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1. A day in the life

Spirits were pretty high at the meeting of the security cabinet on Wednesday. Prime Minister Ariel Sharon reminisced about an order he received as a young officer in the early 1950s to capture two members of the Jordanian Legion in order to exchange them for two Israeli prisoners. The foreign minister, Shimon Peres, argued with Sharon about who gave the order to seize the Jordanian soldiers (Mishael Shaham, Peres said; it was Moshe Dayan, Sharon corrected him).

Industry and Trade Minister Dalia Itzik complained about reports that she had been questioned by the police "under caution" and Education Minister Limor Livnat chimed in with a similar gripe. Both of them directed their ire at the attorney general, Elyakim Rubinstein, whose office is ostensibly the source of such reports. Rubinstein, who during breaks in the security cabinet discussion busies himself with reading the weekly Torah portion and signing documents, didn't understand why he was being bothered. Sandwiches were served. Ministers came and went. Civil servants who were invited to report on various matters waited outside and watched impatiently as the time slipped by.

Here and there, jokes were exchanged around the conference table. In short: it was a routine meeting. As though six Israelis hadn't been killed in terrorist attacks in the two previous days. The only party pooper was Effi Eitam, the recently installed minister of the National Religious Party, who asked: What is this arrogant levity, haven't enough Jews been killed?

Palestinian violence has returned to its previous level, and with it the pattern of response of the country's leadership: discussions on the correct operational tactics in the face of the terror threats, disregard of the fundamental meaning of Palestinian determination to strike at Israel again, and adjustment to the situation. On the face of it, there is something healthy about the ability of the state and its leaders to absorb the terrorist attacks and carry on as usual. It shows vitality and a powerful survival instinct. People hear about a terrorist attack, rush to find out if any of their relatives or friends were victims, and go on with their lives, straight to the World Cup games.

It's the same with the cabinet: the ministers get reports about the important information that is being extracted from some 2,000 Palestinian prisoners, they learn about murder squads that are making their way into the country, they are briefed on the huge effort being made by the security forces to preempt the latest atrocities - and they engage in small talk, return to their offices, organize a few leaks to the press and go about their business. It's an exemplary model of normal human behavior.

The only trouble is that there is something mad in this loop of normality: For 20 months an entire country has been in the grip of a vast crisis on multiple fronts and it is allowing its leadership to lead it without holding it accountable for its performance.

The basic assumptions that shaped Ariel Sharon's approach when he took over as prime minister continue to guide him today as well: Arafat is not a partner for a settlement, he should be got rid of, terrorism must be eradicated, there will be no negotiations under fire, there is no room to put forward a plan for a permanent settlement, and when the violence abates we can engage the Palestinians in talks about a long-term interim agreement. These principles sustained Sharon until he reached the stage of Operation Defensive Shield, and with their help he is now deploying to deal with the operation's disappointing results.

Not two weeks went by before it became clear that the media bubble in which Sharon and his aides had wrapped the military campaign had burst. The operation, it turned out, changed nothing substantial in terms of the murderous behavior of the Palestinians. Not three days went by before the media balloon with which Sharon's industrious spokesmen inflated the dismissal of the Shas cabinet ministers also burst: the capital market had its say, despite Sharon's display of leadership. Reality is created by concrete developments on the ground; media images have only a short-term effect.

2. Play it again, Arik

Israel's responses to the new surge of terrorism look like a second edition of the activity that preceded Operation Defensive Shield: penetration into Area A, the capture or liquidation of wanted individuals, encirclement of cities - until the next big, multiple-victim attack, which will demand a massive response. There are several differences of opinion about what form a devastating reaction should take. The chief of the Shin Bet security service believes that the choice is between conquering the territories and establishing buffer zones; the chief of staff thinks that both moves are needed. There is a great deal of fog about the meaning and location of the proposed buffer zones. Sharon is talking in terms of "obstruction" without taking the 1967 Green Line into account; Defense Minister Benjamin Ben- Eliezer is referring to a security fence "more or less along the Green Line."

The defense minister this week put out a far-reaching account according to which he has reached an understanding with Prime Minister Sharon on the implementation of his concept of the security fence. This version maintains that Ben-Eliezer extracted Sharon's agreement in a discussion with the senior professional level of the defense establishment. The upshot is that within two weeks construction will begin on a security fence that will divide Israel from the territories along the Green Line ("more or less"). If we could rely on Ben-Eliezer's account, this development would herald a dramatic change in the relations between Israel and the Palestinians, but the rate of the devaluation in the defense minister's credibility is in strong competition with the rate of devaluation of the shekel, and sources in the Prime Minister's Bureau deny vehemently that any such agreement was reached with Ben-Eliezer.

In the view of cabinet ministers in the right-wing bloc of the government, Sharon is planning a very different future for the territories: he intends to reoccupy them, remove Yasser Arafat, establish buffer zones and obstacles as a supplementary means to prevent terrorism, and abet the creation of an alternative Palestinian leadership. Only after all these elements are in place will Sharon be ready to enter negotiations, with the aim of achieving a long-term interim agreement.

These right-wing ministers say that their assessment is based on what they heard Sharon say and on the approach being shown by the United States, which is displaying, they say, increasing signs of abandoning the idea that Arafat is a potential partner for a settlement. They also point to the exchange that took place in the security cabinet in Wednesday between Sharon and Shin Bet chief Avi Dichter. Sharon interrupted Dichter in the midst of his analysis of the worsening security situation and his concept of two possible solutions - conquest of the territories or establishment of buffer zones - and asked him to repeat what he said about the first alternative. Dichter started to rephrase his comments, but Sharon stopped him again: "Repeat exactly what you said. You said that if we stay in Area A [under full Palestinian control] the problem will be solved."

According to this scenario, in the wake of a large-scale terrorist attack, Sharon will lead the cabinet to decide to reconquer the West Bank and the Gaza Strip with the aim of remaining in both areas for up to a year. According to these ministers, Sharon is also determined to remove Arafat from the region before the next general elections are held in Israel. When these ministers are asked whether they don't think that the lessons to be drawn from Operation Defensive Shield are the exact opposite - that the army alone cannot uproot terrorism, that the international community will not tolerate brutal treatment of Arafat and that Israel will not be able to withstand world pressure and will have to withdraw from the territories it will seize - they reply that Arafat is leaving Sharon with no choice: If the achievements of Operation Defensive Shield do not prove enduring, Sharon will be compelled to take drastic action in order to bring about a fundamental change in Israel's position; otherwise, he will be ousted form power.

When the time comes to implement his plan, Sharon will benefit from being able to rely on the professional opinion of the top rank of the defense establishment. Two cases in point are the head of the Shin Bet (regarding the retaking of Area A) and the chief of staff, Lieutenant General Shaul Mofaz, who in this week's security cabinet meeting strongly reiterated his opinion that Arafat must be removed from the territory of the Palestinian Authority. Similarly, Major General Amos Gilda, the coordinator of government activity in the territories, also told the security cabinet that as long as Arafat remains in the PA, there will be no chance of reaching a settlement, as he is giving the go-ahead for terrorism.

It's possible, of course, that both Ben-Eliezer and the right-wing ministers are indulging in wishful thinking. Sharon gives the Labor Party ministers the impression that he is ready to embark on the political route, but at the same time he raises hopes within the right-wing group that all he wants to do is gain time until the Americans launch their attack on Saddam Hussein.

Economic policy by other means

Former finance minister MK Avraham Shochat (Labor) was very worried this week about economic developments. He was blunt in his comments: "The behavior of the public in pursuing the dollar is a sign of no-confidence. Usually, when the interest rate is raised, it changes the thrust of devaluation, but that didn't happen this week. The government is not working quickly enough to stabilize the currency and restore the public's faith in it. It has to bring about the immediate approval of the economic plan and, above all, to present a political horizon [on the Palestinian front]. The economic movies will not help unless there is also a change in the political-security situation.

"We are in a situation where the damage being caused by terrorism is having a major influence. I was in similar situations twice as finance minister: in 1992 and in 2000. In 1992, Yitzhak Rabin, who had just been elected prime minister, started to talk about peace with the Palestinians, a declaration of intentions that was realized a year later in the Oslo accord, and I saw first-hand how Israel's economic situation changed dramatically: foreign investment increased from $130 million a year to $3 billion. In the period of [former prime minister Ehud] Barak, too, when the feeling was that peace agreements were going to be signed, the economy grew rapidly.

"The public will very soon feel the impact of the new economic plan. Recipients of state allowances will experience a 10 percent decline in their purchasing power, the situation of businesses will worsen, unemployment will increase. We are in a situation in which every discussion of a security or policy move has to take into account its implications on the economic-social situation. It is wrong to analogize about our present situation from the situation that existed 30 years ago. We are now living in the era of globalization, with a different standard of living, in a less cohesive society."

What Shochat is saying is that economic constraints might determine the line to be taken on policy and security. In other words, just as the dismissal of the Shas ministers last week was intended, above all, to curb serious shocks in the capital market, so Sharon may find himself in a situation where the purpose of his political and military decisions will be above all to stave off economic chaos.

4. The worth of words

MK Shlomo Ben-Ami (Labor), the former foreign minister, had a moment of revelation last week. He was delivering a lecture at the Middle East Media Research Institute (MEMRI) in Jerusalem about the negotiations at Taba that followed the failure of the Camp David conference. Ben-Ami related that the Israeli delegation went to Taba with an explicit guideline from the prime minister, Ehud Barak, to discuss only the implementation of the outline put forward by President Bill Clinton and under no circumstances to reopen it for new negotiations. In practice, the delegation departed from the mandate it received and became involved in negotiations on Clinton's peace plan. Ben-Ami told his audience that in his view it would have been impossible to reach an agreement at Taba even if two more weeks had been available for the talks (this is contrary to the view taken in retrospect by two other participants in the Taba talks, Yossi Beilin and Saeb Erekat).

After the lecture, Ben-Ami was accosted by some members of the audience who wanted to know how his remarks could be reconciled with what he had said after the Taba meeting. At that time, he, like others, claimed that if there had been more time the delegations could have reached an agreement. Ben-Ami sighed and said, "In the conditions that existed then, against the background of the looming elections for prime minister ..." He said no more.

On a related issue, it turns out that Ehud Barak is not the only Labor leader who is prejudiced against Arabs and Palestinians (as is revealed in an interview with him in the current edition of the New York Review of Books - also available on the Internet at www.nybooks.com). On September 2, 1994, the mass-circulation daily Yedioth Ahronoth quoted Shimon Peres as saying: "The role of giving one's word in the Arab world is different than it is in our world. For us, our word is our bond, for them, their word is a decoration." A year later, Peres showed that he was consistent in his views. The same paper quoted him on October 8, 1995: "I would say that for the Palestinians, the agreed written word consists of 40 percent genuine commitment and 60 percent rhetoric, decoration."

Both comments were made after the Oslo accord and before the tremendous effort in which he is now engaged to reach a new signed agreement with the Palestinians.