Cablegate: Israel Media Reaction

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SUBJECT: ISRAEL MEDIA REACTION

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SUBJECTS COVERED IN THIS REPORT:
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1. World Financial Crisis

2. Mideast

3. U.S./India Nuclear Agreement

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Key stories in the media:
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The headlines in today's media were split between the world
financial crisis, the Kadima primaries, and Iran's nuclear threat.

The media reported that Bank of Israel Governor Stanley Fischer has
hastily invited the heads of the country's banks to a meeting this
morning to examine their exposure to the world financial crisis and
ask how they will deal with the problem. The Tel Aviv Stock
Exchange's TA-100 index of the 100 largest public companies fell 1.2
percent yesterday, completing a drop of 6.8 percent over the last
two days. Bank stocks as well as companies controlled by Israel's
biggest tycoons bore the brunt of the losses. Speaking on Israel
Radio this morning, Finance Minister Roni Bar-On said that Israel
used to look up to America, but now it is protected from the world
crisis by being more independent.

The Kadima primaries, in which 74,000 registered voters are supposed
to participate, will take place between 10 a.m. and 10 p.m. today,
and the official results will be published tomorrow morning. The
media reported that the main contest in the Kadima primaries is
between FM Tzipi Livni and Transportation Minister Shaul Mofaz, who
ignore the other two candidates --- Internal Security Minister Avi
Dichter and Interior Minister Meir Sheetrit. Likud Chairman
Benjamin was quoted as saying in an interview with IDF Radio that
entering a Kadima-led government is like joining Lehman Bros.

The Jerusalem Post reported that David Wurmser, a key national
security adviser to Vice President Dick Cheney up until last year,
has told the newspaper that President Bush will not attack Iran to
halt its nuclear weapons program before his term ends. Wurmser's
comments came after a day-long roundtable this week in Brussels on
nuclear nonproliferation sponsored by the European Jewish Congress.

Leading media cited news agency reports quoting diplomats as saying
that yesterday the IAEA showed documents and photographs suggesting
Iran secretly tried to modify a missile cone to fit a nuclear bomb.
Tehran again dismissed the findings as forged.

The media reported that PM Ehud Olmert and PA President Mahmoud
Abbas met at Olmert's official residence. The Jerusalem Post quoted
Olmert spokesman Mark Regev as saying that Olmert believes that the
negotiations can work, and that the "door has not been closed." The
Prime Minister's Office said that the two will meet again after
Abbas's trip to the UN General Assembly. Israel Radio reported that
Livni or Mofaz could then be prime minister and impose their agenda
on the talks. Yediot quoted Spanish FM Miguel Moratinos as saying
in an interview with the Spanish TV station Antena 3 that the gap in
the negotiations between Israel and the Palestinians amounts to 70
sq km only.

Yediot reported that yesterday settlers called on their supporters
to come massively to the Yad Yair settler outpost, near the
settlement of Dolev, to prevent its evacuation by army and police.

Leading media reported that Gilad Shalit's parents have harshly
criticized the transfer of millions of shekels to the PA, and in
particular to Gaza, as tantamount to funding terror. Noam and Aviva
Shalit also said Israel is not applying pressure that would lead to
their son's release. The Jerusalem Post reported that Israeli
defense officials expressed concerned yesterday that Palestinian
terrorists will take advantage of Egypt's decision to open the Rafah
border crossing next week to infiltrate into the Sinai Desert where
they can join existing cells in targeting Israeli vacationers.

Media cited a new report by the World Bank, which some economic
improvement in the territories since May last year, when the
previous report was published. Ha'aretz quoted a bank official as
saying that while Israel removed a number of restrictions on
movement and access in the West Bank, these steps have been
limited.

Ha'aretz reported that the IDF's Judge Advocate General has rejected
the demand to increase the charges against the former commander of
the 71st battalion, Lt. Col. Omri Burberg, who was filmed in June
holding a bound and blindfolded Palestinian prisoner and ordering
one of his soldiers to fire a rubber bullet at the prisoner's leg.

The Jerusalem Post quoted the Free Gaza Group as saying that it
plans to dispatch a ship from Cyprus later this month filled with
doctors and European politicians to Gaza. The group had sailed two
boats into Gaza harbor last month.

Leading media quoted Hamas police as saying that 11 or 12
Palestinians, including a pro-Al-Qaida militant and a child, were
killed yesterday in overnight gun battles in Gaza.

Ha'aretz reported that the Arab League's foreign ministers met last
week, and that some pretty harsh criticism was directed at the
Palestinians.

The Jerusalem Post reported that a group of Iraq and Afghanistan
Veterans of America (IAVA) arrived in Israel this week for a
week-long tour. The newspaper reported that Paul Rieckhoff,
director and founder of IAVA, told the newspaper: "Israel is a close
ally of the U.S. and it was a great opportunity."

Ha'aretz cited a recent survey of Israeli scientists and other
experts commissioned by the Environmental Protection Ministry
according to which Israel will have to continue to use and oil and
coal for the vast majority of its energy needs.

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1. World Financial Crisis:
---------------------------

Summary:
--------

Eytan Haber, veteran op-ed writer and assistant to the late Prime
Minister Yitzhak Rabin, wrote in an editorial of the
mass-circulation, pluralist Yediot Aharonot: "It is hard to believe
this: Not long ago America was at the height of its diplomatic,
military, and economic power."

The independent, left-leaning Ha'aretz editorialized: "The United
States may be to blame for the [international financial] crisis, but
Israel needs to find solutions to problems it has created here."
E

Block Quotes:
-------------

I. "We'll Destroy the World to Its Very Foundation"

Eytan Haber, veteran op-ed writer and assistant to the late Prime
Minister Yitzhak Rabin, wrote in an editorial of the
mass-circulation, pluralist Yediot Aharonot (9/17): "It is
astounding to find out these days to what extent the world leader of
capitalism revives the Socialist motto: 'The world is about to
change its foundation; we are nothing, let us be all'.... It is hard
to believe this: Not long ago America was at the height of its
diplomatic, military, and economic power.... In a weak Western
world the Venezuelan President ... can mock the U.S. President,
Putin dispatch his planes to South America, and China break all the
rules of the business world."

II. "The Crisis Is on Its Way Here"

The independent, left-leaning Ha'aretz editorialized (9/17): "Israel
may be a bit player in the financial shake-up rocking America and
the entire world, but as a global player, Israel's companies are
clearly feeling the shock. In the short term, the effects are
losses from investments in U.S. financial instruments. The big
banks, Hapoalim and Leumi, and pension funds ... are exposed to
these losses. Every business in Israel is now trying to estimate
its exposure to the institutions that collapsed, or might. In the
longer term, we will feel other effects of the crisis such as a drop
in foreign investment and lower trade with the United States and
other countries. The reduction in such business is likely to spur
further losses for Israeli firms, as well as layoffs. It would be a
mistake to view this crisis as a twist of fate that we can do
nothing about. Israeli decision makers, in the government and
private sector, must strive to identify our exposure to the crisis
and reduce it. They must manage a responsible budgetary policy that
ignores the election season's rising populism, and conduct an
interest-rate policy that allows businesses to survive without
allowing inflation to rear its head. The United States may be to
blame for the crisis, but Israel needs to find solutions to problems
it has created here."

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2. Mideast:
------------

Summary:
--------

The conservative, independent Jerusalem Post editorialized: "On the
Palestinians, the Right has a record of criticizing without offering
alternatives, while the Left ignores the harsh realities on the
ground. Kadima must demonstrate a viable alternative."

The nationalist, Orthodox Makor Rishon-Hatzofe editorialized: "[Both
Tzipi Livni and Shaul Mofaz] embody a grave deterioration in the
level of Israel's national leadership."

Block Quotes:
-------------

I. "The Kadima Way"

The conservative, independent Jerusalem Post editorialized (9/17):
"Ignoring the Winograd Commission's recommendations and the
crippling effects of a slew of corruption investigations, Olmert put
his political survival ahead of country and party. Only recently
did he agree to go. With this kind of leadership, is it any wonder
that Kadima suffers from arrested political development? Many of
its 'members' -- in whose hands the fate of the nation may rest --
have come to Kadima not out of ideological conviction (though some
did during Sharon's tenure), but because they were recruited by the
four leadership candidates. More troubling still are those who will
be delivered to the polls by 'brokers' -- old-style political bosses
who trade the support of large sectoral voting blocs in the hope of
patronage. There's a strong case to be made for a centrist third
way party. But if Kadima wants to rehabilitate itself and provide
that possibility, it needs to address Israel's tough security
dilemmas with the right combination of diplomatic savvy and military
toughness. On the Palestinians, the Right has a record of
criticizing without offering alternatives, while the Left ignores
the harsh realities on the ground. Kadima must demonstrate a viable
alternative.... Thursday's outcome will help determine whether
Kadima is a third way, or another dead end."

II. "Two Failed Leaders"

The nationalist, Orthodox Makor Rishon-Hatzofe editorialized (9/17):
"[Both Tzipi Livni and Shaul Mofaz] embody a grave deterioration in
the level of Israel's national leadership. Tzipi Livni is a
mediocre woman, who has not left her footprint in any ministry where
she served.... Livni is also responsible for handling the diplomatic
side of the sanctions against Iran. The Winograd Commission has
shown that she is unable to initiate moves or take responsibility.
On the other side, Mofaz is the dominant security figure since he
was appointed chief of staff in 1998. The IDF, as seen during the
Second Lebanon War, is in great part the product of his policy and
decision over the past years."

---------------------------------
3. U.S./India Nuclear Agreement:
---------------------------------

Summary:
--------

Avner Cohen, a senior fellow at the United States Institute of Peace
and author of "Israel and the Bomb," wrote in the independent,
left-leaning Ha'aretz: "India's exemption could become a precedent
for a new approach to Israel's nuclear question."

Block Quotes:
-------------

"Why India and Not Israel?"

Avner Cohen, a senior fellow at the United States Institute of Peace
and author of "Israel and the Bomb," wrote in the independent,
left-leaning Ha'aretz (9/17): "After some arm-twisting and several
power struggles, the Bush administration proved to the world, and to
America itself, that it is still capable of imposing its will on the
international community when it comes to matters it considers
important. Two weeks ago, the U.S. and India forced the 45-nation
Nuclear Suppliers Group, responsible for overseeing global nuclear
trade, to grant India a special exemption from the body's laws....
India's exemption could become a precedent for a new approach to
Israel's nuclear question. For the first time, Israel is presented
with an opportunity for a new, different nuclear future on both the
international and regional levels. Israel is also boycotted, if not
treated as a leper, over the nuclear issue, despite the fact that it
has demonstrated more caution in relation to nuclear weapons than
India.... Why, then, is India exempt while Israel is not? Neither
the U.S. nor the other Nuclear Suppliers Group states have a
principled, ethical answer to the question. The answer, of course,
stems from political and pragmatic factors that are discomforting to
utter in public: India is on its way to becoming a superpower and
borders yet another emerging giant, China. India's place in the
global nuclear calculus is thus deserving of an upgrade....
Unfortunately, Israel does not know exactly what it wants when
dealing with this complex issue. In addition, it lacks a national
leadership that possesses a vision of what direction its nuclear
policy should take."

CUNNINGHAM

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