Cover story in Issue 17, December 8, 2008 of The Jerusalem Report. To subscribe to The Jerusalem Report click here. The day after Barack Obama was elected America's 44th and first black president, senior Foreign Ministry staff met in Jerusalem to consider the implications for Israel. There was a buzz in the building, as seasoned diplomats expressed their admiration for the American system, the articulate Democratic president-elect and his almost flawless campaign. But when they got down to business, the papers they presented to Foreign Minister Tzipi Livni focused on potential differences of approach between Israel and an Obama administration on key issues, and they found plenty to worry about. The biggest concern by far was over Obama's declared intention to open a dialogue with the radical Shi'ite mullahs in Tehran. Senior officials expressed the fear that if Obama does not set preconditions for engagement with Iran, the Iranians will simply use the talks as a smokescreen to cover acceleration of their nuclear weapons drive. "What concerns us is the possibility of engagement without preconditions, benchmarks or a timetable. That would undermine the sanctions regime against Iran and the Security Council Resolutions calling for a suspension of uranium enrichment," a senior official told The Report. Livni herself goes further. In an early November radio interview she said unconditional engagement would be interpreted in Tehran as a sign of weakness and would encourage the Iranians to think that they could go ahead with their nuclear weapons' program with impunity. In the Foreign Ministry meeting, senior officials spelled out what Israel believes the cast-iron precondition for talks should be: that the Iranians agree to a verifiable suspension of their weapons' grade uranium enrichment program. That would at least ensure that any talks would delay Iran's nuclear plans. Livni and her top officials took one operational decision: to send emissaries to meet with the Obama transition team and urge them to insist on uranium enrichment suspension as a condition for dialogue. Like the Foreign Ministry staffers, Israel's top decision-makers were deeply impressed and even slightly envious of the workings of American democracy, but they were somewhat disconcerted by what they see as the coming winds of change. In a call to congratulate the president-elect on his victory, Prime Minister Ehud Olmert spoke about the excitement the American democratic process had aroused in Israel and expressed his confidence that under Obama, strategic ties between the two countries would grow even stronger. But beyond the public rhetoric, politicians and officials harbor nagging concerns about possible new American policy directions that could hurt Israel. Besides dialogue with Iran, there is a general fear that Obama might make a show of putting public pressure on Israel to shore up America's battered status in the region. There are also fears that his deep empathy with the civil rights cause in America might translate into pressure on Israel on the Palestinian track; that to alter the regional balance in America's favor, he might press Israel to pay a price for Syria's detachment from Iran; and that, given the growing global economic crisis, he might consider cutbacks in aid and arms supplies. Obama has done his best to dispel all these concerns. In a key campaign policy speech to the AIPAC pro-Israel advocacy group in June, he declared his "unshakeable commitment" to Israel's security and its "qualitative military advantage" over any combination of foes "from Gaza to Tehran." He promised deepened military cooperation with Israel, including on missile defense, and said U.S. military exports to Israel should be made under the same guidelines as to NATO. Moreover, he vowed not to touch the $30 billion military aid package promised to Israel over the next ten years. Then, a month later in Israel, Obama repeatedly told Israeli leaders that he would not impose anything on them, and that wherever they took the lead in peacemaking, he would be there to offer America's help. Still, Obama remains something of an enigma. Campaign rhetoric is one thing, actual policies quite another; and leading Israeli America watchers point to Obama's many statements, even in the AIPAC forum, that, down the road, Israel will have to make major concessions to its Arab partners. "Israel will have some heavy stones to carry," the president-elect told his AIPAC audience. America watchers are divided over whether an Obama presidency will help or hinder Israeli interests. Some take a dark view and see Israel and America on an inevitable collision course; others adopt a wait-and-see attitude, while a third group sees Obama's readiness for dialogue with America's friends and foes alike working and redounding positively on Israel. Roni Bart, an expert on America at the Tel Aviv-based Institute for National Security Studies, (INSS), is one of Obama's fiercest critics, and predicts a bleak future for Israel-U.S. relations after "naÃ¯ve American approaches to Iran" come crashing to earth. In Bart's view, the Foreign Ministry's plan to send emissaries to urge the Obama team to insist on Iran suspending its uranium enrichment program as a condition for dialogue is a waste of time. "The suspension of uranium enrichment won't be a condition for the talks, but rather one of the main issues on the table. And I am pessimistic over the chances of this unconditional engagement policy working. It will only help Iran play for time until it is too late," he tells The Report. Bart argues that instead of publicly criticizing Obama on Iran, as Foreign Minister Livni seems to be doing, Israel should adopt a more subtle policy. "We should talk quietly to the new administration and say, 'we don't think the engagement idea is very smart, but we won't oppose it publicly as long as you keep us in the loop,'" he says. At the same time, Israel should also make it clear that there are some things it will not accept, even at the cost of a serious breach with America. For example, the idea, now being bandied about in some circles in America, of a "Dimona for Natanz" deal - that, in return for Iran renouncing its nuclear ambitions, Israel should agree to dismantle its alleged nuclear arsenal. "There is real danger here, because there are quite a lot of people around Obama with a naÃ¯ve view of nuclear disarmament on a global scale, and a non-nuclear Middle East is a central element in the mix," Bart warns. On Syria, Bart says that unlike President George Bush, Obama is probably prepared to pay a great deal in diplomatic and financial coin for a "grand bargain" in which Syria agrees to break with Iran, Hizballah and Hamas and prevent further incursions of anti-American insurgents into Iraq from Syria. For this, Obama would be ready to help rehabilitate Syria on the international stage, remove Syria from the list of terrorist states, encourage American investment and compensate Israel in military terms for the loss of the strategic Golan Heights, which would be returned to Syria as part of the deal. The problem, says Bart, is that it will be almost impossible to verify that Syria is keeping its end of the "grand bargain." "Giving back the Golan is irreversible, whereas all the Syrian promises with regard to Iran, Iraq, Hizballah and Hamas can be turned around from one day to the next," he contends. Worse: Bart sees an even bigger danger of an early confrontation between Israel and the Obama administration on the Palestinian track - especially if the Likud's Benjamin Netanyahu becomes prime minister after next February's general election. In the mid and late 1990s, Netanyahu fell foul of the Clinton administration because of his refusal to move on promised concessions to the Palestinians. Now, says Bart, Netanyahu is taking an even harder line than he did then, and Obama is more receptive to Palestinian demands than President Clinton was. "Obama criticized Clinton for not putting more pressure on Israel at Camp David in 2000, and I won't be surprised if he presents American bridging proposals fairly soon that are far closer to the Palestinian position than the Israeli," he asserts. "At best," Bart concludes, "Netanyahu's relations with Obama will only be as bad as they were with Clinton. They could well be a lot worse." Livni, the Kadima leader and candidate for prime minister, has already picked up on this in her election campaign. "If Israel presents itself as a country that opposes any peace process, then the world, led by the United States, will try to force a process on us. Just saying 'no' has never helped Israeli diplomacy," she told the Knesset in early November, implying that if the hawkish Netanyahu becomes prime minister, Israel and a U.S. administration under Obama would be on a collision course. Netanyahu and Obama have already met twice, in Washington, in March 2007, and at the King David Hotel in Jerusalem, last July. According to some reports, the differences between them during the second session were plain. But Dore Gold, a top Netanyahu adviser who was present at the meeting, dismisses these accounts as groundless. "On the contrary, they had excellent chemistry. And after we presented everything, the two of them decided to go into a corner and talk one-on-one. You don't do that with someone you have problems with," he tells The Report. Gold points to the earlier meeting, which took place at Washington's Dulles International Airport as another sign that the two men are on the same page. Netanyahu outlined detailed plans to pressure the Iranian regime through divestment from Iran. Two months later, the then-senator from Illinois and other lawmakers introduced the "Iran Sanctions Enabling Act," shielding fund managers from lawsuits if they divest. But, in Gold's view, the main reason confrontation between an Obama administration and a Netanyahu-led government is unlikely runs much deeper: Today's political realities, he says, are totally different from those a decade ago. Today there is nothing like the Oslo process to which America was totally committed and which Netanyahu deeply distrusted. "It might not be politically correct to say so yet, but there is growing recognition in the international community that today's process with the Palestinians has not achieved any results," says Gold. "And, given these doubts, he says Obama may be open to new ideas - including Netanyahu's proposal for "economic peace first," which urges shifting the focus to raising living standards in the occupied territories and only then trying to conclude political peace. On Iran, Gold, a former ambassador to the U.N., says there are signs that Obama is backing away from his earlier readiness for dialogue without preconditions, as he now talks about the need for adequate "preparation" before engagement. But even if Obama goes the diplomatic route without preconditions, Gold is not unduly concerned, because, he says, Israel and Obama share the same strategic goal: that, one way or another, Iran not be allowed to acquire nuclear weapons. "Like Israel," says Gold, "Obama recognizes that a nuclear Iran would be a game-changer, and that is the critical factor." Other observers of American policy offer another reason why Israel and America will not clash over policy any time soon: because the Israeli-Arab conflict will not be high on Obama's list of priorities. "He is going to be totally immersed in saving the economy, and when it comes to foreign policy, priority No. 1 will be Iraq, No. 2 Iran, and No. 3 instituting a more multilateralist, consultative foreign policy that includes expanding dialogue with Europe, Russia and China," says Alon Pinkas, a former Israeli consul general in New York. Pinkas believes that Obama will closely follow the recommendations of the 2006 Baker-Hamilton Commission, the special "Iraq Study Group," which recommended a timetable for withdrawal from Iraq (Obama says 16 months), and engaging Iran in dialogue. "If Obama wants to put in place harsher more effective sanctions against Iran, he will need the Europeans and certainly the Russians and definitely the Chinese. And you can't pull that off without engaging the Iranians first," says Pinkas. In the context of first talking to Iran and then tightening the screws if dialogue doesn't work, Pinkas thinks Obama may well be tempted to put the Israeli-Palestinian track on a back burner, and go for a "Syria-first" approach. "In terms of American geo-political strategic interests, in terms of getting out of Iraq within his first term and in terms of defusing the Iranian issue, an Israeli-Syrian negotiating process, actively facilitated by the Americans, makes a lot of sense," he tells The Report. Most top Israeli politicians, including Labor leader Ehud Barak, whom Pinkas serves as a foreign policy adviser, see America's massive ten-year $30 billion military aid commitment to Israel as a sacrosanct strategic asset of the highest order, and insist that Israel should do nothing that might put any part of it under scrutiny. But given the bleak economic outlook, Pinkas argues that Israel could enhance its standing in Washington by initiating a cutback. "We should work out a deal whereby the money figure goes down for, say, a three year period and, in return, the U.S. gives us access to state-of-the-art systems it didn't before," he says. In the late 1990s, Netanyahu initiated a cutback in civilian aid and, says Pinkas, if he becomes prime minister again, doing something similar with military aid "could be a way of balancing the inevitable tensions between him and Obama on other issues." But despite the global economic downturn, most experts do not expect any Israeli or American initiatives on the $30 billion package. Danny Ayalon, who was the Israeli ambassador to Washington during the initial negotiations, points out that the aid does not have to be approved every year, because it was authorized for the full 10-year period through a Memorandum of Understanding, signed by the two governments and approved by Congress. "It is not as if the Americans are throwing money away," insists Ayalon, who recently joined the far-right hawkish Yisrael Beiteinu party. "On the contrary, not only does the aid package serve vital American interests in the Middle East, it provides thousands of jobs in America, because most of the money is spent there." On Iran, Ayalon argues that Obama's multilateralism and readiness to engage Tehran will give his administration far more leverage than Bush ever had. "It will be much easier for the Obama administration to build a broad coalition that would more effectively limit Iran's capacity to continue on the nuclear path. And if worst comes to worst, I think Obama will be uniquely positioned to have legitimacy and support from all parts of the world to use force," he maintains. Other policy experts share this optimistic view. Eran Lerman, director of American Jewish Committee's Israel/Middle East office, agrees that Obama's multilateralist approach will help him deal with Tehran from a position of strength. "There is a whole range of robust things the U.S. could do to destabilize the Iranian economy and the mullah's regime, if Obama has a strong coalition behind him," he says. Israel, in Lerman's view, also has a role to play. "It should hover in the background, muttering darkly about the consequences of failure, and creating an ambiguity about its options that would actually back up a serious American effort to get a non-military solution," he avers. Lerman argues that because of his background, Obama is likely to be more attuned to Palestinian suffering than Bush was and that Israel will have to be far more effective in finding ways to alleviate hardship on the ground. That means lifting roadblocks, and dismantling illegal Jewish outposts. "But does that mean Obama will buy into the Palestinian political narrative? I doubt it," he says. Indeed, Lerman sees Obama's election leading to a revival of the old Jewish-black alliance in the Democratic Party. "Even people like Jesse Jackson are signaling a wish to renew it. On victory night, he evoked the memory of Schwerner, Goodman and Chaney, the three civil rights workers murdered in Mississippi in 1964. These are iconic figures of black-Jewish amity. And although Israel is not the central issue here, it is part of the mix," he contends. So far, there has been one dramatic indication of the revived alliance: the appointment of Jewish American Rahm Emmanuel as White House chief of staff. Ayalon believes Emmanuel's appointment will be significant for U.S.-Israel relations too. "He will almost certainly be in the small presidential team that crafts foreign policy. And knowing him personally, I am sure he won't be shy about expressing his views," he says. Over and above its influence on Israel-U.S. ties, the Obama factor could have a bearing on Israel's upcoming election in February. Of the two frontrunners for prime minister, Livni could be helped and Netanyahu hurt. She will present herself as the candidate most likely to share a common language with Obama, as, like him, a vigorous first-time leader, dedicated to cleaner politics based on pragmatic, middle-of-the road solutions. Netanyahu is likely to find himself on the defensive, having to convince voters that he and Obama are not destined to clash. In the Foreign Ministry the day after Obama's election, there was a sense of history in-the-making, and a general consensus among the professionals that they were witnessing an event of seminal importance, not only for America, but for the world as a whole. The position papers they presented took virtually every conceivable bilateral and regional scenario into account. But the most tantalizing question of all was off limits. To what extent will the fallout from Obama's groundbreaking election help their boss to make a bit of local history and become Israel's second woman prime minister? Livni and her spin doctors are convinced it will. â€¢ Cover story in Issue 17, December 8, 2008 of The Jerusalem Report. To subscribe to The Jerusalem Report click here.