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from Stratfor.com
U.S. Secretary of State Condoleezza Rice is in the Middle East, talking to Israeli and Palestinian leaders. The Syrian-Israeli dance has quieted down, with everyone waiting for the next shoe, if any, to drop. Suddenly all of this has been overshadowed by intense rumors of charges being filed against Israeli Prime Minister Ehud Olmert over alleged business dealings and bribes. Olmert has dismissed these rumors and has said that he will continue his conversations with Rice. As Olmert put it, “There are all kinds of rumors going around from ‘those in the know.’ And these rumors are grave and malicious.”
Police investigators met with Olmert for more than an hour on May 2. The newspaper Yedioth Ahronot reported that the interviews concerned suspicions of bribery. This is not the first series of investigations about Olmert. An investigation of his role in a banking scandal ended in November 2007, with the police saying they had insufficient evidence for an indictment. The renewal of the investigation, plus leaks from police sources about the seriousness of the charges, has generated substantial interest within Israel and has set the political system in motion. The Likud Party in particular will take advantage of the situation. Silvan Shalom, a Likud member of the Knesset and former foreign minister, said on Israeli Radio, “We will act with all our determination to topple the government. The Israeli government is drowning in corruption.”
We have no idea whether the charges are true or not. Rumors about Olmert have been proven false in the past, and leaks from the police might well be malicious, as Olmert charges. But even if the rumors are untrue – and we get the sense that these rumors might prove truer than those in the past – this poses a tremendous problem in the region.
Following the 2006 conflict with Hezbollah in Lebanon, which was widely perceived as a defeat in Israel, Olmert held on because of a perceived lack of alternatives. Likud, whose leader is Benjamin Netanyahu, has a strong but not a wide base since former Prime Minister Ariel Sharon split the party. The Labor parties by themselves cannot govern. The center is held by the Kadima Party, whose founder – Sharon – is in a coma. If Olmert remains in office dogged by rumors of impending arrest, or leaves office, the alternatives in Kadima are limited. Israel does not have a leader admired by a broad spectrum of the electorate. And as with American presidents, living under investigation tends to lead to paralysis. So, if Olmert stays without quick resolution, he will have even more trouble governing than he had before. If he leaves, the process for replacing him will be long, divisive and uncertain.
That means Israel’s ability to negotiate anything as radical as an agreement with Syria will be severely hampered, as will its ability to reach an agreement with the Palestinians, assuming such an agreement was actually possible in the first place. It would leave in place the current default policies, which have not been decisive in solving Israel’s various problems.
Assuming that our read on the Syrian opening is valid, it is difficult to imagine anything more damaging than crippling Olmert. The situation requires a strong Israeli government – and Olmert’s government does not resemble Hercules. Now, the investigation could be resolved extremely quickly with a clean bill of health. But our guess is that it won’t. The prosecutors backed off once over the banking scandal. Our bet – not based on knowledge – is that the prosecutors did not interview the prime minister on a second round of charges without having some confidence in their case. Otherwise they would be accused of weakening Olmert for frivolous reasons.
Our best guess is that this is real and that it will throw the Israeli political system into crisis for an extended period, shutting down major initiatives of all sorts.
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