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DE RUEHTV #0362/01 0421326
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R 111326Z FEB 09
FM AMEMBASSY TEL AVIV
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INFO RUEHXK/ARAB ISRAELI COLLECTIVE

UNCLAS SECTION 01 OF 02 TEL AVIV 000362 
 
SENSITIVE 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PGOV PINR KDEM IS
SUBJECT: With Elections Over, Campaigning Begins 
 
¶1.  (SBU) SUMMARY:  The polls have closed, but Israel remains 
without a clear winner in national elections held on February 10. 
Tzipi Livni's Kadima Party thus far has won 28 seats to Likud's 27 
in the 120-member Knesset, but Likud leader Binyamin Netanyahu still 
could well vault into the lead after all votes are counted in the 
next couple of days.  Even if Livni remained in the lead and later 
this month is charged by President Shimon Peres with the task of 
forming a government, the right-wing composition in the next Knesset 
will pose challenges to her attempts.  A unity government of Kadima, 
Likud, and Ehud Barak's Labor party is her stated preference, but 
rank-and-file opposition within these parties makes that outcome 
unlikely.  A rotating prime ministership deal is possible, but 
precedent for that is not encouraging and unlikely to be accepted by 
the Likud.  Barring such a power-sharing deal, Livni has limited 
options, as only two parties comprising 16 seats are to her left. 
Regardless of the ultimate outcome, Livni's performance was better 
than many had expected and helped cement her leadership of the 
party.  Netanyahu has numerous coalition options that leave him 
best-positioned to form a government, and he is known to want an 
alternative to a right-wing only coalition that hamstrung his 
short-lived government in the 1990s.  He likely will look to Labor, 
SHAS, and Yisrael Beitenu, with the option of adding small religious 
and nationalist parties to round out his coalition.  Labor under 
Barak crashed, leading most in the party to demand it serve in the 
opposition.  Barak, however, revels in his role as Defense Minister 
and could serve under either Livni or Netanyahu.  Yisrael Beiteinu's 
Lieberman was the dark horse candidate of the election, but his 
party garnered fewer seats than polls had predicted.  His 
consolation is that he is well-positioned to play kingmaker.  Though 
tilted toward the right, he has not ruled out serving under Livni 
and will use his position to exact a high price for his 
participation in the next government.  End Summary. 
 
PRESIDENT PERES TO TAP (BLANK) TO FORM NEW GOVERNMENT 
 
¶2.  (U) Israelis went to the polls yesterday to select their next 
leader, but will have to wait a while longer to find out who that 
leader is likely to be.  According to Israel's Basic Law, once 
official election results are published (no later than February 18), 
President Peres has one week to consult with party leaders to 
determine which leader he assesses is most likely to be able to form 
a new government.  Foreign Minister Livni and her Kadima Party 
appear to hold a one-seat edge over Netanyahu's Likud party, but two 
major factors cast doubt on whether Livni will be tasked with 
forming a government.  First, the votes of 220,000 soldiers, 
merchant marine, and diplomats abroad have not been counted and 
could shift as many as eight seats among various parties.  In the 
past, soldiers' votes have largely favored right-wing parties, 
meaning Netanyahu has a good chance to edge out Livni or win an 
equal number of Knesset seats.  Vote-sharing arrangements between 
the parties could also change the final tallies.  Second, the 
right-wing bloc outpaced the left-leaning bloc, providing Netanyahu 
with more natural ideological allies with which to pursue a 
coalition.  In the words of Ha'aretz analyst Yossi Verter, "Only 
Israel's version of democracy could come up with the largest 
political bloc being comprised of Likud and right-wing and 
ultra-Orthodox parties at the same time that the largest party 
(Kadima) is the one leading the center-left camp." 
 
UNITY? 
 
¶3.  (U) Though television commentators and morning-after newspaper 
graphic artists splayed out myriad coalition options that Livni or 
Netanyahu could pursue, it is too soon to forecast the most likely 
coalition outcome with any certainty.  Early assessments suggest 
that the most logical (and most stable) option for Livni or 
Netanyahu would be a national unity coalition that includes Kadima, 
Likud, Labor, and possibly Yisrael Beiteinu or the two 
ultra-Orthodox parties (SHAS and United Torah Judaism).  That would 
yield a large governing coalition with leaders (at least Netanyahu, 
Livni and Barak) whose political views are not that far apart. 
However, each party has members loathe to join forces in such a 
manner, and the only option for accommodating the ambitions of Livni 
and Netanyahu would be a rotational deal whereby each serves as 
prime minister for two years.  Such was the compromise worked out by 
Shimon Peres (Labor) and Yitzhak Shamir (Likud) in the 1980s. 
Netanyahu's allies are pooh-poohing such an arrangement, arguing 
that their bloc bested Kadima's.  Netanyahu has made a point of 
stressing that he is awaiting the final election results, and, in 
any case, is the leader of the "nationalist" bloc that is larger 
than Livni's. 
 
KADIMA WON THE ELECTION, BUT MAY LOSE PRIME MINISTERSHIP 
 
¶4.  (U) Livni's vigorous campaigning, along with an effective 
campaign message questioning whether the country could trust 
Netanyahu's leadership, helped her win over a sizable portion of 
undecided voters heading into the final days of the electoral cycle, 
as well as some votes from the left that would have gone to Labor or 
Meretz if the race between Livni and Netanyahu had not been 
neck-and-neck.  Buoyed by this better-than-expected performance as 
 
TEL AVIV 00000362  002 OF 002 
 
 
revealed in the exit polls, Livni claimed that she should be tasked 
with forming the next government, and she reiterated her interest in 
a national unity coalition that would include Likud and Labor. 
While she quickly set to work on negotiating potential coalition 
agreements (her first appointment was with Avigdor Lieberman of 
Yisrael Beitenu), the lack of natural ideological allies means she 
likely faces an uphill battle.  Kadima has only two Zionist parties 
to its left (Labor and Meretz), whose seats together with Kadima's 
(44) fall far short of the 61 needed to form a viable coalition. 
Arab parties, which comprise 11 seats, also are unlikely to support 
Kadima, given Kadima's pre-election support of a Yisrael Beiteinu 
effort to ban two of the Arab parties.  Furthermore, Arab parties 
have never been invited (or asked to join) a Zionist coalition, 
though they did support then-PM Rabin's government in the 1990s. 
 
¶5.  (U) No matter the composition of the eventual coalition, Livni 
cemented her hold on the reins of the Kadima party by leading a 
strong charge down the stretch that overcame Likud's long-held lead 
in the polls.  While a possible stint in the opposition still could 
test Kadima's cohesiveness, the party's performance in the elections 
at least temporarily answers questions about the party's viability 
as a centrist party. 
 
LIKUD - SNATCHING VICTORY FROM APPARENT DEFEAT? 
 
¶6.  (SBU) Netanyahu's front-runner status led him to run a cautious 
campaign in which he avoided public debates with Livni but belittled 
her credentials in ways that may have offended women voters, and 
only belatedly fought for the votes of the more right-wing segment 
of the electorate.  Despite losing Likud's lead and what seemed a 
sure grip on the premiership, Netanyahu remains best-positioned to 
form the next government because the larger right-wing Knesset bloc 
affords him a broader range of possibilities than does Livni.  Two 
weeks ago SHAS announced its intention to join a Likud-led 
government.  Netanyahu also will turn to Yisrael Beitenu, which 
shares Likud's more hawkish views on the Palestinian question.  The 
Likud leader will make a play for Labor, too, as Netanyahu was 
careful to refrain from any criticism of Labor leader Ehud Barak, 
and he all but publicly declared that he would prefer to have Barak 
continue to serve as Defense Minister in his government.  Netanyahu 
can also use the interest of smaller parties interested in joining 
the government - United Torah Judaism, Jewish Home, and National 
Union - to leverage his bargaining power with the larger parties. 
 
 
LABOR - A TIME FOR REFLECTION 
 
¶7.  (SBU) The Labor party, which led Israel for a majority of the 
country's existence, sank to its nadir  in this election, winning 
just 13 seats and causing most party stalwarts to strongly advocate 
for a stint in the opposition.  These members, including Barak's key 
ally "Fuad" Ben Eliezer, view the party's long-term prospects as 
dire if it remains a junior partner in a coalition, and believe that 
only by remaining outside the government can they rebuild the party. 
 Barak, however, has only said that he will do what is best for the 
party and country, but made clear that he does not fear going into 
the opposition.  Despite these claims and his own statement that 13 
seats would undermine Labor's claim to the MOD, Barak often takes 
little heed of his party's wishes, and could serve as Defense 
Minister under Netanyahu or Livni if asked.  In such a scenario, he 
would likely cite as justification the threats from Iran, Hizballah, 
and Hamas and the need for the government to have a strong, 
experienced Defense Minister.  While there have been no calls to 
overthrow Barak, party bylaws require a party leadership primary 
within 14 months of a defeat in national elections. 
 
LIEBERMAN - A NEW POWER BROKER 
 
¶8.  (SBU) Lieberman's Yisrael Beitenu party vaulted Labor to become 
the third largest party in Israel.  Party activists voiced some 
disappointment in the results, as polls leading up to the election 
predicted that the party could win 20 seats or more.  Nonetheless, 
Lieberman is positioned to strongly influence which party will lead 
- and which parties will participate in - the government.  He has 
refused to play his hand thus far, and though he prefers to work 
with the right-wing, nationalist camp, he has not ruled out serving 
under Livni (but did not endorse her following their first 
post-election meeting today).  His dalliances with Kadima and Likud 
suggest he is likely to try to extract a high price for his party's 
participation in a coalition.  He pledged during his campaign to 
enact a law allowing civil marriages, which puts him on a collision 
course with SHAS, whose spiritual leader heaped stinging criticism 
on Lieberman in the final days of the campaign.  Lieberman also 
could opt to remain outside the coalition in order to continue to 
build up his base; he has his sights set on the premiership, with a 
goal of obtaining 30 seats in the next election, but he faces police 
investigations that could hamper his effort to get there. 
 
CUNNINGHAM