Cover story in Issue 23, March 2, 2009 of The Jerusalem Report. To subscribe to The Jerusalem Report click here. The day after Israel's inconclusive February 10 election, Avigdor Lieberman, leader of the stridently anti-Arab Yisrael Beiteinu party, emerged as the kingmaker. Minutes after the vote count was completed, he was invited to a meeting with Kadima leader Foreign Minister Tzipi Livni to talk about possible cooperation, although much of his radical nationalistic rhetoric and platform is anathema to her party's centrist constituency. And he was also the first party leader invited to hold preliminary coalition talks with the Likud's Benjamin Netanyahu a few hours later. The swift overtures to Lieberman were hardly surprising. With both Livni and Netanyahu claiming victory, Yisrael Beiteinu's 15 seats could determine which of the two becomes Israel's next prime minister. Livni's claim is based on the fact that Kadima won the most seats, 28 to the Likud's 27; Netanyahu's on the fact that the Likud-led right-wing religious bloc commands a majority of 65 in the newly elected 120-member Knesset. But without Lieberman in the right-wing religious column that number would be down to only 50, and Livni's cause would be significantly enhanced. In both meetings, Lieberman laid down four conditions Yisrael Beiteinu, mainly supported by immigrants from the former Soviet Union, would insist on before joining any coalition: A commitment to topple the Hamas government in Gaza; a change in the electoral system to create greater stability and strengthen the executive branch; the introduction of a form of civil marriage that would enable persons not halakhically Jewish to marry in Israel, for the benefit of around 300,000 Russian immigrants in this category; and passage of a new law stipulating that all Israelis, including Arabs, either serve in the IDF or volunteer for national service or be stripped of their citizenship - becoming permanent residents without the right to vote or be elected. Then, in a take-it-or-leave-it gesture, Lieberman, who has extensive business interests in Eastern Europe, flew off on what he said was a vacation to Belarus, a country not known for its tourist attractions, leaving the follow-up coalition feelers in the hands of Stas Misezhnikov, a respected Yisrael Beiteinu legislator who made his mark in the outgoing Knesset as head of the key Finance Committee. Lieberman's business dealings have attracted police attention, and he has been under investigation for various suspected offenses for years, a circumstance which would prevent his appointment to several key cabinet positions. With its hawkish views on the Israeli-Arab conflict, Yisrael Beiteinu would seem to be ideologically closer to the right-wing Likud than to the centrist Kadima, although Lieberman's goal is more to reduce Israel's Arab population than to keep the "Greater Israel," and to this end he is even prepared to hand Arab-populated areas of the country, including parts of Jerusalem, over to the Palestinians. Nevertheless, Lieberman has openly stated that, all things being equal, he would rather go with Netanyahu. The Likud leader, however, has a prior commitment to include the ultra-Orthodox Shas as a senior partner in any coalition he forms. Indeed, it was because of promises from the Likud that Shas refused to join a Livni-led administration last October, sparking the February election. But Shas is adamantly opposed to key Yisrael Beiteinu demands: changing the electoral system in a way that would favor the larger parties; and marital solutions for non-halakhic Jews, which it suspects could ultimately undermine rabbinical control of marriage and divorce in Israel. It is also adamantly opposed to giving up parts of Jerusalem. Moreover, bad blood between Yisrael Beiteinu and Shas spilled over in the election campaign, when Shas spiritual leader Rabbi Ovadia Yosef described a vote for Lieberman as no less than "a vote for the devil" and a sure way of losing one's place in heaven, and Lieberman vowed to get even. Moreover, for Lieberman's mainly secular immigrant constituents, the Shas party, which gave them a hard time when it controlled the Interior Ministry, is anathema. Unlike Netanyahu, Livni has no commitment to Shas or any other religious party. On the contrary, Kadima is also committed to changing the electoral system and introducing a form of civil marriage, and on these two key issues Lieberman would almost certainly get a better deal from Livni. He also has a healthier working relationship her; whereas he and Netanyahu have been at odds ever since 1998 when Lieberman, once Netanyahu's right-hand man, resigned as director general of the Prime Minister's Office, and left the Likud to found Yisrael Beiteinu soon afterwards. As for the other two conditions, both Netanyahu and Livni would have no problem declaring the toppling of Hamas a goal, and, while neither would back Lieberman's proposed citizenship law, both would allow him to table and vote for it. Former tourism minister Yitzhak Aharonovitch, a former deputy police chief who is 4th on the Yisrael Beiteinu slate, maintains that the party's dilemma is genuine, and denies that it is only stringing Livni along to get more from Netanyahu. "True, we would prefer a [right-wing] national government, but if it doesn't work out, we will have no qualms about joining a coalition with Livni," he tells The Report. To keep its options open, Yisrael Beiteinu will probably not recommend either Netanyahu or Livni for prime minister when President Shimon Peres consults with the parties on whom to confer the task of forming the next government after the official results are gazetted, beginning February 18. This would compromise Netanyahu's claim that he should be given the job on the basis of the right-wing religious parties having won a majority of Knesset seats. In fact, Lieberman's party might even try to use its power to impose the formation of a national unity coalition on Netanyahu and Livni. Misezhnikov intimates that Yisrael Beiteinu would not be averse to a coalition of the three largest parties, Kadima, Likud and Yisrael Beiteinu, with 70 seats between them, for a fixed period, dedicated to changing the electoral system, and possibly with rotation between Netanyahu and Livni as prime minister. "The president should get Tzipi and Bibi into a room and keep them there till they work out who leads it," he says. That is precisely what President Haim Herzog did with Peres, then-Labor leader and the Likud's Yitzhak Shamir in 1984. The solution they came up with then was rotation of the premiership, with Peres prime minister from 1984-1986, and Shamir from 1986-1988. Then the left- and right-wing blocs were tied at 60-60. This time, however, Netanyahu appears to have a clear advantage of 65-55. Still Livni has two strong cards: If she detaches Lieberman, Netanyahu will not have a clear right-wing majority; moreover, she knows Netanyahu does not want to form a narrow radically right-wing government that might be isolated on the international stage. Conversely, he knows he can form a government without her, whereas she cannot form one without him. As they go eyeball to eyeball, Livni can pressure Netanyahu by refusing to have any part of a government he leads, leaving him high and dry with the right-wingers, having to deal with a U.S. administration led by President Barack Obama bent on advancing the peace process with coalition partners, not to mention members of his own party, ideologically opposed to any form of territorial compromise. For his part, Netanyahu can pressure Livni by simply refusing to join a national unity government under her, denying her a working majority in parliament. Both sides would dearly like to have a national unity government that cuts across the right-left divide; the standoff is over who leads it. To pressure Netanyahu, Livni and her people will make a strong public show of being ready to go into opposition unless they are offered at least a share of the premiership; to pressure Livni, Netanyahu and his people will insist that they are more than comfortable heading a narrow right-wing government. The result could be a self-fulfilling prophesy, with Netanyahu having to cope not only with Lieberman, but the extremist "Greater Israel" proponents of National Union, whose four-member delegation includes at least one former disciple of the late Rabbi Meir Kahane. The first significant battle in the leadership stakes will be decided by President Peres. Even without Lieberman's support, the Likud argument for Netanyahu is that he commands the biggest bloc, and that only he has a realistic chance of forming a government. The Kadima counter is formalistic: They argue that if no other candidate can produce a solid bloc of at least 61 votes, the leader of the largest party should be given first shot. The law says only that the president should choose the candidate he thinks has the best chance of success. According to Likud spokesmen, all the talk of rotation or of Livni forming a government is simply hot air or spin. The basic political fact is that with 65 right-wingers in the Knesset, only the Likud is in a position to form a government, says Netanyahu confidant Yisrael Katz. "Maybe we will have to do it in two stages, first with the right-wingers and without Kadima, and then bring Kadima in later. Livni can't stop Netanyahu from forming a government. All she can do is slow down the process," he tells The Report. Katz acknowledges that with a narrow right-wing government, further movement in the diplomatic sphere on either the Palestinian or Syrian tracks is unlikely. But he argues that Obama and his team recognize that objectively no progress is possible in the Middle East without some form of accommodation between Iran and the international community, and therefore will not pressure Israel to do things that don't make sense. "As long as the Iranian question is not solved, there will be no genuine process with Syria, which won't leave the Iranian axis, or with the Palestinians, who are divided because of Iran's support for Hamas. Nobody will say to Israel: 'Look, we haven't been able to solve the Iranian problem, why don't you leave the Golan, maybe it will help?' They must first solve the main problem, then other processes will be possible," he insists. And, if conditions change and genuine peace prospects open up, "we can always bring in Kadima," he says. To cut to the chase and get the government they want now, Likud leaders are offering Kadima the foreign and defense portfolios and full equality in a Netanyahu-led coalition, but without rotation of the premiership. So far Kadima is not buying. Their strategy is to focus on getting first shot at forming a government in the hope that that will soften Likud attitudes. "The president has a great deal of leeway. But there are precedents and one of our arguments will be that in the past, it was always the largest party that got the first shot," says Yoel Hasson, the Kadima whip in the outgoing Knesset. If Peres doesn't choose the Kadima leader, Hasson hopes the president will use the weight of his office and personal prestige to convince Netanyahu and Livni to work out their differences and go for national unity. "Theoretically, the president could call in the two candidates, tell them he is not going to choose either, and urge them to reach an agreement between themselves," he hints broadly. If, nevertheless, Netanyahu gets the nod from Peres and first builds a narrow right-wing coalition, Kadima leaders insist that they will not join. "We will not agree to be a fig leaf for the extremists," says Hasson. However, he acknowledges that were the Likud to offer rotation of the premiership, Kadima would consider it. This adds up to the choice Kadima is offering Netanyahu: if he wants it in his coalition, he must offer Livni rotation; otherwise, he can stew in his own juice at the head of an internationally spurned right-wing government. If Kadima eventually does decide on going into the opposition, Netanyahu will almost certainly try another tack: splitting the party by offering plum posts to some of its leading members, for example the Defense Ministry to the party's hawkish No. 2, Shaul Mofaz. Hasson angrily dismisses the scenario. Even if Mofaz wanted to split the party, he wouldn't be able to because he doesn't have anything like the support of one third of the Knesset faction required by law, he maintains. To cut Lieberman down to size and preempt the narrow right-wing scenario, another coalition possibility is being quietly pursued behind the scenes: a Likud-Kadima-Labor government, with 68 seats, for a limited period, dedicated to changing the electoral system. Although both Netanyahu and Livni would like to see Labor leader Ehud Barak staying on as defense minister, given his military acumen and the huge security problems Israel faces, there are two major obstacles to such a coalition: The question of who would lead it and, given Labor's poor performance in the election - it won only 13 seats as compared to 44 in 1992 - the predominant feeling in the party is that it should stay in opposition to rebuild. When Lieberman gets back from Belarus, besides a pile of more tempting coalition offers, he could also find the police on his doorstep. The Yisrael Beiteinu leader is suspected of fraud and money laundering and police say the evidence against him is substantial. The week before the elections they called in his daughter, Michal, for questioning in the case. Just the fact of the ongoing investigation could bar Lieberman from serving in certain ministries, like Justice and Internal Security, and possibly even Finance, which he has been eyeing. Lieberman, though, has the reputation of being one of Israel's most unpredictable politicians. And before they resign themselves to the opposition benches, Kadima politicians are counting on him to come up with an original solution for his personal and their coalition problems. "It all depends on Lieberman, and I think the decisions he takes are going to take a lot of people by surprise," says Hasson.â€¢ Reinventing Labor Five days after the Labor Party's unprece- dented electoral crash, it is more than a little ironic to find Labor Knesset Member Ophir Pines-Paz ensconced in the Tel Aviv headquarters of the Kibbutz Movement. For the first time in its history the Labor Party failed to carry its affiliated kibbutzim, garnering only 33 percent of the kibbutz vote for a second place finish to Tzipi Livni's Kadima, which took 33.25 percent. That staggering statistic tells the story of Labor's heaviest ever electoral slide to only 13 Knesset seats, compared to 19 in the last election and 44 when Yitzhak Rabin came to power just over 16 years ago. In the last few days of this election, votes leaked in droves from Labor - "the party that built the country" - and its smaller sister leftist party Meretz to Kadima, with Livni's campaigners successfully depicting her as the only hope for stopping the Likud's Benjamin Netanyahu from returning to power. Pines-Paz, a former party secretary general, sees Labor's dwindling fortunes as more than just a passing fad. He blames long years of decline on an anachronistic party structure and a chronic failure to stick to principles, reflected in a readiness to serve in just about any government no matter what its program or composition. For Labor to have any hope of making a successful comeback, he says it must show that it is ready to pay the price of serving in opposition, and, while out of power, institute a radical program of reform and modernization. "It's not a question of rehabilitating the Labor Party. It has to be reinvented from scratch," Pines-Paz tells The Report. Once in opposition, Pines-Paz says Labor should present a plan for regional peace, an economic blueprint based on agreement between government, the manufacturers and the trade unions, and take the lead in campaigns to fight government attempts to undermine the Supreme Court and Yisrael Beiteinu leader Avigdor Lieberman's assault on Israel's fragile democracy. "Lieberman constitutes a tremendous challenge to the liberal left that believes in coexistence with the country's Arab population and in a Jewish state that doesn't trample the rights of minorities," avers Pines-Paz, the only Labor minister to resign over Lieberman's inclusion in the outgoing government. In historic terms, Labor seems to be at least a temporary victim of the so-called big bang in Israeli politics. The idea in November 2005 when Ariel Sharon left the Likud to found Kadima was that the "big bang" would break the perennial tie between right and left in favor of a new center-left; instead, it has led to a new tie of sorts between the right and center, and virtually decimated the Zionist left, with Kadima encroaching heavily on Labor and Meretz's political space. The left's decline can be put into even sharper relief by the fact that the three largest parties, Kadima, Likud and Yisrael Beiteinu, with 70 seats between them, all have Likud roots. "On election night I was on a TV panel with Roni Bar-On (Kadima), Silvan Shalom (Likud) and Uzi Landau (Yisrael Beiteinu), and I said to the moderators: 'Look who I am on with - they are all Likudniks!'" Pines-Paz exclaims. Clearly, Labor's big task in the next Knesset will be to differentiate itself from Kadima. That, says Pines-Paz, will depend a great deal on whether or not Kadima is in the government: "If we are on opposite sides of the barricades, it will be easy. But if we are both in opposition, working together to bring down a narrow right-wing government, it will be very tough," he declares. Cover story in Issue 23, March 2, 2009 of The Jerusalem Report. To subscribe to The Jerusalem Report click here.