Israel Time to Switch, Not Fight

By William E. Smith

Shortly before 9 a.m. this Friday, Israeli Prime Minister Shimon Peres will leave his office in Jerusalem for the short drive to the presidential residence. There, assuming that everything goes according to plan, the Labor Party leader will hand in his resignation to President Chaim Herzog, thus setting in motion a transfer of power that many Israelis had once doubted would ever take place. Under the terms of a power-sharing arrangement that Labor and the right-wing Likud bloc had forged two years ago, when they formed the present national unity government, Peres will exchange jobs with Foreign Minister Yitzhak Shamir, head of the Likud. Shamir thus takes over as Prime Minister for the last two years of the current parliamentary term.

The rotation agreement was cobbled together after the 1984 elections ended in a stalemate. Neither Labor, with 44 seats in the newly elected 120-member Knesset, nor the Likud, with 41, was able to form a viable government. So the two traditional rivals formed an uneasy political alliance, with Peres taking the first turn at running the country.

From the beginning, Peres set himself four primary goals. To a country divided over the 1982 invasion and subsequent occupation of Lebanon, Peres promised an early troop withdrawal. He also pledged to restore Israel's ailing economy to health and to bring down its staggering triple-digit inflation rate. He committed himself to warming up what he called the "cold peace" with Egypt, the only Arab country that has signed a peace treaty with Israel. And he said he would seek ways of ending the nearly 40-year-old conflict between Israelis and Arabs.

All in all, Peres kept to his agenda, scoring some notable successes. He pulled Israeli troops out of Lebanon, except for the narrow "security zone" along Israel's northern border. He managed to lower inflation, from a high of 800% to around 25%. Scarcely a month before the end of his term, he reached an agreement with Egypt to submit the festering Taba dispute, concerning ownership of a 750-yard stretch of Red Sea beachfront, to international arbitration. This led to a restoration of full diplomatic relations with Egypt, which withdrew its ambassador from Tel Aviv in 1982, following Israel's invasion of Lebanon and the subsequent massacre of some 800 Palestinian civilians by Phalangist militiamen in an Israeli-controlled section of Beirut. In an effort to loosen the Middle East deadlock, Peres went to Morocco to confer with King Hassan II, then to Egypt to talk with President Hosni Mubarak. But his term ended before he could achieve any solid breakthrough toward peace.

In the process, the Prime Minister's political reputation underwent a remarkable transformation. In 1984 his own party regarded him as an obstacle to an electoral victory. Yet a recent poll in the daily Ma'ariv gave Peres a 76% popularity rating. Says a Western diplomat in Tel Aviv: "Two years ago, he was thought of as too clever by half -- devious and even untrustworthy. This was the price for too many shifts in party allegiance and changes in loyalty in his long political career. Today, he's Israel's leading statesman."

The dramatic change is due in part to Peres' deft handling of the nation's problems. But it has also flowed from a conscious political decision to live up to his agreement with Shamir. Despite strong pressure from within his party, he resisted the temptation to force showdowns with his coalition partners, which might have broken the accord and led to early elections. Several times, angered over attacks on his performance by various Likud ministers, he demanded an apology. And each time the Likud, eager to avoid a fight that might give Peres an excuse to resign and renege on the agreement, forced the offending minister to issue retractions.

There is a real chance, to be sure, that some of Peres's accomplishments could come undone. Renewed hostilities by Lebanese Shi'ite militiamen, members of the fanatical, Iranian-backed Hizballah, or Party of God, and the Palestine Liberation Organization have raised questions as to whether Israel can stay out of southern Lebanon after all. In a well-planned military operation recently, Hizballah fighters attacked seven outposts of the Israeli-backed militia known as the South Lebanon Army. Israel responded by massing troops and tanks along the Lebanese border. Although only about 200 men were sent five miles into Lebanon to retake an S.L.A. outpost, an Israeli military source says a much larger operation was initially planned but was scaled down when the U.S. expressed concern about the possible effects of another Israeli thrust into Lebanon. Still, Peres can justifiably take pride in the fact that only two Israeli soldiers have been reported missing in southern Lebanon since the June 1985 withdrawal, in contrast to more than 600 lost in the previous three years.

Similarly, Israel's economic recovery is far from complete. Besides cutting the inflation rate, Peres reduced imports and froze the exchange rate of the Israeli shekel. In July 1985 he pulled off the seemingly impossible feat of persuading the dominant Histradut union federation to renounce the cherished system of index-linked pay increases. One crucial question now is whether the Histradut will continue to cooperate with the government once Peres ceases to be Prime Minister.

As for his chief foreign policy accomplishments, they came late and were limited in scope. Last month's summit with Mubarak in Alexandria was remarkably friendly. But even though the Egyptian President agreed to name an ambassador to represent his country in Tel Aviv, he was not prepared to go much further in normalizing relations with Israel for fear of adverse Arab reaction. On the Palestinian issue, Peres expressed his willingness to negotiate with a delegation of Jordanians and "authentic" Palestinians. That meant that he was ready to talk to moderates with ties to the Palestine Liberation Organization but not directly to the P.L.O. leadership. Any chance of progress in that direction, however, collapsed last February when King Hussein of Jordan angrily broke off a political alliance with Yasser Arafat over the P.L.O. chief's unwillingness to accept United Nations Resolutions 242 and 338, which implicitly recognize Israel's right to exist.

To encourage King Hussein, who refused to enter into direct talks with Israel about the future of the 1.3 million Palestinians in the Israeli- occupied West Bank and Gaza Strip, Peres gave cautious support to the concept of an international conference on the Middle East; the idea is opposed by both his Likud coalition partners and the U.S. On the question of Soviet participation in such a conference, Peres argued that Moscow should be allowed to take part only if it renewed its diplomatic ties with Israel and resumed the granting of exit visas to Soviet-born Jews who want to immigrate to Israel.

Though many of his colleagues never expected the rotation agreement to last, Shamir told TIME editors in New York City last week that it had worked "because both sides knew there was no alternative, and because the ground rules were well prepared." At 70, Shamir has spent 30 years in Israeli political life, serving three years as Menachem Begin's Foreign Minister and, following Begin's retirement, eleven months as Prime Minister. For the next two years, Shamir foresees a "change of style but not of substance," adding that it will not amount to "anything dramatic." Like Peres, he will be constrained in his actions by the nature of the coalition government.

As Prime Minister, Shamir has no guarantee that he will not be challenged by Peres and the Labor Party at the earliest opportunity. In such an event, he might also face a threat from two ambitious younger leaders of his own Likud bloc, Deputy Prime Minister David Levy, 48, and Industry and Commerce Minister Ariel Sharon, 58. But if the coalition's brief history is any indication, he may manage to hold onto his government and party posts at least until the 1988 elections.

With reporting by Roland Flamini and Robert Slater/Jerusalem