VZCZCXYZ0001
PP RUEHWEB

DE RUEHTV #0632/01 0761038
ZNR UUUUU ZZH
P 171038Z MAR 09
FM AMEMBASSY TEL AVIV
TO RUEHC/SECSTATE WASHDC PRIORITY 1000
RHEHAAA/WHITE HOUSE WASHDC PRIORITY
RHEHNSC/WHITE HOUSE NSC WASHDC PRIORITY
RUEAIIA/CIA WASHDC PRIORITY
RUEKJCS/SECDEF WASHDC PRIORITY
RUEAHQA/HQ USAF WASHINGTON DC PRIORITY
RUEADWD/DA WASHDC PRIORITY
RHMFIUU/CNO WASHINGTON DC PRIORITY
RHEFDIA/DIA WASHINGTON DC PRIORITY
RUEKJCS/JOINT STAFF WASHDC PRIORITY
RUEHAD/AMEMBASSY ABU DHABI PRIORITY 5162
RUEHAS/AMEMBASSY ALGIERS PRIORITY 1757
RUEHAM/AMEMBASSY AMMAN PRIORITY 5661
RUEHAK/AMEMBASSY ANKARA PRIORITY 5970
RUEHLB/AMEMBASSY BEIRUT PRIORITY 5200
RUEHEG/AMEMBASSY CAIRO PRIORITY 3707
RUEHDM/AMEMBASSY DAMASCUS PRIORITY 6012
RUEHLO/AMEMBASSY LONDON PRIORITY 2828
RUEHFR/AMEMBASSY PARIS PRIORITY 1038
RUEHRB/AMEMBASSY RABAT PRIORITY 9747
RUEHRO/AMEMBASSY ROME PRIORITY 7248
RUEHRH/AMEMBASSY RIYADH PRIORITY 2212
RUEHTU/AMEMBASSY TUNIS PRIORITY 6249
RUCNDT/USMISSION USUN NEW YORK PRIORITY 8287
RUEHJI/AMCONSUL JEDDAH PRIORITY 1077
RUEHJM/AMCONSUL JERUSALEM PRIORITY 1668
RHMFISS/CDR USCENTCOM MACDILL AFB FL PRIORITY
RHMFISS/COMSOCEUR VAIHINGEN GE PRIORITY
RHMFIUU/COMSIXTHFLT  PRIORITY

UNCLAS TEL AVIV 000632 
 
STATE FOR NEA, NEA/IPA, NEA/PPD 
 
WHITE HOUSE FOR PRESS OFFICE, SIT ROOM 
NSC FOR NEA STAFF 
 
SECDEF WASHDC FOR USDP/ASD-PA/ASD-ISA 
HQ USAF FOR XOXX 
DA WASHDC FOR SASA 
JOINT STAFF WASHDC FOR PA 
CDR USCENTCOM MACDILL AFB FL FOR POLAD/USIA ADVISOR 
COMSOCEUR VAIHINGEN GE FOR PAO/POLAD 
COMSIXTHFLT FOR 019 
 
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: 
-------------------------------- 
 
Mideast 
 
------------------------- 
Key stories in the media: 
------------------------- 
 
All media reported that the indirect talks between Israel and Hamas 
in Cairo have failed to achieve a breakthrough that would free Gilad 
Shalit in return for the release of hundreds of Palestinian 
prisoners.  HaQaretz surmises that, at a special meeting of the 
cabinet on Tuesday, outgoing PM Ehud Olmert will say that "Israel 
has drawn back its red lines as far as possible, but Hamas foiled 
the negotiations.  Under these conditions it is not possible to 
reach an agreement."  Major media reported that IDF Chief of Staff 
Lt. Gen. Gabi Ashkenazi is cutting short his visit to the U.S. in 
order to attend the meeting.  (HaQaretz quoted IDF sources as saying 
that AshkenaziQs action is not a reflection of optimism or pessimism 
regarding the chances that the prisoner exchange will take place and 
Shalit will be freed.)  After two days of intense indirect 
negotiations, Olmert's special envoy on the prisoner exchange, Ofer 
Dekel, and Shin Bet chief Yuval Diskin returned from Egypt last 
night.  At a briefing for Olmert and his advisers, the two blamed 
Hamas for what they called its unwillingness to show flexibility to 
reach an agreement.  Dekel and Diskin told Olmert that Hamas had 
actually toughened its stance and that it returned to positions it 
had held in the negotiations a year ago.  HaQaretz quoted sources as 
saying that at a certain point Diskin and Dekel sent over the final 
Israeli offer.  When the Egyptian officials returned with the Hamas 
offer the two Israelis were shocked to realize that the Islamist 
group had posed new demands.  HaQaretz quoted a source as saying 
that the two men had told Olmert: "They raised the demands of 
someone who did not wish for a solution.  The demands came out of 
nowhere and there was a huge discrepancy between that and things 
that had been discussed in the past."  The media reported that most 
of HamasQs demands revolved around several dozen prisoners that the 
group wants freed, and over the issue of whether the freed prisoners 
would be allowed to return home to the West Bank.  HaQaretz reported 
that a senior Egyptian source told the newspaper that there were 
significant difficulties in the negotiations.  The source said 
progress in the deal depends on "political decisions that Israel 
must make."  The source was quoted as saying that the main dispute 
was the number of prisoners released who would be expelled from the 
West Bank. Hamas appears to agree to the expulsion of only five 
prisoners on its list, while Israel wants to send dozens abroad. 
 
Yediot and Israel Radio reported that PM-designate Benjamin 
Netanyahu has asked President Shimon Peres to help him in the 
coalition talks with Kadima and the Labor Party.  Maariv reported 
that the stances of those parties have not changed.  HaQaretz 
reported that, according to the government coalition agreement 
signed between Likud and Yisrael Beiteinu, the government will be 
committed to toppling the Hamas regime.  The Jerusalem Post reported 
that the agreement puts Yisrael Beiteinu Chairman Avigdor Lieberman 
in charge of IsraelQs strategic dialogue with the U.S. on issues 
such as Iran.  Maariv reported that, in an interview with the 
Russian news agency Interfax, Lieberman advocated defense 
cooperation with Russia, in contradiction with the official Israeli 
position. 
 
The Jerusalem Post reported that EU foreign policy chief Javier 
Solana told reporters in Brussels yesterday that the EU may 
reconsider its links with Israel if the countryQs incoming 
government is not committed to establishing a Palestinian state. 
The Jerusalem Post quoted the Czech European Union presidency as 
saying yesterday that there is a Qstrong European call to withdraw 
from the Durban 2 conference if final documents do not take into 
consideration the EUQs suggestions. 
 
The Jerusalem Post reported that Netanyahu told representatives of 
some 30 independent charities and NGOs yesterday that he was ready 
to work together with them to beat the recession and continue 
helping them to provide assistance to the countryQs weakest 
populations.  Maariv reported that all major Israeli banks suffered 
losses following a reevaluation of securities and investments. 
 
 
-------- 
Mideast: 
-------- 
 
Summary: 
-------- 
 
Senior columnist Nahum Barnea wrote on page one of the 
mass-circulation, pluralist Yediot Aharonot: QThe choice that Israel 
is facing remains unchanged.... No matter what we do, we lose. 
 
Military correspondent Amos Harel and Palestinian affairs 
correspondent Avi Issacharoff wrote on page one of the independent, 
left-leaning HaQaretz: QThere are Hamas demands, which Israel is not 
prepared to accept.... The question arises whether Olmert's bureau 
did not raise, with the help of the media, exaggerated, and 
baseless, expectations. 
 
The conservative, independent Jerusalem Post editorialized: QIsrael 
must, at the very least, consider declaring a new, irrevocable and 
sacrosanct policy: There will be no more lopsided prisoner exchanges 
with terrorist organizations. 
 
Military correspondent Alex Fishman wrote on page one of Yediot 
Aharonot: QIf the Prime Minister indeed sends [negotiator] Ofer 
Dekel for another round, he will have to send him with a mandate to 
make another compromise on the issue of deportation [of released 
Palestinian prisoners]. 
 
HaQaretz editorialized: QEven in a narrow government [Netanyahu] 
will have to act as the leader of all the people and adopt a 
statesmanlike approach, just as he did as head of the opposition in 
the previous Knesset and as a candidate in the elections. 
 
Block Quotes: 
------------- 
 
¶I.  QWe'll Lose in Any Event 
 
Senior columnist Nahum Barnea wrote on page one of the 
mass-circulation, pluralist Yediot Aharonot (3/17): QThe gap between 
[IsraelQs and HamasQs] positions is too large, and the time that the 
Olmert government has left in office is too short.  Out of all the 
obligations that the Olmert government will be leaving behind for 
the Netanyahu government to inherit, releasing Shalit is the one 
that involves the greatest degree of heartache... . The choice that 
Israel is facing remains unchanged: Either risk the chance of Gilad 
Shalit's fate being the fate of [MIA] Ron Arad or risk the awful 
security damage that will be wrought by those dangerous prisoners 
once they are released.  No matter what we do, we lose... The life 
of an entire state cannot hinge on the fate of a lone soldier, no 
matter how precious he is. That said, Gilad Shalit's continued 
captivity by Hamas has become a national trauma, and it is the 
nature of national traumas to become strategic problems.  Netanyahu 
empowered Olmert to conclude the deal. He was prepared to put off 
the presentation of his new government, just so long as he might be 
absolved of the need to decide on this most awful of dilemmas. 
Nevertheless, it has been fated that he should be the one to have to 
deal with this problem. We need to wish him luck at finding the way, 
because the 1,000 days of Gilad Shalit's captivity are far-far too 
many. 
 
II.  "The Gaps Remain" 
 
Military correspondent Amos Harel and Palestinian affairs 
correspondent Avi Issacharoff wrote on page one of the independent, 
left-leaning HaQaretz (3/17): QYesterday's round of 
Egyptian-mediated talks did not blow up, but neither did it lead to 
an accord.... Although it was not expressly stated, it seems that 
Tuesday's special cabinet meeting will not discuss a deal at all, 
because there is no deal.  There are Hamas demands, which Israel is 
not prepared to accept.  In light of the above, the question arises 
whether Olmert's bureau did not raise, with the help of the media, 
exaggerated, and baseless, expectations.... The fate of Gilad Shalit 
has become a central topic of conversation in many Israeli homes 
over the past few days.  The question, Qwhat will happen to the 
boy?Q is heard everywhere.  The media is also enlisted almost fully 
in calling for the release of the soldier, marginalizing opponents 
to a swap.  Support for a deal is legitimate, but even those who 
support it should ask themselves if those calling for release at any 
cost will be around to share the blame when some of those freed 
commit new attacks. 
 
III.  QTwo Funerals and a Prisoner Exchange 
 
The conservative, independent Jerusalem Post editorialized (3/17): 
QBoth Jewish law and rational analysis should instruct Israel's 
cabinet to conclude that this country must under no circumstances 
release hundreds upon hundreds of murderous Palestinian prisoners as 
ransom for our captive soldier Gilad Shalit.... [Yet,] generals and 
spymasters are leaning toward jettisoning the no-nonsense strictures 
of security in order to reunite Noam and Aviva Shalit with their son 
Gilad. As the cabinet meets today, the hunt is on for the 
Palestinians who shot dead at close range two traffic policemen 
Sunday night near Masu'a in the Jordan Valley.... Granted, the 
terror war against the Jewish state will continue regardless of 
whether Israel does a prisoner deal or not.  And yet setting these 
incarcerated exemplars of Islamist values free would doubtless 
provide an immense boost to enemy morale; for, paradoxically, in 
Palestinian mythology shahids have a Qfuture,Q while those taken 
alive and sentenced to rot in Israeli prisons are monuments to the 
futility of waging war on the Zionist enterprise -- provided, that 
is, that they are kept in those prisons, with the possibility of 
their release arising only when the Palestinians make real peace 
with the Jewish people.  While the Shalits' campaign and the 
Olmert-Livni government fumble, Prime Minister-designate Benjamin 
Netanyahu's deafening silence is sending a message of acquiescence. 
Yet however the Shalit dilemma pans out, Israel must, at the very 
least, consider declaring a new, irrevocable and sacrosanct policy: 
There will be no more lopsided prisoner exchanges with terrorist 
organizations. 
 
IV.  QThere's Still a Chance 
 
Military correspondent Alex Fishman wrote on page one of Yediot 
Aharonot (3/17): QTheoretically, this government still has a few 
days in which it can make history and set a precedent, either way. 
But the announcement of the Prime Minister's Office last night, 
saying that Hamas had backed down from all agreements, already hints 
that Olmert chose the easy way: to accept Shin BetQs recommendation, 
to wrap himself in the alibi of having made a Qconcerted effortQ and 
to kick the Shalit affair over to the Netanyahu government.... it is 
highly unlikely that by the end of today's cabinet meeting there 
will indeed be a vote on any decision.  It is more likely that the 
Prime Minister will summarize the meeting in one of two ways: Either 
he will declare that the current stage of negotiations have ended 
and he leaves the matter to the next government, or he will announce 
that he is sending his representatives for another round in Cairo. 
If the Prime Minister indeed sends Ofer Dekel for another round, he 
will have to send him with a mandate to make another compromise on 
the issue of deportation.  The problem is that in order to recommend 
a compromise -- contrary to Shin BetQs professional opinion -- he 
needs a great deal of courage. 
 
¶V.  "Statesmanlike in a Narrow Government" 
 
HaQaretz editorialized (3/17): QLike Livni, who is steadfast in her 
positions, Netanyahu has a right to adhere to his principles.  Yet 
even in a narrow government he will have to act as the leader of all 
the people and adopt a statesmanlike approach, just as he did as 
head of the opposition in the previous Knesset and as a candidate in 
the elections.... Even though he came to power after the murder of 
Yitzhak Rabin, he did not act as a unifying leader.  Rather, his 
conduct exacerbated domestic strife.... The formation of a 
right-wing government does not obligate him to resume this approach 
even if there is pressure on him to do so from within the coalition. 
 The national challenges require him to focus and adopt a 
statesmanlike, unifying attitude rather than a sectarian-partisan 
approach. It is possible to enact reforms without resorting to 
incitement against adversaries.  A statesmanlike posture is 
especially important toward Arab citizens, against whom Netanyahu's 
senior coalition partner, Avigdor Lieberman, orchestrated a racist 
election campaign. 
 
CUNNINGHAM