Opportunity in Israeli crisis

The death throes of the current Israeli government may result in surprises on the diplomatic front.

The clock is ticking for the current Israeli government following Premier Ehud Olmert's decision to resign sometime after the September leadership race in his Kadima party.

While most pundits predict early elections in the new year, intervening months may see an acceleration of talks with the Palestinians - and perhaps Syria - as key coalition parties look to stave off a looming Likud electoral victory.

Olmert's government overcame a crucial hurdle early Monday morning, passing the annual national budget in cabinet after days of internal coalition wrangling.

Despite the damage done to his political cachet by the resignation pledge, the Israeli prime minister again demonstrated his mastery of political machinations, securing a narrow 13-12 majority for the budget in cabinet, after 15 hours of seeming deadlock, by warning that he would immediately submit his resignation unless the budget was approved.

Olmert had also threatened Defense Minister Ehud Barak with dismissal unless he withdrew a threat to jump the government over proposed budget cuts. The move allowed Barak to save face with the defense establishment through presenting himself as the protector of military disbursements, but he was not about to precipitate the collapse of the government given Labor's currently disastrous polling numbers.

A Haaretz-Dialog external pagepoll conducted last week showed Labor plumbing new lows, garnering only 12 seats in an election scenario where Barak was competing with Likud head Binyamin Netanyahu and the leading Kadima primary contender, Foreign Minister Tzipi Livni, for the premiership.

Importantly, Barak did no better in the poll against Livni's chief Kadima rival, Transport Minister Shaul Mofaz, whose hard-line positions on peace negotiations could be expected to turn off long-time Labor voters who cast their ballots in 2006 for Kadima.

It appears that voters have not forgiven Barak for his disastrous stint as premier from 1999-2001, which saw a series of policy zig-zags, the collapse of Syrian-Israeli and Palestinian-Israeli talks and start of the second intifada.

With the budget in the bag, all eyes now turn to the tight race for the Kadima leadership. Mofaz and Livni are the only candidates with a real shot at winning, though their competitors, Interior Minister Meir Sheetrit and Public Security Minister Avi Dichter, may sway the final vote through last minute political deals with the two front-runners. Sheetrit, who has a significant support network within Kadima, has made it clear that he opposes Mofaz's candidacy.

Livni maintains a healthy lead in most polls of party members and the wider public but has been lax in fostering support in party institutions and local support networks, which tend to decide tight Israeli party contests.

While a number of prominent Kadima leaders have expressed their backing for Livni, the Mofaz camp has a more developed support structure within the party and enjoys far greater influence within Kadima-controlled local councils, party branches and regional offices.

These offsetting strengths mean that the Kadima primary race is likely to go down to the wire and involve significant campaign spending that would make it difficult for the winner to move quickly to fresh national elections, where donors would have to be hit up for fresh funds.

Olmert will play a key role in deciding the length of time that the winning candidate has to form a new governing coalition, with an early resignation likely to precipitate a complete collapse and new elections.

Olmert may choose to play for time, continuing Turkish-mediated talks with Syrian officials, which are being conducted through his office, in an effort to garner a diplomatic coup from the ashes of his administration. Here the personal animosity between Olmert and Livni may play a part in stymieing progress, with Livni expressing criticism of the Syrian peace track.

Olmert is also maintaining his own channel with Palestinian Authority (PA) President Mahmoud Abbas in a bid to undermine Livni's role as head of the Israeli negotiating team with the Palestinians. Olmert's recent offer of a 93-7 percent West Bank territorial split was clearly designed to embarrass Livni and to force a rapid Palestinian denunciation.

Monday's release of 198 Palestinian prisoners was also conducted at the prime minister's behest. It was a clear message to the Palestinians that he remains in control and is the ultimate arbiter of progress towards what he hopes will be a relatively vague "shelf" peace deal. Livni favors a more comprehensive and detailed agreement but also backs delaying discussions on Jerusalem - a sine qua non for the Palestinians.

Monday's prisoner release was timed to coincide with the arrival of US Secretary of State Condoleezza Rice on a peace promotion mission. It was a shot across the bows of both the Hamas administration in Gaza and Barak with sporadic Egyptian-brokered talks between Barak's Defense Ministry representative and the Islamic movement on a prisoner swap having led nowhere in recent months.

The politicization of talks with Hamas, the PA and Syria was inevitable at some point, but the dragging of all three tracks through the mire of domestic Israeli political contest appears to bode ill for genuine progress on any front.

Nevertheless, with little to lose, the death throes of the Olmert administration, burgeoning US pressure, and likely limited tenure of any successor Kadima-led administration may yet function to promote the diplomatic achievement Kadima desperately needs to woo voters and secure future party viability.

Coming months may yet spring surprises.

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