Can Obama Influence Netanyahu?

Hebrew is a compressed language. Much disdain can be packed in a few syllables. To say of the prime minister, "He's someone who cracks under pressure," takes just two words: hu lahitz.

When a television mic caught the Israeli Finance Ministry's budget chief using those words last week, the budget chief denied he was talking about Benjamin Netanyahu. The denial was hard to take seriously. For one thing, the official resigned the next day in disgust over Netanyahu's handling of a national budget crisis. For another, the description precisely fit the prime minister's behavior.

In the lead-up to Netanyahu's meeting today with Barack Obama, I'm sure the president's staffers have studied the Israeli leader's positions on the Palestinians and on Syria and Iran. Let's hope they also carefully watched how Netanyahu dealt with the first major domestic challenge of his new term in office. It was a characteristic Netanyahu failure of negotiating skills, leaving him deeply politically unpopular just a few weeks after taking office. But the budget affair needs to be read carefully. The pressure under which Netanyahu bent was local, not foreign.

A week and a half ago, Cabinet members received the Finance Ministry's budget proposal. Aimed at holding down the deficit, it was a collection of cutbacks in social programs -- from nationalized health care to unemployment benefits to welfare payments -- in the midst of the global economic crisis. More cuts were aimed at the defense budget.

While drafted by Finance Ministry bureaucrats, the proposal fit Netanyahu's economic views. It couldn't be blamed on the finance minister, Yuval Steinitz, because Steinitz was appointed merely to sit in the minister's chair while Netanyahu set policy. Steinitz has no economic qualifications, other than being one of the prime minister's most loyal supporters.

The political storm was immediate. Knesset members from Netanyahu's Likud Party complained of non-stop phone calls from party members. Defense Minister Ehud Barak, head of the Labor Party, rejected the defense cuts. Netanyahu leaked the message that he had reprimanded budget officials for the proposal. He might as well have been shouting at himself in the mirror.

A week later, the Cabinet passed a rewritten budget proposal and sent it to Parliament. The most controversial cuts were gone, replaced with a 1 percent increase in the value added tax. To make the change even more regressive, the tax will be applied for the first time to fruits and vegetables. The full list of changes is much longer. Much of it was negotiated between Netanyahu and Ofer Eini, head of the powerful Histadrut union federation. Netanyahu feared that Eini could convince the Labor Party to pull out of his governing coalition.

The original economic program had a double meaning: Philosophically, Netanyahu is a committed economic conservative who would like to take apart what's left of Israel's social democracy. Practically, he expected to bargain away some of the measures to keep others. But his opening position was so extreme that he looked arrogant. Surprised by the fury -- in his party, among his coalition partners, and among the public -- he cracked, and gave up nearly all his goals. In the process, he embarrassed an ally, Steinitz, and rewarded his opponents.

He also squandered public credibility. A national poll at the end of last week published in the daily Ha'aretz showed that 55 percent of respondents thought that Netanyahu's performance was the same or worse than his scandal-stained predecessor, Ehud Olmert. Only 31 percent rated him as a better prime minister. To score such low popularity so soon after being elected is a rare achievement.

What can Obama learn from this? On foreign policy, as well as domestic, Netanyahu really is a conservative. Unlike Olmert, he has never shown any sign of regarding permanent rule over the Palestinians as a danger to Israel's future. In his eyes, the dangers are the near enemy of Palestinian terror and the far enemy, Iran. If he does not lecture Obama about these two dangers, count it as a rare moment of restraint on his part.

At the same time, if he is pushed to join a negotiating process, Netanyahu's instinct is to make his price as high as possible. That's true in any negotiation. The difference between negotiating a budget and negotiating with the Palestinians is that he knows he needs to get a budget through parliament. He does not see reaching a deal with the Palestinians as a necessity.

And yes, experience shows that he is someone who cracks under pressure. But the pressure that matters, or at least matters most, is from those who will determine whether he stays in office: his own party, his coalition partners, and indirectly the voters who influence them. Netanyahu has great regard for America, but the Likud delegation in the Knesset is of more visceral concern.

Right now, the Likud delegation is more intransigent than the one Netanyahu led during his previous term as prime minister in the late 1990s. Yet those Knesset members are to the right of their electorate. The same Ha'aretz poll showed that 40 percent of Likud voters would like Netanyahu to agree to a two-state solution, which he has so far rejected. For the public as a whole, the figure was 57 percent.

Obama's goal should be raising those numbers. Just as he needs to reintroduce America to the Muslim world, he needs to reintroduce the possibility of achieving peace to the Israeli public. Israelis need to feel that their prime minister's intransigence is costing them a better future. The arguments that Obama makes in today's meeting in the White House matter less than the arguments he must publicly make to the Israeli public who can then, in compressed language, demand that Netanyahu change or leave the stage.

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