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PP RUEHROV
DE RUEHTV #2078/01 2541336
ZNR UUUUU ZZH
P 101336Z SEP 08
FM AMEMBASSY TEL AVIV
TO RUEHC/SECSTATE WASHDC PRIORITY 8382
INFO RUEHXK/ARAB ISRAELI COLLECTIVE

UNCLAS SECTION 01 OF 02 TEL AVIV 002078 
 
SENSITIVE 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PREL PGOV PINR IS
SUBJECT:  THE POLITICAL COUNTDOWN: TOWARDS KADIMA PRIMARIES SEPT 17 
OR POSSIBLE INDICTMENT OF THE PRIME MINISTER 
 
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SUMMARY AND INTRODUCTION 
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¶1.  (SBU) The Kadima primaries are only a week away. Front-runners 
Tzipi Livni and Shaul Mofaz, already labeled by the local media as 
the Obama and McCain of Israeli politics, are locked in campaign 
combat.  They offer daily interviews, sound bites and policy 
statements to a public weary with the saga of which will come first: 
the indictment of the incumbent prime minister or his resignation. 
Speculation was fueled again this week by the Israel Police 
recommendation that Olmert be indicted, not only for fraud, breach 
of trust, money laundering and tax evasion but also for bribery. 
The indictment decision will be that of Attorney General Meni Mazuz. 
 Amidst speculation as to whether he will abide by a commitment 
(circa May 2008) to resign immediately if indicted, PM Olmert 
conducts business as usual.  There are signs of strain, however, in 
his enervated appearance and in a verbal broadside he launched 
against Defense Minister Barak at the September 7 cabinet meeting. 
As the tension rises on all fronts, the prospect of general 
elections early next year cannot be discounted. The latest opinion 
polls show Likud's Binyamin Netanyahu maintaining his lead. 
 
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THE FRAUD SQUAD GOES PUBLIC 
--------------------------- 
 
¶2.  (U) At the close of a months-long investigation of PM Olmert, 
the Israel Police this week finalized their recommendation to the 
State Attorney's office. Dramatically, the Fraud Squad recommended 
that PM Olmert be indicted on charges of bribery in the Talansky 
affair, as well as reception of goods, fraud, breach of trust, money 
laundering and tax offenses, in both the Talansky and RishonTours 
investigations. While a police recommendation at the close of an 
investigation is standard practice, publication of its contents is 
highly controversial, if not prejudicial. Justice Ministry officials 
were quoted voicing skepticism as to the possibility of a charge of 
bribery, and Olmert's attorneys issued a statement noting that "the 
only person authorized by law to decide whether to indict the prime 
minister is the attorney general. He has the authority and he bears 
the responsibility. We will wait patiently for the decision by the 
attorney general who in contrast to the police is well aware of the 
heavy responsibility he bears."  In the prevailing atmosphere in 
which Justice Minister Daniel Friedmann has sought to curb the 
powers of both the Attorney General and the Supreme Court, the 
invocation of "responsibility" could be read as a veiled threat. 
One pundit summed up Mazuz's dilemma: he must indict Olmert or face 
pressure to resign the office of Attorney General if he fails to do 
so. 
 
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EHUD VERSUS EHUD 
---------------- 
 
¶3.  (SBU)  At the weekly cabinet meeting on September 7, PM Olmert's 
strained appearance was matched by an outburst of personal 
aggravation directed at Defense Minister Ehud Barak. Ostensibly, PM 
Olmert was striving for a business-as-usual atmosphere with a 
cabinet agenda that included weighty items, notably a proposal by 
Justice Minister Friedmann to deprive the Supreme Court of its 
current power to overturn Knesset legislation.  Barak, as Labor 
party chairman, ventured to suggest that such an issue required 
agreement by the coalition members and added that "at this point in 
time, in the present reality, in this political situation, it is not 
right to hold this discussion."  Olmert lashed out with a broadside 
against Barak accusing him of breaking every agreement he ever made, 
of failing to consult, of leaking sensitive matters and finally, of 
the ultimate offense of "chutzpah" (impudence) in lecturing the 
prime minister about honoring agreements.  Barak did not back down, 
and later that day dealt the prime minister a back-handed blow when 
he told a Labor party rally: "Our prime minister has had an 
especially hard day and I do not want to make it harder for him, but 
I will not change my adamant positions on any of the matters I 
handle."  Although Barak has suffered in the polls, there is no 
active move within the Labor Party to remove him. 
 
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PRIMARIES AND ELECTIONS 
----------------------- 
 
¶4.  (SBU) The run-up to the Kadima primaries has provided few 
surprises, with Tzipi Livni consistently polling ahead of the second 
front-runner Shaul Mofaz.  The most recent poll (Haaretz and Channel 
10) was conducted September 4, and gave Livni the coveted 40 percent 
minimum requirement to win the primaries outright in the first round 
on September 17.  The same poll gave Mofaz 20 percent of the vote. 
If accurate, such results would obviate the need for a second round 
on September 24.  However, most pundits distrust polling data of a 
Kadima electorate that is amorphous and new, and many observers 
surmise that Mofaz will fare better than the polls predict.  A 
 
TEL AVIV 00002078  002 OF 002 
 
 
number of contacts familiar with Mofaz's political organization 
share his optimism that he will stage an upset.  By far the most 
interesting finding of the poll was that 28 percent of those 
canvassed had not decided for whom they would vote. 
 
¶5.  (SBU) Whatever the primaries' outcome, the issue of early 
general elections issue remains on the horizon, if only because 
there is no guarantee that whoever wins the Kadima primaries will 
seamlessly transition to a new coalition.  Even so, Livni's 
political advisors are hoping that a decisive primary win, combined 
with her avowed openness to early elections, will actually work to 
cement a coalition from the current Knesset, many of whose members 
would lose their seats in the event of early elections.  Livni is 
sounding out Labor leaders such as Ophir Pines-Paz and Eitan Cabel 
about their willingness to remain in the coalition under her 
leadership, and she has dispatched senior political operatives, 
including former Cabinet Secretary Israel Maimon and Eyal Arad, to 
encourage the Shas Party to stick with her.  Livni remains open to 
including the opposition Likud Party in her coalition, but the Likud 
leadership is only likely to accept such an offer following 
elections, which polls suggest will hand Likud 30 seats (compared to 
the 12 they hold now).   Should Mofaz win the Kadima primary, many 
predict early elections will be a foregone conclusion, and split the 
Kadima Party into its constituent elements:  with Mofaz forced to 
return to Likud - and Livni forming her own party and marrying up 
with Labor. 
 
CUNNINGHAM