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To: Nadine Carroll who wrote (2012)	11/3/2002 4:36:51 PM
From: LindyBill	Respond to of 6901

Good rundown in the WSJ.com today on the Israeli situation. The last couple of paragraphs point up the domestic economy crisis. Can you imagine what this country would accomplish with a Free Enterprise economy? It is a long way off, of course. JERUSALEM DISPATCH Divorce, Israel-Style The unity government falls. What took it so long? BY DANIEL DORON Sunday, November 3, 2002 12:01 a.m. JERUSALEM--Why did the Israeli government fall last week? Or rather, why didn't it fall earlier? The ostensible reason for Wednesday's Likud-Labor divorce was disagreement on the state budget. But the real reason was an upcoming leadership battle within the Labor Party itself. Party leader Benjamin Ben Eliezer, the defense minister in the fallen government, faces a challenge from two left-wing rivals, former minister Haim Ramon and Haifa's Mayor Amram Miztna, on Nov. 19. Since the collapse of Socialist-Zionism, once Labor's ruling ethos, the party has gradually lost its ideological appeal among the near 40% of Israelis who vote left, and especially among the supporters of the "peace process." The peace camp has come to be dominated, increasingly, by the more radical Meretz party. In an effort to compete with Meretz and to resuscitate Labor's failing appeal, younger Labor leaders are moving considerably to the left, especially on welfare policy and negotiations with the Palestinians. The more security-conscious Mr. Ben Eliezer felt increasingly threatened by these challengers, who have been agitating for Labor to quit the National Unity government of Ariel Sharon. Their argument has been that unless Labor distances itself from Likud, it will have no chance in the national elections next October. So when a budget vote came up last week in the Knesset, Mr. Ben Eliezer seized the opportunity to part company with Likud. He demanded that money be shifted away from West Bank settlements and directed instead to groups that Labor hopes to win over: pensioners, the disabled, single mothers and students. With one masterful move, Mr. Ben Eliezer hoped to enhance Labor's image on two issues. His stance demonstrates that Labor is more "socially aware," and also that it is still the party of peace, defending the Oslo process from a settlement movement that would allegedly scuttle it. But if Mr. Ben Eliezer's sudden decision to leave may shore up his leftist credentials, it fell like a ton of bricks on Prime Minister Sharon--not because it makes Labor any more electable, but because it makes his own position within Likud more risky. Mr. Sharon has refused to dissolve the Knesset and hold general elections, and yet polls consistently indicate that Likud would emerge as the largest party. So why would he want to keep such an unlikely coalition with Labor? Because his Likud competitor, Benjamin Netanyahu, remains enormously popular, especially among members of the party's central committee that elects the candidate for prime minister. Mr. Netanyahu had refused to run for prime minister when Ehud Barak's government fell unless he could dissolve the Knesset and rule effectively. This enabled Mr. Sharon to gain the post. That was good for Mr. Sharon, but was it good for Israel? Critics charge that this hindered Mr. Sharon from waging an effective war against terrorism and from making vital reforms in the economy. With Labor stalwart Shimon Peres zealously protecting Yasser Arafat and his Palestinian Authority, Israel could never take decisive steps to win the war against terrorism. Mr. Sharon's defenders claim that his policy managed to win the war against Palestinian terrorism by attrition; that his carefully measured response was politically the only one feasible, considering the strong support the Israeli left and Europe give Arafat, and the ambivalence shown by the U.S. when Israel did take decisive military steps. The "grand coalition" also had devastating effects on the Israeli economy, where an inordinate concentration of political and economic power in the mutually reinforcing elites created a system rife with monopolies and inefficiencies (40% of all private assets, worth $400 billion, are held by four Israeli entities; Israelis pay a 30% to 50% monopoly rent on all consumer items!). Unemployment has reached 10%. All governments are motivated primarily by internal political considerations. They have to be, in order to stay in power. In Israel, where the government dominates the economy to the tune of over half of gross domestic product, this is even more so. But the challenges facing Israel are of a gravity unmatched elsewhere. In a situation, literally, of life and death, ordinary political considerations can look more than a little incongruous. Mr. Doron is president of the Israel Center for Social and Economic Progress.