Disagreement in Jerusalem, an agreement in Egypt

Tuesday, December 14, 2004

Sharon has a complicated negotiation underway – he has to be careful not to alienate his own Likud ministers with a reshuffle of portfolios that demeans any of them as he tries to hand out ministerial portfolios to Labor and possibly to Shas. Labor and Shas are demanding significant changes to the 2005 budget – not to increase it, but to rearrange its priorities, and there seems to be a limit how far Sharon is ready to push Finance Minister Binyamin Netanyahu. He appears to be trying to turn laissez faire, neo-Thatcherite economics into the new ideology for the Likud to replace the more or less defunct ideology of the Greater Land of Israel. By doing so, the Likud is trying to appeal to the upper middle classes, which until now have been in the pockets of the Labor Party, Shinui and to a certain extent, Yahad (Meretz).

Despite Netanyahu’s promise that his tax breaks for the rich and no more welfare for the poor will ultimately benefit the poor (shades of neocon economics as practiced in America), he is turning the party against the very constituency that gave it victory after victory in elections since 1977. The Likud and United Torah Judaism continued their negotiations this morning for the Ashkenazi ultra-Orthodox party joining the coalition. But there, too, things are not going as smoothly as Sharon promised last week when he won permission from the Likud central committee to bring Labor and the two religious parties into the coalition. Labor – and Sharon – don’t want Shas in the coalition until it changes its position – laid down by Shas spiritual leader Rabbi Ovadia Yosef – against the disengagement. Sharon’s strategy now seems to be to first bring Labor and UTJ into the govenrment, and only afterward – perhaps after the January 9th elections in the Palestinian Authority, which are expected to be followed by a meeting between Sharon and PLO Chairman Mahmoud Abbas (presumably to be elected PA president) – bring in Shas.

Meanwhile, Israel Radio’s Arab affairs correspondent, reporting from a Cairo meeting between Industry Minister Ehud Olmert and Egyptian President Hosni Mubarak as Israel, Egypt and the U.S. sign a free trade agreement, said that there is an emerging deal whereby Egypt would take over the troubled Philadelphi corridor after the Israeli disengagement takes place next summer.

The corridor is a few hundred meters long and wide and is an Israeli-controlled buffer zone between Egypt and Gaza created by the 1979 Egyptian-Israeli peace treaty. Israel’s readiness to allow Egypt to post some 750 new troops along that border, with armored vehicles, is one of the key signals that relations between the two countries are warming, especially since they did not open the American-mediated accords but simply will exchange letters detailing the new parameters for an Egyptian presence. Amos Gilad, the who heads the Defense Ministry’s political-security department, is due to visit Egypt this coming week for talks with Egyptian Intelligence Minister Omar Suleiman about the details of the agreement between the two countries. In Gaza, by the way, the Israeli army was taking action in Palestinian neighborhoods from which mortars – some 5,000 in the last four years – are fired at Israeli settlements in Gush Katif. Several houses were demolished, but no injuries were reported.

The free trade agreement signed today is significant for the Egyptian cotton industry, which has been somewhat in the doldrums. As long as 12 percent of the goods manufactured in specified FTA zones in Cairo, Port Said and Alexandria are from Israel, the goods can be sold in the U.S. customs free. A similar agreement between Israel, Jordan and the U.S. has blossomed from some $15 million in sales when it began seven years ago, to more than $1 billion this year. The deal is expected to create thousands of jobs for Egyptians – and no less significantly, strengthen ties between the two countries.

Yesterday's Situations

Today's Situation || Yesterday's Situation