Egypt has shifted to a more cooperative mode viz. the United States after Mubarak learned the tough way that you can’t play both ends of the game and win (see 23 October report). The anti-West crowd aimed its guns at the Sainsbury supermarket chain and drove them out of business in Egypt. This also knocked out any hopes for foreign investment.
I know I have written some tough stuff about Israel the last few months; I have talked about a system rotten to its core and acts of self-destruction. But if any of you remember a more pathetic situation any time in the past 52 years to what is going on right now inside that country, please advise. The situation is so unstable at this point that I don’t feel comfortable trying to figure out things a week ahead in that country. I have been editing this document for 2 weeks and I have this sense that no matter what I release today will be proven wrong within 3 days. However, certain trends are definite. Remember I wrote in October that the Internet sector in Israel was a bubble waiting to burst? We now find out there was “zero” seed financing in Internet and software application companies in the 4th quarter; 78 VC firms pulled out. You can verify that statistic with Globes, the country’s financial newspaper.
Let’s talk election politics: Israel votes in 3 weeks and the man who sparked the latest Intifadah and quashed any remaining optimism is about to be elected as prime minister. Israeli Arabs are likely not to vote in the elections (sees 22 July speech text) and the Left is virtually backing Sharon with blank ballots just to get Barak removed as head of the Labor Party (23 October report) with an eye toward a second election soon afterward. Some of the Leftists are in denial and are trying to back Peres. Sharon and Barak agreed that Netanyahu was a menace to society and cooperated to the extent that this snap election was called just to keep him away; they just didn’t count on the fact that everyone hates Barak as much as they do. These rather unprecedented actions by so much of the Israeli electorate (Arabs, Russians, Leftists) demonstrates the extent of alienation in the country (23 October). Over 20% of voters in the country is threatening to not vote or to vote with blank ballots.
Will Peres replace Barak in the elections? I think not despite the massive and harmful rumors and planted stories to the contrary by people in Barak’s own party and the Likud trying to sabotage him and settle scores (by the way, same goes for Netanyahu and Sharon). If you were a guy in the Labor Party trying to get ahead such as Haim Ramon, would you want Peres to win? If so, you’d then have to unseat him and he’ll never move aside as head of party voluntarily. If he wins, he will definitely be unpopular and lose the next election that I am sure will take place within a year (remember that whoever wins is stuck with this ungovernable Knesset; Netanyahu was smart enough not to run right now). If he loses, then Ramon can step in and take over the party much faster and run against Sharon. Ramon and Barak hate each other; the two met this past week and Ramon refuses to appear in any Barak TV ads. I don’t care what is said about Shas supporting Peres; they are lying to him because they publicly backed him earlier this year for President and voted against him secretly; the Shas voters are voting for Sharon no matter what. (I believe that the stories that Shas is cool toward Sharon are being orchestrated to (1) not drive Russians toward the secular Left as they did last election when Shas embraced Bibi; (2) hedge its bets in case Peres actually does run and win.) So are 95% of religious voters and the Arabs really don’t like Peres; in fact, that’s why he lost to Bibi and I believe they will not enthusiastically vote for him now. I also know that other leaders in the Middle East don’t trust Peres. Peres also will never deliver the masses of Israeli into any peace agreement. There is no good longterm strategic reason to back Peres, a man who could run against himself and still lose. The only one pushing Peres is his protege Beilin, who is a visionary but has no pull in the country except among his own. If it happens, in my opinion, it’s a mistake in the long term for the Labor Party if Peres replaces Barak and wins the race. Anyone who is prime minister next month will lose his position within a year. Two other reality bites points: The Labor Party has no organization in place if Peres becomes the candidate and they don’t have the money to put an advertising program in place at the last minute with a different candidate. Sharon is spending two-thirds of his budget on get-out-the-vote and this will win it for him.
Sharon is being dragged into making commitments before the election and this will haunt him later. The seeds of disillusionment within Likud and among his other right-wing partners are being planted now.
The important point is that Sharon and Barak are coordinating; whoever wins has probably pledged to take the other into his government. No matter who wins, the Left will be frozen out.
It is conceivable that under Sharon, the PA will fall apart and hasten the creation of a new leadership; it is already losing control. Sharon wants Arafat out and he will likely take steps to encourage this with the help of local Palestinians who also want him and his Tunisia crowd out. It might be more radical at first, but might produce a necessary shakeout that works well with Sharon’s successor.
Bush told Palestinians they will get a better deal from him and that’s why talks were suspended until Bush was inaugurated. A last stab at Clinton. I don’t see anything coming out of the marathon talks set to begin today in Taba; the Israelis have became so cynical that Barak’s polling told him that a peace deal now would actually harm his electoral prospects but the appearance of talks is good both for Barak and Arafat, the latter of whom is sensitive that he will be blamed for Sharon’s victory if he appears intransigent now. Arafat can’t compromise now because he never prepared his public for it.
History will show that Barak’s main tactical blunder was that he was not honest enough to tell the Israelis up front the concessions to which he was going to agree. Barak said as much yesterday. (See 22 July speech text.) Instead, he kept appearing to concede. Maybe he really didn’t know the price he was going to pay (and didn’t understand that offering it would be suicide as it wasn’t enough to be accepted), but I think he knew how far he might go and just felt he couldn’t say so out loud for fear of maintaining his political position (and thought he could convince everyone that his offer should be accepted). In the end, he wound up offering almost the full price which wasn’t enough and his negotiating partners felt they could get more, the Israelis saw a man without a negotiating position bringing back nothing, and meanwhile Barak kept zig-zagging all over the domestic policy map. He would have been better off stating a clearcut policy up front and sticking to it rather than trying to convince everyone that the secret to the universe was inside his head especially after people realized there was nothing inside his head worth knowing. Both he and Bibi suffered the same fate – they each were democratically elected leaders who above all feared their own publics and were consumed by them. Leaders have to lead their nations and prepare them for unpleasant truths. Arafat needs to do so as well if he ever wants to move from revolutionary to statesman
Another lingering legacy for the Israelis: Barak totally ignored Congress and American Jewry. Bibi and Rabin were rather lax as well. This problem is coming home to roost now that the White House, where all eggs were kept, will not be nearly as friendly. Until the Israelis start sending over diplomats who speak English and know how to work the halls (as opposed to political hacks who were sent by David Levy because they were his buddies), they will have an influence problem in DC.
The recent Jerusalem Rally: This requires some hard thinking. It was a good show but it was fully paid for and organized by Americans, both Jewish and non-Jewish. It was mostly attended by young religious people, the majority of whom were from outside the city and were transported by over 100 busses. There was no meaningful evidence of participation from other sectors of Israeli society. If the Right wanted to show its vocal support, the rally succeeded. If its purpose was to show broad support by Israelis across the political spectrum, it failed and this is also because the organizers limited speakers to those it wanted to stage. Fact is that the dogma of a united Jerusalem is no longer taken at face value by 80% of the country and they are not exactly getting out on the streets to stand up for it. I still expect the majority of the country to accept a compromise along the lines I have previously published once people believe that a deal is real. Actually, this rally hurt the cause of a united Jerusalem because it essentially took an issue that used to be national consensus and made it hostage to sectarian politics. It also brought to light the hypocrisy of Ehud Olmert, the city’s mayor, as well as other Likud members who were proven to be much more forthcoming on the issue than they were publicly stating.
John Ashcroft: Attorney General Nominee by Bush: It is relevant that large sectors of the country are offended by him, especially since he is the chief law enforcer and people will say that if he is the law enforcer then it shows the country and its law enforcers do not care about them. Bush put him up because he owes a big one to the Christian Coalition whose poster child he is. A president deserves his own man as attorney general but the post is also the face of justice to the public and must be a person people will respect. For a man who promised to unite and not divide, Ashcroft was a poor choice. Nevertheless, his nomination is likely to succeed due to senatorial courtesy and the fact that he is qualified for the job. His record also shows an ability to put his feelings in check and to uphold the law. A good amount of the criticism of him seems a bit exaggerated when you study the record carefully. The Democrats may be just as happy to have him serve as a target over the next 2 years so that they will have something to run against when they try to get advantage in Congress in the next election cycle. Bush could have avoided this with a less controversial nominee.
Bush Inauguration: I utterly opposed his election but I am still proud watching his inauguration. As an American, I want my president to be legitimate and for him to succeed. Our inauguration is a good and necessary ceremony; it is a vital national interest to give the president and the country a feeling of a clean start every once in a while and I was quite pleased that the Clinton affair was ended yesterday with a plea bargain. Bush has done a good job this week coming across as a real person in a way Gore never managed to do; his speech struck the right chords. His first legislative proposal is due Tuesday on education; I hope it will be popular. He needs some early victories on the bipartisan front; he will get nowhere picking fights now. Good vibes may also make the difference between a recession and a soft landing for the US economy.
Iraq succession: Saddam’s son Qusai will take over and the West will acquiesce because there are no better alternatives on the horizon. Nothing will really change except that there will be a return to business as usual. There is a lot of money to be made here and all sides just want to get on with it. I expect changeover within 6-12 months unless of course Saddam dies before then.
American Money: How many of you have lost money at the grocery or post office because the either you or the cashier mistook the value of the dollar bill? I strongly dislike the new American bills and coins. All these different quarter coins confuse me; the dollar coin is indistinguishable from a quarter at night; the various-denominated dollar bills all seem to look alike and they have a monopoly-money appearance to them. I am told it took a committee 2 years to choose these designs. Tells you the value of committees….
