Acting Prime Minister Ehud Olmert appointed a blue-ribbon team Sunday to monitor the Palestinian Legislative Council elections and recommend policy, as Israel began gearing up for the possibility that Hamas may win Wednesday's vote, forcing Israel to make some tough choices. Newly-appointed Foreign Minister Tzipi Livni told the weekly cabinet meeting that even if Hamas did not win, and even if it was not included in the next government, there would be those in the international community who would try to make a distinction between having terrorist organizations in the parliament - which they would deem legitimate - and having them in the government, which they would not see as acceptable. Israel cannot accept this distinction, she said, and would demand on the day after elections that the PA government do what it promised the world: dismantle the terrorist organizations.

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Livni said the PA sold the world on the idea that elections with Hamas participation were necessary because at the end of the process, the PA would have the legitimacy to place all arms under a central government. The international community had to stick to this position, she said. Israel is increasingly concerned that Hamas's participation in the elections will lead to increased calls in Europe to look at the organization as a political one and take it off its list of terrorist organizations. The cabinet, meanwhile, was united around the notion that any Hamas participation in PA government institutions was unacceptable, one government source said. But the panel that Olmert set up was to present him with various policy alternatives for exactly that eventuality, as well as others. Olmert convened a meeting with top security officials and a handful of cabinet ministers after the cabinet session that presented the different scenarios, ranging from a Fatah victory to a Hamas one, and then appointed a panel to draw up various policy options for the different scenarios. The panel includes Chief of General Staff Lt.-Gen. Dan Halutz, Shin Bet (Israel Security Agency) head Yuval Diskin, Foreign Ministry Director-General Ron Prosor, Prime Minister Ariel Sharon's military aide Maj.-Gen. Gadi Shamni and Sharon's special adviser Dov Weisglass. The National Security Council, headed by Giora Eiland, was also charged with coming up with a set of recommendations. An indication as to how the international community will deal with the elections won't be long in coming, as the Quartet - comprised of the US, EU, Russia and UN - is scheduled to meet on January 30, as are the EU foreign ministers, to discuss the matter. Defense Minister Shaul Mofaz told the cabinet that there was a likelihood that terrorists would try to disrupt the elections by carrying out an attack. He said there were still 10 concrete warnings of attacks, and another 40 based on "partial information." Mofaz also said it was likely that there would be attempts to carry out attacks similar to the one last week in Tel Aviv, which he said was financed by Iran, planned in Syria, and carried out by a man from near Nablus. He said Iran was transferring "considerable funds" to Hizbullah and Islamic Jihad, and that the terrorist organizations in Judea and Samaria were demanding money for each attack. At the start of the meeting, Olmert said a formal cabinet discussion on the ramifications of the PA elections would take place after they were held so it would not appear as if Israel was trying to influence the outcome. Olmert urged the ministers not to talk about the elections beforehand.

Israel readies for possible Hamas win

FM: World distinguishes between terrorists in parliament and in government.