US embassy cable - 04TELAVIV1941

C O N F I D E N T I A L SECTION 01 OF 02 TEL AVIV 001941 
 
SIPDIS 
 
E.O. 12958: DECL: 03/31/2014 
TAGS: PGOV, IS, GOI INTERNAL 
SUBJECT: LABOR'S ENTRY TO COALITION COULD HINGE ON 
INDICTMENT DECISION 
 
REF: TEL AVIV 1906 
 
Classified By: Ambassador Daniel Kurtzer for reason 1.4 (b) and (d). 
 
1.  (C) Summary: In the face of a possible bribery indictment 
against PM Sharon, speculation has begun over whether Labor 
will put on hold any plans to take the place of the 
right-wing parties in Sharon's coalition if they eventually 
bolt over Gaza withdrawal (reftel).  Before the State 
Prosecutor delivered her recommendation to indict Sharon on 
March 28, MKs both in and outside Labor treated a unity 
government as imminent if and when Sharon's disengagement 
plan wins Cabinet approval, since leaders of both right-wing 
coalition parties had said they would then leave the 
coalition.  One Labor MK told Ambassador Kurtzer as recently 
as March 23 that there are no substantive barriers, including 
on the nature of PM Sharon's disengagement plan, that would 
hold Labor back from joining with Likud.  PM Sharon's 
announcement that he now intends to present his plan to Likud 
voters for approval, probably in mid-May, and only then 
present it to the Cabinet, puts off at least for some weeks 
the rightists' decision point.  With reports now indicating 
that AG Menachem Mazuz could take two months to reach an 
indictment decision, Labor could still find itself in the 
awkward position of having to decide whether to join with 
Sharon before the AG decides whether to indict him.  While 
Labor leaders are remaining judiciously silent on the 
prospects of a unity government, they must now weigh the 
costs of joining a government headed by a tainted prime 
minister who says he is determined to take the major step 
that Labor has endorsed for years.  End summary. 
 
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Pre-Arbel Announcement, MKs Saw Labor/Likud Unity Imminent 
--------------------------------------------- -------------- 
 
2. (C) Before State Prosecutor Edna Arbel recommended to AG 
Menachem Mazuz March 28 that he indict PM Sharon on bribery 
charges in the "Greek Island Affair" (reftel), Labor MKs 
predicted Labor would join the Likud government as soon as 
the right-wing National Religious Party (NRP) and National 
Union (NU) bolt the coalition.  NRP and NU leaders had said 
they would do so to oppose Sharon's controversial Gaza 
disengagement plan, and while they have offered various 
timing scenarios, observers looked for a walkout immediately 
after a Cabinet approval of the plan.  MK Isaac Herzog 
(Labor) told Ambassador Kurtzer on March 23 that 16 of the 19 
Labor MKs would agree to join a Likud government, with Labor 
MKs Amram Mitzna, Yuli Tamir, and Avraham Burg the only 
hold-outs.  MK Burg and Shinui MK Eti Livni both told poloff 
in separate conversations that Labor was eager to join with 
Likud.  Echoing this assessment from the Likud side, Deputy 
PM Ehud Olmert asserted in a March 26 radio interview that he 
is "almost certain" that "if political conditions are ripe 
the Labor Party will join the government." 
 
3.  (C) In fact, Labor is so anxious to join with Likud, 
Herzog told Ambassador Kurtzer on March 23, that there are no 
real substantive issues that block its agreement to join. 
Labor would even go along with a a withdrawal plan for Gaza 
settlements only, despite Labor's desire for inclusion of 
West Bank elements too, Herzog said.  Herzog went so far as 
to forecast which ministerial seats Labor would receive if it 
joins the coalition.  Peres, he predicted, would promise 
seats to former unity government Defense Minister Binyamin 
"Fuad" Ben-Eliezer, Dalia Itzik, Chaim Ramon, Shalom Simhon, 
and Avraham Shochat and Peres would seek the foreign minister 
seat for himself. 
 
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Labor on the Verge 
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4.  (C) State Prosecutor Arbel's recommendation to indict 
Sharon, however, could complicate Labor's decision to join 
with Likud.  For now, Labor's leaders are remaining 
judiciously silent.  Only a handful of Labor MKs have so far 
commented on Arbel's recommendation, leaving a party view on 
the matter anything but clear.  Labor MKs Yuli Tamir and Ofir 
Pines-Paz called on the PM to suspend himself until his name 
is cleared (reftel), while Labor faction chair Dalia Itzik 
called on her Knesset colleagues to reserve judgment until 
after the AG decides on whether to indict.  Labor MK Burg 
reportedly on March 29 called on Peres to announce that Labor 
will not join with Likud while Sharon is involved in 
scandals.  Without providing the names of its sources, the 
major Hebrew daily "Ma'ariv" reported on March 30 that 
Arbel's indictment recommendation "caused the immediate 
suspension of a secret agreement recently reached by Sharon's 
aides and Labor Party representatives," identified in the 
report as Sharon COS Dov Weissglas on the Likud side and MK 
Chaim Ramon on the Labor side.  According to the unsourced 
Ma'ariv article, which Peres and a Sharon spokesperson have 
since denied, Likud and Labor teams discussed a division of 
ministerial portfolios similar to that recounted by Herzog 
above. 
 
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Sharon May Push the Envelope 
---------------------------- 
 
5.  (C) Labor leaders clearly face the difficult situation of 
having to choose between joining a government headed by a 
tainted prime minister or not joining and thereby sacrificing 
a chance to realize a Gaza withdrawal, a policy Labor has 
endorsed for years.  Sharon's decision to hold a Likud-wide 
referendum, probably in mid-May, and only later to submit the 
withdrawal plan to the Cabinet, puts off for some weeks the 
rightist coalition partners' decision point on leaving, and, 
by extension, Labor's decision point on joining.  At the same 
time, reports now indicate that AG Mazuz is looking at two 
months to reach a Sharon indictment decision.  Labor may thus 
still have to make its decision on joining the coalition 
without the benefit of the AG's decision. 
 
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KURTZER