Israeli Election Watch

While coverage of the GOP convention permeated the discussion in the United States, the rapidly approaching primary elections in Israel provoked a number of salient articles. Also of note are the talks between Nicolas Sarkozy and Bashar Al Assad which were perhaps exceeded in attention by the development of peace negotiations between Israel in Palestine in Italy.

I briefly mentioned the principal contenders for prime minister in Israel in a post a few weeks ago, and it appears that Foreign Minister Tzipi Livni will win the September 16 Kadima primary in the first round. A recent Haaretz poll confirms this, showing her with a 20 point lead, although 28 percent of the electorate remains undecided. A strong caveat has to be added, as high-level party support and getting out the vote can play a significant role in the outcome, as Haaretz notes.

In a second election round between Livni and Mofaz, the difference between them remains 20 percent. All Mofaz can hope for is a rerun of the polls fiasco in the Labor primary between Peres and Pertz in November 2005. The polls predicted a victory for Peres but on election day his voters remained at home while Peretz' divisions transported his voters to the polls. Today, too, most of the functionaries and large Kadima faction heads support Mofaz, which could narrow the difference. But the mood is with Livni.

The article goes on to explain that Livni has a significant advantage in the Arab community and is viewed more favorably by the media. Moreover, her grassroots organization is superior and appears to be growing at the expense of that of Shaul Mofaz, the Transportation Minister.


Despite this substantial lead, at least one party official believes the margin of victory will be much smaller.

Asked by ISN Security Watch to respond to this week's poll of party members, that puts Livni 20 percentage points up on Mofaz, a Kadima member of Knesset (MK) identified with the party's right said: "Most of the press support Livni so they try to present a picture that Tzipi will win, but I'm not sure at all." ISN Security Watch agreed to protect the MK's identity.

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He believes that Mofaz will win the primary because "most of the Kadima membership came to our party from the Likud. [Their opinions] are closer to Mofaz' concepts and policies." He believes that Mofaz is also in a better position to unify the party post-primary.

Likud senior official apparently disagree, and are preparing for a Kadima ticket headed by Livni according to Attila Somfalvi in Ynetnews. His sources cited internal pessimistic estimates by the Mofaz campaign and the shift of party support to Livni from Mofaz created by Ronnie Bar-On and Tzachi Hanegbi.

However, as Gerald Steinberg explained, it is unlikely that she will be able to form a coalition. Dr. Dominic Moran of ISN Security Watch expressed a similar viewpoint, citing Likud's recalcitrance, as well as a lack of support from UTJ and Shas (current members of the coalition). Interestingly, an unnamed Livni adviser agrees saying:

The political adviser from Livni's camp also believes the formation of a new coalition will prove impossible, forcing fresh elections in which she will run on her corruption-free image, promoting an agenda of political renewal.

But Somfalvi has noticed a shift in message from the Livni campaign toward a focus on a new government and a coalition. This is in contrast to previous sentiments expressed by campaign members like the one above, indicating, as Somfalvi points out, either a consolidation of message or a shift in belief. I haven't seen any polling data to confirm this, and the most recent poll shows Netanyahu winning 36 to 24.6 over Livni. However, a reluctance to go to elections from both Labor and Shas could tip the balance in the formation of a new government.

“I do not see willingness to go to elections,” a senior political figure says. “Livni’s associates are already starting to talk about the possibility of forming a government even with Shas, rely on a minority government, or perhaps add Shas later. These calculations convey a sense of a different atmosphere.”

Moreover, sources in the political establishment are estimating that the Pensioners’ Party, as well as Labor, both pulverized in the polls, won’t rush into new elections.

In the second part of his political analysis Somfalvi reveals that Likud officials are increasingly worried about the possibility of a coalition being formed. The scenario they worry about is a further fall in the polls for Labor after Livni's primary victory, meaning Labor will want to avoid having to face elections.


The talk in Israel however is that Olmert is trying to undermine the coalition in order to weaken the power of his Kadima successor, and preserve his power. Unnamed senior officials pointed to his intent to introduce a bill evacuating settlers from the West Bank and his backing of a proposed 2009 budget as an attempt to sow "discord" among the party (both Livni and Mofaz oppose the bill). I doubt this will significantly affect the likelihood of the formation of a coalition, though it certainly appears Olmert would like to stay in power for as long as possible.

Barring any major changes, I see Livni winning, though not in a landslide. I really don't have enough knowledge of Israeli politics to assess the potential for her to forge a coalition, but I am inclined to think she will not be able to, unless she gains significant cross-party momentum from the primary (which likely won't happen unless she blows out Mofaz).

Once the primary is over I will be looking more into her policies, but for now the ISN Security Watch article and this article are worth reading.

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The Other Elections

With the hasty resignation of scandal-plagued Israeli Prime Minister Ehud Olmert, Israel has been suddenly thrown into election season. There has been a glaring lack of reporting in US papers and blogs on the evolving election, despite its potentially significant effect on several conflicts and relationships in the region, notably the future of Palestine, and tensions with Iran. Assuming Ahmadinejad is reelected in the 2009 Iranian election (a potentially unsafe assumption, as inflation continues to rise unabated, and Iran's new compromise Economy Minister and central bank resist Ahmadinejad's more radical economic policies) the result of the Israeli election will likely determine whether or not the region is embroiled in another war. Some observers have made a compelling argument that the result of the 2009 Iranian election will determine US and Israeli action, however, I see an emboldened Netanyahu coming off a decisive victory over Kadima escalating regardless of whether Ahmadinejad remains in office. An Obama administration could very well mitigate the impact of an aggressive Israel (lead by Mofaz or Netanyahu) as strikes on Iran are dependent on US compliance. The confluence of these three elections represents a potential turning point for one of the central conflicts of the region. Until all three have concluded, expect little progress on any of the major issues in the region, as all three nations will be carefully calculating how to strengthen their position and work with new governments.



Election Roundup

Most polls predict Tzipi Livni, the moderate and pragmatic Foreign Minister, will win the Kadima primary over Transportation Minister Shaul Mofaz, who takes a much harder line on Iran. Regardless of who wins, Kadima will most likely be unable to form a majority in the Knesset, meaning elections will have to take place, in February or March.

For more on the process, and the likelihood of a Kadima coalition see this interview with Gerald Steinberg of Bar Ilan University.

Iran's election remains a bit more uncertain at this point, as no major opposition candidates have emerged to challenge Ahmadinejad. It appears the reformists will not pose much of a threat, as Khatami has declared he will not run.



I intend to write more about the Israeli candidates and their likely effect on Israel's relationship with Syria and Lebanon, as well as the United States.

How's Medvedev Doing?

Although Putin no longer is in charge of Russia, his legacy continues. Recently "elected" Dmitri Medvedev has continued critisizing the United States over the past few weeks, most recently at the World Economic Forum. As the Financial Times notes, his rhetoric is somewhat softer than Putin's and more focused on the economy, but is similarly critical of the United States view of itself as a global leader.

Medvedev positions Russia as an alternative to the US which is currently plagued by economic woes. He termed United States actions "economic egoism" and blamed US markets for trying to "substitute" for the commodity markets. More interestingly, Medvedev argued that Russia should be the new economic focus of the world and offered numerous suggestions for how it could do so.

There is some truth to his argument, as Russia's economy has benefited substantially from the rise in oil prices. Former IMF representative Martin Gilman explains that:

For Russia, the stakes are different. As the world's second-largest oil producer, it is almost the mirror image of many Western countries. Higher oil prices are fueling a boom in domestic aggregate demand, with real gross domestic product expanding by more than 8 percent for the year through May. Government revenues are rising so much that, even with the supplementary budget, the fiscal surplus is expected to decline only slightly to 5 percent in 2008. Foreign-exchange reserves have hit almost $550 billion as the country attracts foreign investment on a net basis on top of the current account surplus.

Medvedev has a point here as Russia's economy is growing much more quickly than that of the United States which is barely growing if at all. Moreover, it maintains a fiscal surplus in comparison to the train wreck of a budget that George Bush has created. The astute economists have probably already guessed that this is resulting in inflation. However, Gilman believes that Russia will be able to head off the inflation, an argument I'm inclined to agree with - especially as there isn't any indication of wage inflation.

This oil boom comes at a price, however. The continuing rise in private spending, along with the acceleration in government spending since the second half of last year and a loose monetary policy, have fueled a doubling in the rate of inflation in just a little over a year. Hopefully, recent steps to tighten monetary conditions and the deceleration of fiscal expansion should help to prevent Russia from following Ukraine's path toward inflation rates exceeding 30 percent.

Another problem looms large, as Russia's production actually dropped in May by 0.8 percent as total exports fell by 4.6%. This spells trouble for Russia's economy and the government is acting accordingly, offering numerous incentives and tax breaks to increase production.

For Russia, the stakes are especially high as critical decisions about future oil output are overdue. The country already produced 0.8 percent less oil in May than in the same month last year, bringing the country closer to the first annual decline in oil output in a decade. Total exports also fell by 4.6 percent less than in May last year.

The government plans to offer a 100 billion ruble ($4.2 billion) package of tax breaks and incentives to stimulate production growth, including a cut in the mineral extraction tax, incentives for production of high-quality and environmentally cleaner fuels, tax holidays for offshore exploration and changes to the excise duties on high-quality oil products. But with higher costs of development, it is unclear if the proposals, which will go into force in 2009, will go far enough to boost production.

Earlier this week, Russia saw concerns about the US economic crisis harm its stock market, amid rising inflation, despite corrective measures taken by the Central Bank. I expect to see the Central Bank continue to increase interest rates, but it will likely rely on the ruble to combat inflation.

Russia won't be saved by Arctic oil, at least not yet, as Denmark, Canada, US, Russia, and Norway have agreed to halt exploration into the Arctic.

In the short term, the Moscow Times reports that Gazprom, Russia's largest energy company, is seeking to establish a pipeline to Alaska among other things.

Central Times Asia (Subscription) explains that Russia faces an increasingly strong challenge from the United States in the Caspian region, as a recent visit by US assistant secretary of state for South and Central Asia, Richard Boucher made headway on energy policy in both Turkmenistan and Uzbekistan. Medvedev will be visiting the Turkmenistan in early July, most likely to try and sway the Turkmen government away from the US proposed Trans-Caspian Pipeline. Diplomat of the Future has an excellent post assessing the visit by Boucher as well.

However, just a few days prior to that, it appeared that Russia was in danger of losing its stranglehold over Caspian Basin exports, as aggressive lobbying by the United States seemed on the verge of bearing fruit, specifically in getting Turkmenistan to join a long-planned trans-Caspian pipeline (TCP) project.

The source of great expectations for the United States was a regional tour made by Richard Boucher, US assistant secretary of state for South and Central Asia. Boucher made no secret of the fact that the goal of his Caspian Basin visit, which lasted from May 28 to June 3, and included stops in Azerbaijan, Turkmenistan and Uzbekistan, was to undermine Russia's influence in the region. In all regional capitals, Boucher repeated his message: "The more choices any nation has, the more independence it has".

Turkmenistan has become increasingly favorable towards the United States and European Union and is seen as a prime opportunity for breaking up Russia's control over energy transit in the region.

US and European Union leaders have aggressively courted Turkmenistan's Berdymukhammedov since his rise to power in late 2006, hoping to secure a Turkmen commitment to ship a large share of its energy reserves westward via TCP. Russia, meanwhile, has aggressively lobbied against both TCP and Nabucco, which, if constructed, would break Russia's near-monopoly on energy export routes linking Central Asia and Western European markets. Russia is touting its own project, dubbed South Stream, as a more viable transit system.

The US also made progress in Uzbekistan, and is using military cooperation to further energy cooperation.

During a four-day stay in Tashkent, Boucher reportedly raised the possibility of Uzbekistan's exporting its hydrocarbons to Europe via TCP and Nabucco. He emphasized Uzbekistan's intensifying security cooperation with the United States and European Union, and even strongly inferred that the transit of non-lethal cargos for the coalition's forces in Afghanistan through Uzbekistan had already started. In all three capitals, Boucher downplayed human rights-related issues. In Ashgabat, he praised the Turkmen government for "opening up".

Gazprom attempted to combat the growing influence of the EU and the United States, but was rebuffed in Tashkent and Ashgabat.

In Tashkent, President Karimov reportedly declined to meet with the top-level Gazprom delegation, comprising board chairman, Alexei Miller, deputy board chairman, Valery Golubev, and Valery Gulev, general director of Gazprom's subsidiary, Zarubezhneftegaz, which is in charge of all Gazprom's overseas operations. Company representatives succeeded in meeting only two deputy premiers and the finance minister. Moreover, such a high-profile visit was completely ignored by the Uzbek press. "Karimov probably didn't want to meet with Gazprom's officials until he talked to Boucher and other Western officials, and heard what they had to say, or offer, to be specific," a Tashkent-based analyst suggested on conditions of anonymity, according to Eurasianet.

On June 3, the Gazprom delegation tried its luck in Ashgabat, but soon discovered it was in for yet another fiasco. For the first time in many years, company executives were not granted a meeting with President Berdymukhammedov.

An unnamed Tashkent analyst argued that the shift in power from Putin to Medvedev was seized upon by Western countries as a good time to renegotiate.

It appears to me that the incentive is largely symbolic in trying to wrest control of a region that Russia has had exclusive influence over for several decades. There is some, albeit distant, economic incentive, but I see it mainly as an attempt by the West to improve its standing with this relatively unexploited area in the hopes that these nations could become allies in the future. The EU has a much greater interest in swaying Turkmenistan than does the US and I suspect they are beyond this recent push.


As the world economy eventually turns away from oil and towards alternative forms of energy, Russia will be likely left out in the cold. Despite their large manufacturing base, the vast majority - 80% of their exports come from oil and as that slowly decreases (especially if production falters) then Russia may be facing a more serious economic crisis of its own. In addition to the weapons industry, Russia is focusing on developing a stronger nanotechnology sector, which could boost their economy in the long run.

Speaking of alternative sources of energy, the US is working on a deal to expand Russia's civilian nuclear power sector. This comes at an unusual time, as the Pentagon publicly criticised Russia's military nuclear program earlier this week, arguing Russia was unnecessarily expanding its nuclear arsenal Once again, US decisionmakers are applying a double standard, not to ourselves this time, but instead to a rival. It is likely that the US has secured or is hoping to secure Russian cooperation on the Iran issue, although I am inclined to think that Putin and Medvedev may just be putting on a facade, knowing that Bush has little time left in office. At this point, there is no credible evidence that Russia will radically change its stance on Iran but it certainly has interests in expanding its nuclear fuel storage capabilities, something the deal offers. But I doubt the Democratic Congress will allow this to pass especially considering Bush's lame duck status.

A Dirham of Progress

McClatchy reports that the United Arab Emirates is set to open an embassy in Iraq. The UAE will be the first Gulf state to do so since the Iraq invasion.

Hopefully the UAE will set an example for other Gulf states to open embassies, but I suspect religious tension as well as concerns about the stability of Iraq will continue to obstruct further reconciliation between Gulf states such as Saudi Arabia and Iraq. I expect to see the Bush administration tout this as a sign of progress in Iraq, but absent political progress in the Parliament and the Cabinent, the situation is not likely to improve greatly.

The debate regarding the Bush-al Maliki security agreement indicates Iraqis espeically al-Sistani and the Islamic Supreme Council of Iraq are growing more poignant and agressive in their assessments of the United States.

Undoubtedly the ISCI, al-Sistani and Sadr will react harshly to the leaked details of the agreement.
Patrick Cockburn of the Independent has the details:
"Iraqi officials fear that the accord, under which US troops would occupy permanent bases, conduct military operations, arrest Iraqis and enjoy immunity from Iraqi law, will destabilise Iraq's position in the Middle East and lay the basis for unending conflict in their country."

Already the agreement has frightened Iraqi politicians but Cockburn argues Maliki will cave to the United States in order to stay in power. I think he overestimates Maliki's docility and I expect to see Maliki due to pressure from al-Sistani in particular demand some changes, but I doubt the agreement will be put to referendum.
This should make for a very tense yet busy few weeks.

Update:
Iraq stands to lose $20 - $50 billion in US aid should the security agreement fall through. This weakens my argument regarding Maliki somewhat, but Juan Cole agrees the agreement could still fail due to widespread opposition and concerns regarding sovereignty.