VZCZCXYZ0000
PP RUEHWEB

DE RUEHTV #0704/01 0841554
ZNR UUUUU ZZH (CCY AD46FEAE MSI7887-695)
P 251554Z MAR 09
FM AMEMBASSY TEL AVIV
TO RUEHC/SECSTATE WASHDC PRIORITY 1143
INFO RUEHXK/ARAB ISRAELI COLLECTIVE PRIORITY
RHEHNSC/NSC WASHDC PRIORITY

UNCLAS TEL AVIV 000704 
 
SENSITIVE 
SIPDIS 
C O R R E C T E D COPY CAPTION 
E.O. 12958: N/A 
TAGS: PREL PGOV IS
SUBJECT: NETANYAHU SECURES A COALITION 
 
REF: A. TEL AVIV 675 
     ¶B. TEL AVIV 646 
     ¶C. TEL AVIV 580 
 
¶1.  (SBU) SUMMARY.  Prime Minister-Designate Binyamin 
Netanyahu saw his coalition cemented the evening of March 24 
when the Labor party's Central Committee voted to join the 
next government.  Netanyahu also has agreements with Yisrael 
Beitenu (YB) and SHAS, giving him a 66-seat coalition. 
Netanyahu is slated to present the government to the Knesset 
on March 30 and take office that day.  The agreement with 
Labor helps create a less rightwing coalition, and gives the 
incoming premier the Minister of Defense (Labor leader Ehud 
Barak) that he had sought even before the elections.  The 
coalition agreements, however, will present Netanyahu with 
other problems.  He must now pick through what few 
ministerial portfolios remain to placate members of his own 
party.  He also must strive to maintain a balance that will 
keep Labor satisfied while not alienating his partners on the 
right.  That delicate balancing act has already begun, as 
reports of a deal with YB for further building in the E-1 
corridor appeared the same day as Netanyahu declared he 
would, in fact, conduct peace talks with the Palestinians. 
Barak, for his part, at least temporarily beat back his 
challengers and will have an array of spoils to withhold or 
reward them with.  End Summary. 
 
------------------------------------- 
NETANYAHU SECURES A MAJORITY, 
LOOKS TO PRESENT GOVERNMENT NEXT WEEK 
------------------------------------- 
 
¶2.  (SBU) The Labor party (13 seats in the Knesset) vote on 
March 24 to join Netanyahu's government gave Netanyahu a 
66-seat coalition in the 120-member Knesset, as he had 
earlier signed agreements with YB (15 seats) and SHAS (11 
seats).  The Likud leader the following day was set to sign a 
deal with the Jewish Home party, which would expand his 
coalition to 69 seats.  Press reports quoting unnamed sources 
close to the Likud leader say he will present his government 
to the Knesset on Tuesday, March 30, at which point the 
legislative body will conduct a vote of confidence in his 
 
government and he and his ministers will officially take 
office.  In the interim, he reportedly will resume talks with 
United Torah Judaism, which could bring him an additional 
five seats, but these discussions will not push back 
Netanyahu's desired timeline. 
 
----------------------------------------- 
GOVERNMENT COMES WITH BENEFITS, HEADACHES 
----------------------------------------- 
 
¶3.  (SBU) The agreement with Labor gained Netanyahu not only 
a government, but provided him additional international 
legitimacy by having the nominally dovish Labor party on 
board what would otherwise be a solid rightwing government. 
It also gives Netanyahu a Defense Minister in Barak whom the 
public largely trusts as Israel faces tough decisions on how 
to confront Iran's nuclear ambitions, as well as the 
continuing rocket attacks from the Gaza Strip and potential 
threats from Hizballah and Syria.  Additionally, Labor's 
inclusion in the government dilutes some of the bargaining 
power of Netanyahu's rightwing partners.  It is not 
coincidence, for example, that Jewish Home apparently gave up 
its demand for the Education Ministry immediately after 
Labor's deal was approved. 
 
¶4.  (SBU)  That said, Labor's entry into the coalition poses 
three key challenges to Netanyahu.  First, will Netanyahu 
actually have Labor's full support?  At least seven Labor MKs 
stridently opposed the agreement with Netanyahu, and it is 
possible some of these MKs will operate as a dissident 
faction or split off from Labor entirely.  Second, the 
incoming premier will have to mollify as many as 11 members 
of his own party who had expected to be ministers.  With 
Labor gaining five ministerial positions Netanyahu has only 
six portfolios remaining, none of which rise to the level of 
a senior cabinet position.  One key factor working in 
Netanyahu's favor is that opponents in the party are likely 
to be chastened by Likud's last rebellion, which led to the 
party garnering only 12 seats in the 2006 election.  With 
Tzipi Livni and her Kadima party already having won a 
plurality in the February elections, and standing ready to 
pounce at another electoral opportunity, disappointed Likud 
MKs are likely to swallow their pride for now.  The third 
challenge for Netanyahu will be maintaining a middle ground 
between Labor and his rightwing partners.  Already Netanyahu 
has begun the delicate dance, telling a group of Israeli, 
Arab, and foreign businessmen today that he will engage in 
peace talks with the Palestinians, while unconfirmed reports 
leaked that he had reached a secret agreement with Lieberman 
to commence  construction in the E-1 area that would threaten 
the contiguity of Palestinian population centers in the West 
Bank. 
 
--------------------------------- 
BARAK PREVAILS AGAINST PARTY FOES 
--------------------------------- 
 
¶5.  (SBU) In the Labor vote that provided Netanyahu his 
majority, the party's Central Committee by a 58 to 42 percent 
margin opted to approve Barak's agreement to enter the 
coalition.  The days and hours leading up to the vote proved 
acrimonious, as the party appeared split over which course -- 
joining the government or playing second to Kadima in the 
opposition -- would prove the death knell of the once-proud 
party.  However, a high voter turnout, along with strong 
backing from Histadrut labor federation chairman Ofer Eini, 
helped Barak secure the victory.  Notably, the Central 
Committee vote also gives Barak the sole discretion in 
appointing Labor ministers to the new government.  How Barak 
uses that power -- will he appoint foes as well as friends? 
-- will help determine whether the party rift will heal or 
widen. 
 
¶6.  (SBU) Though bringing in a relatively small number of 
seats, Barak has significant spoils to spread around.  Israel 
media reports that Labor is slated to get the Defense 
Ministry, Industry and Trade, Agriculture, and Welfare 
ministries, along with a ministry without portfolio, two 
deputy minister positions (one in the Ministry of Defense), 
and a rotating chairmanship of the powerful Foreign Affairs 
and Defense Committee in the Knesset.  The agreement also 
gives Labor and Histadrut a formal say in economic decisions, 
provides for increases in pensions and unemployment benefits, 
and stipulates that the Defense Minister will be a full 
partner to the limited forum of Cabinet decisionmakers. 
 
********************************************* ******************** 
Visit Embassy Tel Aviv's Classified Website: 
http://www.state.sgov.gov/p/nea/telaviv 
********************************************* ******************** 
CUNNINGHAM