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Year In Review/Israel
Year 5768 from page A81
Israeli Prime Minister Ehud Olmert announces he will not run for re-election.
The Golan Heights likely would revert to Syrian control in any Israel peace deal.
Iranian President Mahmoud
Ahmadinejad at Columbia University in
New York City on Sept. 24, 2007.
A82
September 25 • 2008
JN
The aid compound in Gondar, Ethiopia,
includes a school and synagogue where
Ethiopians learn Jewish prayers.
Though the year had begun in the after-
math of an Israeli airstrike on a suspected
Syrian nuclear installation, and though
February saw Hezbollah operations chief
Imad Mughniyeh assassinated on Syrian
soil, Israel and Syria held secret contacts
under Turkish auspices. On May 21, in a
joint statement issued simultaneously in
Jerusalem, Damascus and Ankara, the par-
ties announced the renewal of peace talks.
The big question was whether, in return
for the Golan Heights, Syria would detach
itself from the Iranian orbit.
Indeed, Israel's main strategic concern
in 5768 was not peacemaking, but Iran's
assumed drive for nuclear weapons.
Israel's intense lobbying effort to
have the international community take
tougher measures against Iran suffered
a major setback last December when a
U.S. National Intelligence Estimate found
that Iran had suspended a covert nuclear
weapons program in 2003.
Israeli intelligence officials argued
that the program had since resumed and
intensified, but as the year went on it
became increasingly apparent to Israeli
officials that the United States — and the
West — was moving further away from
confrontation with Iran.
With sanctions having failed to halt
Iran's suspected nuclear weapons pro-
gram, Israeli officials' pronouncements
about Iran grew harsher.
Transportation Minister Shaul Mofaz
declared that an Israeli attack against Iran
was becoming inevitable.
"Other options are disappearing;' he said.
In June, the Israel Air Force carried out
large-scale maneuvers simulating an aerial
attack on Iranian nuclear installations,
stoking fears that if the international com-
munity failed to act, Israel might launch a
pre-emptive strike.
All the while, many members of the
Knesset and the Israeli intelligentsia wor-
ried that Olmert was too distracted by
the corruption investigations to focus
sufficiently on the Iranian threat. Calls for
Olmert's ouster grew along with the inves-
tigations against him.
Olmert was questioned for allegedly
receiving a substantial discount on a
house in Jerusalem in return for helping
contractors get building permits for other
projects. He was investigated as well for
allegedly trying to tilt the terms of an offer
for the privatization of Bank Leumi to
help his friend Frank Lowy, the Australia-
based tycoon.
The prime minister also was probed
for making political appointments to the
small business administration he con-
trolled as minister of trade, industry and
labor between 2003 and 2005.
The scandal that eventually would force
Olmert to resign his position as party
leader, and as prime minister, came in late
May. Morris Talansky, an American Jewish
fundraiser and businessman, testified that
Olmert had accepted about $150,000 in
cash payments under dubious circum-
stances over a 15-year period before he
became prime minister.
Police also said they were investigating
Olmert for double-billing trips abroad
whose expenses were paid by Jewish
charities.
Olmert's public standing also suf-
fered from the aftermath of the 2006 war
between Hezbollah and Israel. The pub-
lication in late January of the Winograd
Commision's final report on the war was
scathingly critical of his performance, but
it stopped short of recommending that he
resign.
The prime minister claimed the report
had lifted a "moral stigma" by vindicat-
ing his decision to launch a major ground
operation in the last 60 hours of the war,
even though the operation cost dozens of
lives and its utility proved to be inconclu-
sive. But the two soldiers kidnapped in
the attack that sparked the war remained
missing.
That changed only in July, and the
change came through diplomacy, not war.
In late June, nearly two years after the
outbreak of the war, Israel and Hezbollah
agreed to a prisoner exchange. In July, the
remains of Israeli reservists Eldad Regev
and Ehud Goldwasser were returned to
Israel in exchange for the remains of some
200 Lebanese and Palestinian fighters
and the release of five Lebanese terrorists,
including Samir Kuntar, from Israeli jails.
The deal was alternately praised and
criticized in the Israeli media, and it was
widely seen as a victory for Hezbollah.
With the prime minister reeling from
low popularity ratings and allegations of
bribery, breach of trust and violations of
election campaign laws, Olmert finally
announced in July that he would not run
for re-election when his party, Kadima,
held new primaries in September.
The new Kadima leader would become
prime minister as soon as a coalition gov-
ernment could be formed.
Despite the political turmoil of 5768,
Israel's economy remained relatively
strong. In the first quarter of 2008, unem-
ployment hit a 13-year low of 6.3 percent,
and in 2007 Israel's per capita gross
domestic product rose to $31,767 — on
par with European countries such as
France and Italy.
However, the strong shekel, which rose
by about 20 percent against the dollar dur-
ing 5768, hurt Israeli exports and, for the
first time in years, sparked some signs in
Israel of incipient inflation.
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