D.C. Dispatch April 11, 2006

The old order has collapsed in Israel. But is this a new beginning, or another dead end?

Beyond the Collapse

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JERUSALEM—On March 28, Israel elected a new government led by Kadimah, a party that didn't exist six months ago. On March 29, a new Palestinian government was sworn in, led by Hamas—a party that has never held power before. Is this a new beginning, or another dead end?

Hamas leaders say they want a period of peace. "I think this government is meaning really to put an end to any kind of bloodshed, for the Palestinians first and for others as well," Aziz Dweik, speaker of the Palestinian parliament, said last week. Israel's new leader, Ehud Olmert, spoke of living "in a state of peace and quiet."

That would be desirable after all of the dramatic surprises that have transformed Israel's political landscape in the last seven months: Israel's withdrawal from Gaza; the defeat of veteran statesman and Nobel Prize laureate Shimon Peres for leader of the Labor Party; the decision of Prime Minister Ariel Sharon to leave the Likud Party and start Kadimah, a new party of the center; Sharon's stroke and departure from the political scene; and the Hamas victory in the Palestinian election.

As recently as last summer, no one could have imagined any of this. The old order has collapsed. Nothing signified that more than the collapse of Israel's Likud Party in last month's election. Likud went from 32 percent of the vote in 2003 to just 9 percent on March 28. David Makovsky of the Washington Institute for Near East Policy observed that Labor was the dominant party for Israel's first 29 years (1948-1977). Then Likud dominated Israeli politics for the next 29 years (1977-2006).

What could be next? Israeli voters' confidence in the old alternatives has evaporated. The status quo—continuing occupation—doesn't work, in the view of most Israelis. The crushing defeat of Likud conveyed that message. Peace negotiations? Israel says it can't talk peace with Hamas. Israel's Labor Party still holds out hope for negotiations. But Labor, which came in second in the election with 15 percent of the vote, did not run on a platform of reviving the peace process.

Israelis think that the security fence is working. So, before the recent election, acting Prime Minister Olmert said he would turn the fence into a border. "We are prepared to compromise, give up parts of our beloved land of Israel, and painfully remove Jews who live there," Olmert said. The voters' response? "OK, we'll try it." The vote was a wary endorsement of Olmert's risky new alternative, the relocation of more than 60,000 Israeli settlers behind new borders, determined unilaterally by Israel.

Olmert's Kadimah Party went from zero to 29 seats in just six months, becoming Israel's largest party. But polls had suggested that Kadimah might get 40 or more seats in the 120-seat Knesset (parliament), so the result was not as favorable to Kadimah as had been expected. Labor leaders now claim that the vote was more an endorsement of Labor's economic message than of Kadimah's security plan.

Labor could be right about that. One reason for Likud's collapse was the tough budget discipline imposed by its leader, Benjamin Netanyahu, who served as Sharon's finance minister. Netanyahu's policies sharply improved Israel's economic growth rate but hurt Likud's constituency of poor voters, who depend on public subsidies. Economic protest votes gave a new "pensioners party" an unexpected seven seats. Now Labor leader Amir Peretz is proposing a "social front" coalition, led by Labor, as the country's new government. The argument is that while the election produced a weak consensus on security, it produced a strong consensus for new anti-poverty measures.

A social front coalition would make movement on the diplomatic front even less likely. The Palestinians insist that Israel renounce unilateralism before peace negotiations can take place. "We hope that [Olmert] will change this policy from unilateral steps to a negotiated settlement,' " Palestinian President Mahmoud Abbas said after the Israeli election. The Israelis insist the Palestinians must renounce violence before negotiations can begin.

Two new governments, each insisting that the other must change. The United States favors negotiations, not unilateral action. But the Israeli government hopes the United States, too, will change.

William Schneider is the Cable News Network's senior political analyst. He is also a resident fellow at the American Enterprise Institute in Washington, D.C., and a contributing editor for the Los Angeles Times, National Journal, and The Atlantic Monthly. His column appears every week in National Journal, a weekly magazine covering politics and government published in Washington, D.C.