Israeli Political Scandal May Reset Mideast Peace Clock

If Netanyahu is indicted next week, Israel's far-right could be weakened in talks with Palestinians.

Strong-willed leaders in the Mideast have driven the peace process one way or the other from the start. So when one suddenly falters, as Israeli Prime Minister Benjamin Netanyahu did this week, prospects for peace can rise or fall with him.

A police recommendation Wednesday that Mr. Netanyahu be indicted in a influence-peddling scandal has threatened his future - and his hard-line stance against the Oslo peace accords. This has raised hopes in Arab capitals that Israel might return to a softer stance toward Palestinians.

State prosecutors will decide early next week whether to indict him. But already he faces strong pressure from Israeli opponents on the left and far right - who are not pleased with his leadership - to step down and call new elections.

"Never in our history did we have something like it," says Labor leader Shimon Peres, who helped craft the 1993 Oslo peace pact that Netanyahu wants to alter.

The police recommendation was an unprecedented "political earthquake," says Mr. Peres, whose own short term as prime minister came after the 1995 assassination of Yitzhak Rabin, another larger-than-life soldier-turned-peacemaker. Netanyahu, the Likud party leader, defeated Peres by a thin margin in elections last May.

The right-leaning Jerusalem Post said in an editorial yesterday that the recommendation would likely "deal a fatal blow" to Netanyahu's chances of completing his four-year term.

His strong leadership has reflected those of others in the long Mideast peace process, such as Palestinian chief Yasser Arafat, Jordan's long-ruling King Hussein, and Syria's Hafez al-Assad.

American personalities have also left their mark: Policies have been defined by former US secretaries of state, the tough-on-Israel James Baker and far-traveling Warren Christopher.

The possibility of new elections in Israel has Palestinian and Arab analysts looking for a bold stroke by Israeli voters that might reconfirm the more accommodating policies of previous Labor governments.

"This could really be a moment of reckoning for Israelis," says Rami Khouri, a Jordanian political commentator. "Either they will share Palestine and remove Israeli settlers out from Arab land, or we will see perpetual conflict. Now the choice is clear. There is an obvious discrepancy between Netanyahu's position and that of the majority of Israelis, who want peace."

Recent talk of forming a "peace coalition" between Labor and Likud has been put on hold. The scandal looks set to tie Netanyahu's hands on peace and foreign policy until it is resolved.

THE crisis comes at a bad time for Netanyahu, as US special envoy Dennis Ross visits the region for talks with the prime minister and Mr. Arafat on jump-starting the peace process.

Though political scandals in Israel are commonplace, none have reached this high nor have had such potential impact. The prime minister's credibility in the United States - where he recently stood defiant before President Clinton's requests to be flexible with Palestinians - may also drop.

A 12-week police investigation into allegations that Netanyahu was involved in a decision to appoint political crony Roni Bar-On as attorney general in exchange for other political favors has resulted in a 995-page police report.

Contents leaked to Israeli television on Wednesday shocked Israelis, and cast doubt on the prime minister's trustworthiness.

Still, like his American counterpart, whose presidency has been buffeted by an array of scandals, Netanyahu has denied any wrongdoing and vowed not to let the crisis affect his leadership.

Four ministers of Netanyahu's Cabinet have said they will resign, however, if the allegations are proved even partly true. It took weeks for the prime minister to form his coalition to begin with, as he horse-traded for the support of small but influential right-wing and religious parties.

They have forced the prime minister to follow some unyielding policies, such as the building of a new Jewish settlement in Arab East Jerusalem, which was occupied by Israel in 1967.

Digging by bulldozers there has so far sparked a month of Palestinian-Israeli clashes in West Bank towns. And a suicide bomber from the Palestinian faction Hamas, which opposes the peace process, blew up a Tel Aviv cafe, killing three women. The killing served to illustrate that many Palestinians feel that they have few other political options.

Though subsequent polls have shown a shift to the right in Israeli public opinion, that didn't prevent scores of demonstrators from besieging Netanyahu's house yesterday with chants of "Bibi go home" and "Elections now."

Though Mr. Ross and Palestinian leaders say the scandal is an internal matter for Israel, any shake-up of hard-line policies, some say, could renew their hopes for peace.

"There will be some soul-searching, but the crisis will be positive because Israelis are not happy with what's going on," says Mr. Khouri. "It's not the fact that he is an arrogant and provocative personality. The main issue is his policy, and the freak nature of his right-wing coalition."