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The deputy head of the Mossad, N., a likely candidate to replace the chief of Israel's external intelligence organization, Meir Dagan, in the fall of 2008, has stepped down after a falling-out with his boss.

To fill the unexpected vacancy, Dagan restored his former deputy, T., to the post. T. had been "on loan" to the Israel Defense Forces.

This development nearly guarantees that Dagan will recommend him as his replacement, although there is no certainty that the prime minister will carry through with the appointment.

Former prime minister Ariel Sharon appointed Dagan in October 2002 to replace Ephraim Halevy, ignoring Halevy's recommendation that his deputy, Ilan Mizrahi, succeed him.

T.'s identity has been made public in the past, but his return to his former position in the Mossad has led the censorship authorities to reimpose restrictions on revealing his name. This contradicts the precedent set by Benjamin Netanyahu's government, which in 1998 announced the appointment of Major General Amiram Levine as the (first) deputy to Halevy.

Originally, Dagan's tenure was set at five years and was extended a year by Prime Minister Ehud Olmert. Upon his appointment, Dagan promised Sharon to qualify two internal candidates as possible replacements at the head of the organization.

Personal request from Sharon Dagan had planned for T. and another senior officer, H., to undergo a period of evaluation as possible candidates to head the Mossad. Hadas was a candidate for the top job at the agency, along with Dagan, Mizrahi and Major General Shlomo Yanai. H. stepped down from his position as department head at the Mossad following Dagan's selection, and returned after a personal request from Sharon.

T. and H. were appointed to positions between department heads and the head of the Mossad, and they had been expected to switch roles halfway through their tenure.

H. had a falling-out with Dagan, and he retired from the organization once more. T. was then sent as an instructor at the National Security College and served as an adviser in the operations branch at the General Staff. He was replaced by the former head of Tzomet, the branch that runs agents.

In recent years N. excelled in two particular tasks he was assigned - the diplomatic efforts against Iran's nuclear ambitions, and intelligence on Hezbollah. Under N. the relations between Mossad and the IDF also improved. Traditionally, the relationship between the Mossad and Military Intelligence has been tense.

The working relations between Dagan and N. had been considered to be good, but they hit a wall of late. Last week the Mossad head and his deputy concluded that they can no longer continue performing as a team.

Version vs. version According to one version of events, N. was tired of the atmosphere that had developed and resigned.

Another version claims that Dagan decided to cancel N.'s appointment.

With the departure of N., T. was recalled immediately from the IDF to fill the void, and he has effectively become the sole internal candidate to replace Dagan in 18 months.

T. is considered to be affiliated with Foreign Minister Tzipi Livni. During the raid on Entebbe in 1976, he was part of the forward command group of Yonatan Netanyahu.

The head of the Mossad is appointed by the government following a recommendation by the prime minister, who is his immediate boss. The appointment requires the approval of the Senior Appointments Advisory Committee, headed by retired judge Yaakov Terkel.

Traditionally, IDF generals have an advantage in the appointments, and an internal appointment to head the organization is made only if there is some difficulty bringing in someone from the General Staff.

Shavit was appointed head of the Mossad from inside the organization's ranks only after prime minister Yitzhak Shamir decided to keep his first choice, Amnon Lipkin-Shahak, in the IDF as a candidate to become the chief of staff.

The appointment of the new Mossad chief depends mostly on who will be prime minister in the summer of 2008.