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1. No grace period

The new government's grace period didn't even last a day: Within 24 hours of its first session, it had to deal with a major terrorist attack in Haifa, sobering data about a steep drop in tax revenues for the month of February, and the first serious glitches in implementation of the coalition agreement because of the controversy over the future of the Religious Affairs Ministry.

The people who will have to formulate the Israeli response to the bus bombing on Haifa's Moriah Boulevard are the same ones who dealt with such things in the previous government: Ariel Sharon, Defense Minister Shaul Mofaz, Chief of Staff Moshe Ya'alon, Shin Bet security forces chief Avi Dichter and their teams. Since the signing of the Oslo Accords, the views of the Israel Defense Forces and the Shin Bet regarding the conflict with the Palestinians have noticeably diverged: The IDF believes in a forceful response; the Shin Bet advocates a solution that relies on an understanding with the Palestinian leadership. The IDF provides the political echelon with assessments saying the conflict must be resolved by an unequivocal victory that teaches the Palestinians the lesson that terror doesn't pay and permanently disabuses them of the desire to ever return to the path of violence. The Shin Bet does its best to supply the intelligence necessary to achieve this objective, but its overall assessments, as well as the views of its leaders, support the notion that the conflict cannot be resolved by force alone.

The bombing two days ago in Haifa came after a series of major operations carried out by the IDF in the Gaza Strip that caused a high number of civilian casualties. As usual, Hamas warned it would retaliate in good measure. From the perspective of the defense establishment, the incursions deep into the Gaza Strip had an operational logic as well as a moral and political justification: They are part of an endless bloody cycle that Israel is not responsible for starting. The escalation of recent weeks began in mid-February when four soldiers were killed when their tank drove over an explosive device planted by Hamas. From the Palestinian perspective, these attacks were a response to earlier Israeli military actions. But this is just a superficial account of events; below the surface lie the interests and intrigues of Iran, Hamas, Yasser Arafat and other Palestinian figures, whose objective is to sabotage the attempts to achieve a cease-fire and to institute reforms in the Palestinian leadership.

Meanwhile, the gathering clouds of an impending U.S.-led war on Iraq are hovering over everything. The prospect of the war with Iraq has become a key factor in determining the Israeli government's approach to the conflict with the Palestinians, as was reflected two nights ago in the decisions of the new security cabinet following the Haifa bus bombing and in President Bush's swift condemnation of the attack. The looming war is also casting the differences in outlook between the IDF and the Shin Bet into bolder relief.

2. The IDF's conception

In August 1995, Israel learns that Awad Silmi is planning to carry out a car bomb attack. Israel asks the Palestinian Authority to arrest him. The Palestinian Preventive Security forces ostensibly comply with the request and arrest Silmi and three of his accomplices. In fact, the Preventative Security people provide Silmi with an apartment and a gun and explain to him that this is how they are protecting him from the long arm of the IDF. They tell Israel that Silmi has been tried and imprisoned.

As the number of terror attacks continues to rise, Military Intelligence chief Maj. Gen. Moshe Ya'alon accompanies Foreign Minister Shimon Peres to a meeting with Yasser Arafat, at which the Israelis present the information they have about Hamas plotting future attacks. They list the names of 35 master terrorists, headed by Yihye Ayash and Mohammed Deif, and insist Arafat arrest them and prevent them from carrying out their plans. Israel learns that Arafat has reached an understanding with Yihye Ayash and Mohammed Deif, in which they have agreed to hold off on their actions until the elections for the PA institutions are completed. The IDF recommends that Prime Minister Yitzhak Rabin give Arafat an ultimatum: Take immediate action to thwart the terrorist plots or risk a forceful Israeli response. Rabin, who decides to define Palestinian terror as a strategic threat, says that he accepts this recommendation, but will wait to implement it until after Arafat is elected as chairman of the PA.

In November 1995, Rabin is assassinated; in January 1996, Israel assassinates Yihye Ayash; and in February and March `96, bus bombings inflict heavy Israeli casualties. Only then does Prime Minister Shimon Peres issue a threat to Yasser Arafat that is serious enough to induce him to make 1,200 arrests. The PA hastens to report to Israel that Awad Silmi is among those arrested, apparently having forgotten that it supposedly arrested him six months earlier. When the PA tries terrorists for their involvement in attacks, it does not charge them with murder, but with other offenses that enable it to impose relatively lighter sentences.

The conception that took root among the top echelons of the IDF in wake of this series of events ascribes personal responsibility to Arafat for the continuation of Palestinian terror and, thus, for the failure of Oslo. From the experience he gained as chief of military intelligence, head of Central Command and deputy chief of staff, Chief of Staff Ya'alon believes Arafat never intended to adhere to the spirit of the Oslo Accords by renouncing terror and settling disputes with Israel through dialogue. He concurs in the assessment (of which Benny Begin was the most prominent spokesman in the political and public arenas) that Arafat misled Israel and that a genuine settlement with him was never possible because he never gave up his ambition of ending Israel's existence as a Jewish state, and because he is incapable of forgoing his demand for the right of return.

This school of thought contends that the political echelon, which was in thrall to the Oslo conception, refrained from publicly calling Arafat to account for the terror attacks, even though it warned him about them ahead of time. This failure of will projected weakness and led the Palestinian leader to conclude that he could continue giving the green light to violence. Furthermore, the political echelon was so captive to the Oslo concept that even after the Al-Aqsa Intifada erupted and the agreements that Shimon Peres reached with Arafat were broken the very same day, the minister for regional development (Peres) disputed Military Intelligence's contention that this was decisive proof of the PA chairman's treachery, and berated the IDF leadership: "He [Arafat] lost control and you describe him as a strategist."

The Shin Bet was also involved in the contacts with Arafat. It was the Shin Bet that gathered the intelligence about Hamas plans for terror attacks and that supplied the information necessary for the liquidations of the "engineers" and their collaborators. Yet, its assessment of the events and their causes produced a different outlook. Shin Bet chiefs Jacob Perry, Carmi Gillon and Ami Ayalon all expressed views that took into account the complexity of the situation in the PA and the constraints affecting Arafat. They were less categorical than the IDF top brass in their appraisal of Arafat's motives. They gave the political echelon assessments that attributed Arafat's reluctance to confront Hamas to his desire to avoid a civil war, and underlined the important place this organization has achieved in Palestinian society.

During Jacob Perry's tenure as head of the Shin Bet, assessments were even presented that said Arafat was ready to compromise on the right of return and that he would agree to an accord that did not include a full Israeli withdrawal to the 1967 lines. Something of these differences are also evident in the Shin Bet's current positions regarding the PA and in its predictions about the effects a war in Iraq would have on the Israeli-Palestinian conflict.

3. The Shin Bet's assessments

Officially, the Shin Bet is not predicting what the implications of the war in Iraq will be. Officially, the Shin Bet is concentrating on gathering operational intelligence concerning the possibility that the American assault will spawn new terrorist activity in the West Bank and Gaza Strip, and it has concluded, for now, that there are no sleeper cells there that will spring into action as a result of the war. At the same time, the Shin Bet is producing more general assessments that differ from those of the IDF.

Reports published at the beginning of the week give an idea of the kind of views being presented by the Shin Bet in internal discussions: Arafat will not disappear from the Palestinian scene and he will do all he can to preserve his power. Arafat does not have control over the terror activity, though he still has the ability to influence its scope. There is no assurance that the war in Iraq will indeed set off a chain reaction that will lead to changes in the composition of the Palestinian leadership and to readiness on its part to reach a cease-fire and resume a meaningful diplomatic dialogue. Palestinian terror is not embodied solely by Arafat and so his removal from power, or the neutralization of his influence, will not necessarily bring an end to the hostile actions against Israel.

These assessments diverge from the prevailing view held by the IDF and the political echelon. Ariel Sharon and Shaul Mofaz are betting that the U.S. war in Iraq will lead to a major shift in the Arab world's attitude to terror, including Palestinian terror. Lately, top IDF officials have been talking not only about imminent changes in the Palestinian leadership and its approach to Israel, but also about the prospect of an opportunity to renew relations with nations in North Africa and the Persian Gulf. The IDF believes that Arafat's involvement in instigating terrorism is now crystal clear to intelligence agencies around the world, and that all can see that Israel is right in saying that Arafat cannot be a partner to any accord. This recognition has not yet become manifest on the international diplomatic level, but the war in Iraq could make it so.

The IDF feels that Operation Defensive Shield created the critical mass that shook the loyalty of those surrounding Arafat and impelled them to seek a replacement for him. The Israeli military pressure that has continued ever since is accelerating this process, whose first fruits should be reaped next week with the appointment of a Palestinian prime minister (probably Abu Mazen) and the approval of reforms in the structure of the PA and in the division of authority among its leadership. Bush's June 2002 speech gave the process serious momentum and compelled the PA (and Israel) to start facing the need to make some decisions. This is why the IDF's tone is predominantly optimistic: Within a few weeks, a big turning point will occur that will lead to Arafat's neutralization, a cease-fire, a diplomatic process and an economic resurgence. The Shin Bet's predictions are less rosy. In a few weeks, we'll know which of the two was closer to the truth.

4. Meridor packs up

This week, Dan Meridor packed up his things in his modest office at the edge of the former Foreign Ministry compound and instructed his aide to consolidate all the reports that he wrote over the past year. It wasn't clear whether this material would go straight into the state archives or whether someone in the new government would have some use for it.

Meridor's work would seemingly be worthy of continuation. With the prime minister's authorization, he dealt with various important issues, many of them confidential matters. In essence, Meridor was Ariel Sharon's eye on the intelligence authorities and on long-term defense development. At the start of the election campaign, Sharon put him in charge of a planning team that was supposed to present a plan of action for the new government. Meridor hoped to continue in his post and in the end was hugely disappointed. The prime minister probably didn't intend from the outset to mislead him; the more likely explanation is that Sharon became entangled in political circumstances that compelled him, as he saw it, to forgo Meridor's services. Besides being further proof of Sharon's ability to betray his promises, it was new evidence of his weakness and malleability.

The team that Meridor was a part of (with Dov Weisglas, Major General Amos Gilad and Ephraim Halevy) was supposed to provide Sharon with the optimal Israeli position regarding implementation of the Bush outline. Its discussions were to yield recommendations as to how to achieve a cease-fire, what demands to present to the Palestinians in return for an IDF withdrawal to the September 2000 lines, how to respond to the U.S. demand for a settlement freeze, if and how to involve the European Union in the dialogue process with the Palestinians, how to influence the reforms in the Palestinian leadership, how to ensure continued American support for Israel, how to ensure that responsibility for any failure in the contacts with the Palestinians would be placed on them, what the territorial implications of the Bush outline would be, what kind of relationship between Jordan and the PA Israel should aim for, how to ensure that the new Palestinian leadership will be able to control the armed factions, and how to ensure the transparency of the PA's financial activity.

These discussions did not reach any conclusion. On a few subjects, members of the group might have been at cross-purposes. Meridor, for example, publicly stated his opposition to the American demand for an across-the-board settlement freeze; he would have preferred to obtain an understanding with the American administration for the continued development of some settlements over the Green Line, concentrated in agreed-upon blocs, in return for the dismantling of more remote and isolated settlements.

In his brief and tense parting conversation with Sharon, Meridor was not asked to bring another minister up to speed on his recent efforts - as if the issues he was addressing were insignificant and no longer needed handling by the political echelon. Or maybe all the ministers in the new government are already up to their ears in other, more pressing business.