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The supreme command echelons of the IDF now believe that Israel made an error in its treatment of former Palestinian prime minister Mahmoud Abbas (Abu Mazen), thereby contributing to the fall of his government through Israel's parsimony in making gestures to him. The army is now warning the government not to make the same mistake with Ahmed Qureia (Abu Ala), who is now working to establish his government.

High-ranking military sources, which reflect the prevailing mood in the general staff, said yesterday that Israel should have dealt differently with Abbas - it should have transferred to his control any Palestinian city he asked for, and should have avoided the debate over the personal fate of Yasser Arafat. In an effort to avoid a similar failure, the IDF is now recommending that the government remove the blockades of cities like Bethlehem and Jericho; discriminate between regions in which there is terror and terror-free regions; and cancel the ban on Palestinian vehicular traffic throughout the West Bank. The army is disappointed that the government is not accepting its recommendations and prefers the Shin Bet's suggestions.

The army is worried about the possibility that the continued all-out pressure on the Palestinian population will cause a humanitarian crisis and increase hatred toward Israel. The IDF general staff describes this approach as "sacrificing the strategic interest for the sake of tactical considerations." The common assessment in the army is that if Qureia fails to put together a functioning government, Arafat will retain his status as solo ruler - and thereby bring about a collapse of the Palestinian Authority and utter chaos.

The IDF believes that this is in fact Arafat's intention. He is not ready for a two-state solution, and is making efforts to have the conflict reach a point in which it is simply stuck, with no way forward or backward. Arafat aspires to a one-state situation, in which the Palestinian demographic advantage would win, and in this sense his approach is no different than that of Hamas or Islamic Jihad. On the other hand, goes the assumption, Qureia embodies a certain latent chance of compromise on the basis of the principle of partition into two states.

According to military sources, an unofficial dialogue is underway between Israel and the United States, in which the proposal for a comprehensive cease-fire is being discussed. Israel demands a dismantling of the infrastructure of terror in exchange for the suspension of all IDF activity in Palestinian Authority territory. The components of "terror infrastructures" are themselves subject to negotiation, and Israel might show flexibility on this particular issue.

On another matter, the military sources said that the cost of erecting the separation fence would reach NIS 10 billion. In the army's opinion, there is no sense in building a "broken" fence: It should be built so that it continuously divides Israel from the Palestinian Authority. The route of the fence was instead dictated by the political echelons.

Based on what the sources are saying, the IDF supports the prime minister's stand that the prisoner exchange deal with Hezbollah should be carried out, in spite of the ethical dilemma posed by the family of Ron Arad, so long as the cost of the transaction will be reasonable in terms of the number and identity of the prisoners to be given in exchange for the release of Elhanan Tannenbaum.

From statements made this week by senior military sources, it could be understood that the IDF is not confirming the version of the Arad family, according to which it was Mustafa Dirani who kidnapped him or sold him to the Iranians. The IDF version has it that Dirani was head of the security wing of the Amal movement in Lebanon, and as such was entrusted with watching over the IAF navigator. The Revolutionary Guards took Arad from him and handed him to the Iranians. Clearly, Dirani now has no idea where the navigator is, and it is equally doubtful whether Nasrallah could shed any light on the mystery. Dirani's continued incarceration in an Israeli prison does not place any pressure on the Iranian president, who evidently does have information on the fate of the navigator.

These considerations are leading the IDF to make a recommendation to carry out the swap, in order not to miss the opportunity to bring Tannenbaum home, although not at every price: The army's general staff is opposed to releasing terrorists with blood on their hands, and they believe the number of released prisoners should not be unreasonable, so that the deal will not become an incentive to carry out further kidnappings of Israelis.