1. A deceptive lull

At the cabinet meeting two days ago, Shin Bet chief Avi Dichter presented a pessimistic assessment of the situation: He said that the conspicuous decline in the number of terror attacks should not be attributed to a strategic shift by the Palestinian terror organizations, but to the success of Israeli interception efforts. Just six hours later, the terror curve was on the way up again: In addition to the murder of David Buhbut of Ma'aleh Adumim, Yosef Ajami of Jerusalem was killed on the Mevo Dotan-Hermesh road and a Palestinian suicide bomber struck at the Umm al Fahm junction, killing a policeman and injuring three others, one critically. And yesterday, a suicide bomber blew himself up on a bus in Tel Aviv.

Though Dichter noted the Palestinian leadership's apparent reassessment of the consequences of the intifada and the growing criticism of Yasser Arafat, he stressed that the Palestinian security organizations have yet to show that they are genuinely ready to confront the militant organizations or to forgo terror as a means of pressuring Israel. There is some evidence of an internal struggle within the ranks of the Fatah Tanzim, but Hamas or Islamic Jihad are not showing any signs of an attitude shift. Moreover, intelligence reports indicate that key figures like Mohammed Dahlan and Rashid Abu Shabak, in whom Defense Minister Benjamin Ben-Eliezer placed great hopes when pursuing the "Gaza and Bethlehem First" idea, are not coming up with the goods as expected; they're more concerned with protecting themselves than they are in seriously taking on the terror organizations.

At the Wednesday morning meeting, the general feeling was that even though the Palestinian leaders had not yet been induced to change their basic approach, Israel was at least managing to stem the onslaught of Palestinian terror. By that evening, some Labor ministers were referring to the lull in terror attacks over the past month as a missed opportunity.

Only a few voices in the government - Ben-Eliezer, Shimon Peres, Matan Vilnai and Dan Meridor - had called for Israel to take advantage of the period of relative calm by launching political initiatives. Sharon appeared to listen carefully to their position and to find it reasonable (at the cabinet meeting two days ago, he took the trouble to mention that, in principle, Israel accepts the Bush outline for an accord with the Palestinians), but he did not make any actual moves in this direction - as far as is known, at least.

Though the prime minister gave the impression that he was about to come out with a political initiative that would solidify the emerging cease-fire and promote Israeli-Palestinian dialogue, nothing of the sort happened. This week's terror attacks threatened to ratchet up the cycle of bloodshed once again, even though the security services described Wednesday's attacks as a random cluster of terror attempts that unfortunately were not foiled.

The Shin Bet and Army Intelligence still hold the view that as long as there is no shift in the militant groups' reliance on terror and as long as key Palestinian leaders are unwilling to confront them, there is no reason to ease the military pressure that Israel is applying in the PA territories. In fact, the IDF and the Shin Bet are recommending that Israel embark on a military action in the Gaza Strip similar in scope and intensity to Operations Defensive Shield and Determined Path, one that would strike a major blow to the terror organizations there. As they see it, until the terror infrastructure in Gaza is hit as hard as its counterpart in the West Bank, the chances of the Palestinian leadership adopting a different approach to the conflict are slim.

They also predict that any political initiatives undertaken by Israel at this point, when the Palestinian leadership is not acting in earnest against the terrorist infrastructure, will boomerang and end up enhancing Arafat's stature.

Meanwhile, the group of moderate ministers argues that any military action should be accompanied by a political plan. Otherwise, Israel will find itself in a vulnerable position when the conflict reaches the next stage. They're thinking about the international pressure hovering over Israel - which is kept at bay only by the United States - and the Bush plan that calls for the establishment of a viable Palestinian state, an end to settlements and occupation, and the determination of permanent borders. These ministers propose that a political initiative be launched now so that Israel may reap the maximum benefit from Arafat's current weakness.

But what does Sharon think? As usual, he tells everybody what he or she wants to hear while slyly negotiating the demands of coalition politics with an eye to maintaining his grip on power. This week, he managed a neat little accomplishment: He anchored the NRP in the government by giving it the infrastructure and tourism portfolios.

2. A bone for the NRP

A few weeks ago, when IDF forces withdrew from Bethlehem, Effi Eitam threatened to walk out of the coalition. After Sharon played down the importance of the decision ("Basically, all we did was move around some jeeps and armored personnel carriers"), Eitam reconsidered and retracted his ultimatum. This week, he got his reward: a substantial portfolio that could improve his party's position come election time. He was so keen to get the job that he ceded control over the Israel Lands Administration - a big mistake, politically speaking. But the NRP did get its palm greased: The settlement division of Hahistadrut Hatzionit, which is under its control and has thus far been concerned with establishing and bolstering settlements in the territories, was authorized to handle Negev communities as well.

The other day, NRP representatives were explaining that the party felt a surer affinity for the Sharon government once the prime minister made it clear that he had no intention of launching a comprehensive political initiative in the coming year, and that his aim was to achieve a stable cease-fire and to put off the political stage until after the elections.

In the coming months, Sharon will wait to see what develops on the U.S.-Iraq front and continue to implement the same approach to Palestinian terror. At most, he may throw Ben-Eliezer a bone by letting him remove some illegal settlement outposts. With this being Sharon's anticipated plan of action for the upcoming election year, the NRP leaders are confident that they did the right thing in signing a new coalition agreement.

The addition of the NRP certainly makes life more difficult for the Labor party chairman: For one thing, Ben-Eliezer's threats to leave the government (over disputes about the state budget) immediately lose some of their punch. But Sharon has also apparently secured the NRP's understanding for the need to dismantle a few outposts, thus depriving Fuad of the chance to make this issue the acid test for whether Labor remains in the coalition.

A couple of nights ago, aides to Ben-Eliezer confirmed that he was sticking to his plan to take down about 20 outposts and that he was holding talks about this with both the prime minister and the heads of the Yesha Council. If he does not obtain Sharon's consent, he will use his own authority to order the IDF to dismantle the outposts. Ben-Eliezer wants to be able to point to this achievement as he competes for the Labor Party leadership, and it seems that Sharon is willing to go along with it.

Ben-Eliezer needs this little feather in his cap because the main endeavor that he promoted - the Gaza and Bethlehem First plan - is turning out to be far less boast-worthy than it was cracked up to be. This is how the defense minister described his proposal to journalists about two months ago: "Both sides, Israel and the Palestinians, have exhausted the struggle. There is a change in the Palestinians' behavior. We've caught them at the critical moment. Perhaps what we are seeing here is the historic intersection of two processes: Israel knows that it has done all that it can do and the Palestinians have also done all that they can do. They realize that terror has failed and they're ready to work to reduce the violence. A spark of opportunity has been created to save the situation and keep from falling into the abyss."

To put it most charitably, this statement seems ill-considered when you look at how the Palestinian Authority has fulfilled its side of the bargain in the Gaza Strip: There has been no decline in terror attacks or any indications that the terror groups there are ready to desist from their activities. Even though Ben-Eliezer based his plan on an unofficial understanding with the aim of achieving an informal but effective cease-fire - rather than an agreement accompanied by binding conditions - the Palestinians refused to cooperate.

Only in Bethlehem have the Palestinian security forces made some evident effort to neutralize terrorist attempts. But that city was really amended to the plan as a postscript; the primary objective was for it to begin to work in Gaza.

Aides to the defense minister explained yesterday: "The plan's usefulness has not been thoroughly exhausted and, in any case, it contributes to the internal debate within the PA."

3. Why all the fuss?

At the most recent cabinet meeting, Matan Vilnai had a request: He asked to see some hard data on the water dispute with Lebanon. Vilnai said he couldn't understand what all the fuss was about and reminded the ministers that, for years, the Lebanese have been pumping large quantities of water from the Hazbani just a few kilometers away from the new water plant. He was not given a satisfactory answer since there was no one available to present the government with reliable information on the issue; the expert on the matter, Noah Kanarti, was in Washington for talks.

The public debate in Israel about the water dispute is dominated by the government's portrayal of it: The authorities in Beirut violated international protocol by unilaterally acting to divert the waters of the Wazzani, which feeds into the Hazbani. There is no justification to their demands that Lebanon's water rights be increased by the use of the river. They chose the present time to do so because they believe that, given the outlook for an American-Iraqi conflict, Israel will refrain from responding with force to the diverting of the river. Beirut is pursuing this provocation with the encouragement, if not pressure, from Hezbollah, which by doing this serves the interests of certain Arab elements outside Lebanon.

This week, Vilnai insisted on a different appraisal of the situation: He believes that Hezbollah is proceeding with caution and does not wish to intensify the conflict with Israel; he thinks that Hezbollah is narrowing the focus of its aggressive moves to the Sheba Farms area alone, to which it makes formal claims.

Vilnai feels that Sheikh Nasrallah learned the lesson of Arafat's failure in the intifada and that he is wary of doing something that would induce Israel to respond in a way that would bring ruin to the Lebanese people. Therefore, Vilnai is skeptical of the connection that his colleagues (particularly Shimon Peres) see between the construction of the Wazzani pumping facility and Hezbollah plots. In any event, he asks, is Israel really going to go to war over a reduction in the quantity of water received by four kibbutzim in the north?