused no damage: 35.6% were undecided. 
 
The Jerusalem Post and Israel Radio reported that a Palestinian 
public opinion poll published on Monday showed that Hamas PM Ismail 
Haniyeh would defeat PA President Mahmoud Abbas if presidential 
elections were held these days in the West Bank and Gaza Strip.  The 
poll also showed that Haniyeh would defeat Marwan Barghouti if the 
latter were to run in a presidential election.  The Jerusalem Post 
noted that Barghouti is altogether more popular than Abbas among the 
Palestinians. 
 
------------------------ 
¶1.  Global Stock Market: 
------------------------ 
 
Summary: 
-------- 
 
Chief Economic Editor Sever Plotker opined in the mass-circulation, 
pluralist Yediot Aharonot: "If [the captains of the U.S. economy] 
can lead the shipwrecked boat of the American financial market to 
safe shores, we're all saved.  If not, may God have pity upon us." 
 
Block Quotes: 
------------- 
 
"A Beacon of Light on a Dark Day" 
 
Chief Economic Editor Sever Plotker opined in the mass-circulation, 
pluralist Yediot Aharonot (3/18): "If [the captains of the U.S. 
economy] can lead the shipwrecked boat of the American financial 
market to safe shores, we're all saved.  If not, may God have pity 
upon us.  Until the end of last week, their record in handling the 
crisis was pretty much a failure.  Hundreds of billions of dollars 
were injected into the markets to provide the oxygen needed for 
their normal performance.  The fever has not vanished; the plague 
has not been eradicated.... What about Israel?  Our stock exchange 
is behaving exactly like its sisters in the world.... At last one 
can sense that someone is in charge of the world economy.... We 
should not be deluded in our hopes." 
 
------------------------- 
¶2.  US.-Israel Relations: 
------------------------- 
 
Summary: 
-------- 
 
Defense commentator Amir Oren wrote in the independent, left-leaning 
Ha'aretz: "As far as Israel is concerned, and in view of the 
candidates' current positions -- no one is better than McCain." 
 
Former ambassador to France and the UN Yehuda Lancry wrote in 
Ha'aretz: "The [reported] reservations of [diplomatic] sources in 
Jerusalem [about U.S. ambassador-designate to Israel James 
Cunningham] are curious and even obnoxious." 
 
Block Quotes: 
------------- 
 
¶I.  "The Best of All Possible Presidents" 
 
Defense commentator Amir Oren wrote in the independent, left-leaning 
Ha'aretz (3/18): "As far as Israel is concerned, and in view of the 
candidates' current positions -- no one is better than McCain.  The 
Republican candidate is clearly more qualified than his rivals to be 
commander in chief -- in theory of the American armed forces only, 
but in practice also of the international alliance against radical 
states and terrorist organizations.  McCain has a deep understanding 
of the region's strategic problems and publicly supports a nuclear 
deterrent for Israel.  McCain visited Israel many times as part of 
Congressional delegations.... While Obama and Hillary kept silent, 
and years before they entered politics, McCain dared speak out -- 
not only against an Iranian nuclear capability, but also in favor of 
an Israeli one.  In essence, McCain seeks both to prevent nuclear 
proliferation and grant Israel an exemption from this regime; he 
calls it a 'special status'.... McCain does not require an 
explanation of the linkage between progress on the diplomatic track, 
which involves withdrawal from the territories, and ensuring 
Israel's strategic strength." 
 
II.  "An Unwelcome Welcome" 
 
Former ambassador to France and the UN Yehuda Lancry wrote in 
Ha'aretz (3/18): "Maariv recently wrote about 'disappointment in the 
Foreign Ministry' concerning the new U.S. ambassador to Israel, 
James Cunningham, whose appointment is described by Israeli 
'diplomatic sources' as a weak and strange choice of a 'diplomatic 
bureaucrat' who lacks understanding of, and diplomatic background 
in, the Middle East.  Both in form and essence, the reservations of 
the sources in Jerusalem are curious and even obnoxious.... During 
my service in the United Nations, I knew Cunningham in his capacity 
both as deputy ambassador and as the acting ambassador of the U.S. 
delegation to the UN.  He showed himself to be an excellent, 
professional and decisive diplomat, very much exposed to the 
complexities of the Middle East.  The UN delegation heads, along 
with the representatives of the permanent members of the Security 
Council, treated him with respect.  The second Intifada had placed 
Israel in some difficult situations before the Security Council. 
Cunningham made considerable efforts to follow his superiors' 
instructions and bail out their friend, Israel, either by using the 
U.S. veto or making sure Israel escaped with minimal damage.  In 
extreme situations, when in its fight against terror Israel 
extracted an unusually high cost of Palestinian lives, Cunningham 
might well have suggested during closed talks that Israel restrain 
itself when exercising force.  But he scarcely did so, and he should 
not be viewed as holding strict views on Israel." 
 
--------- 
¶3.  Iran: 
--------- 
Summary: 
-------- 
 
The conservative, independent Jerusalem Post editorialized: "The 
great challenge facing any presidential candidate is to show how he 
or she will galvanize Western strength and unity to achieve victory 
in the war against totalitarian Islamism." 
 
Block Quotes: 
------------- 
 
"McCain's Challenge" 
 
The conservative, independent Jerusalem Post editorialized (3/18): 
"By saying, as early as January 2006, 'There's only one thing worse 
than the United States exercising the military option; that is a 
nuclear-armed Iran,' McCain has taken the critical step of asserting 
that Iran must be stopped at almost any cost.  But he has not shown 
how he intends to bring along the 'hearts and minds' of other 
democracies into such an effort.  This is something that McCain can 
and should begin to do in the context of his visits to London and 
Paris.  Although these capitals are the strongest on the Iranian 
issue, they would be the right place for McCain to call for a 
completely united front between Europe and the U.S. -- by Europe 
joining the American trade embargo, not by the U.S. joining Europe's 
overly head in the sand mindset.  The stark truth is that America is 
not currently winning against Iran, and cannot win unless there is 
more Western unity behind an effective policy, rather than behind 
empty rhetoric and weak sanctions.  The great challenge facing any 
presidential candidate is to show how he or she will galvanize 
Western strength and unity to achieve victory in the war against 
totalitarian Islamism." 
 
JONES