The Bar-On Affair: Impact on Israel and the Peace Process

American Jewish Committee
Thursday, 17 April 1997

On April 16, Israeli police investigators delivered their recommendations to the State Attorney regarding the Bar-On affair. These called for the indictment of Prime Minister Netanyahu, Justice Minister Tzachi Hanegbi, MK (Shas) Aryeh Deri, and Director General of the PM's Office Avigdor Lieberman for fraud and breach of trust. The police recommendation regarding Netanyahu was more constrained than the other three, and left open the possibility that the State Attorney could ask the police to interrogate the Prime Minister a second time. The State Attorney, together with the Attorney General, is likely to decide in the next few days whether to indict any or all of the principals, or to take alternative measures.

The background and details of the Bar-On scandal were discussed in our Briefing of February 26. Here, in view of the rapid pace of events, we shall focus briefly on the State Attorney's options, together with possible scenarios for the coming days.

The State Attorney is not obliged to act in accordance with police recommendations, and there are many precedents whereby a police finding that pointed to indictment of a senior public official was not acted on by the State Attorney. Hence one option is to avoid indictment of all or some of the principals; Attorney General Elyakim Rubinstein and State Attorney Edna Arbel could, for example, cite the fact that the police file is built essentially on the testimony of a single witness in arguing that they did not have a strong enough case to win in court. They could argue that the public interest is better served not by pressing the matter in court, but by exposing the facts of the case. They could opt, regarding all or some of the principals, to censure them publicly in the strongest possible terms, and/or to call for a State Commission of Inquiry.

However there are also precedents (most recently regarding a former NRP minister, Avner Shaki) in which the High Court of Justice has overturned a State Attorney's decision not to press charges, thereby forcing a trial. Rubinstein and Arbel must weigh whether a ruling not to go to court will stand up to the inevitable appeal to the High Court by private citizens.

A second option, at least regarding the Prime Minister, is, as noted, to ask the police to interrogate him again. Netanyahu was only interrogated once during this process. A call for a second interrogation might delay the political reaction to the scandal for several more days or weeks.

There are ample High Court precedents to indicate that indictments should prompt the immediate resignation, or at least suspension, of Hanegbi and Lieberman. In Netanyahu's case, were he to be indicted, the law would not require his resignation, but it does call for the Prime Minister to step aside for three months while the Cabinet appoints a caretaker Prime Minister. MK Shaul Yahalom of the NRP, a coalition member and chairman of the Knesset's Legal and Constitutional Committee, has suggested that the Prime Minister step aside for a month, during which time he would be given a quick trial by the president of the Supreme Court.

In terms of political reality, if Netanyahu is indicted there will be overwhelming pressures within the Likud and elsewhere in the coalition for him to resign, thereby forcing new prime ministerial and Knesset elections. Alternatively, in this special case, the Knesset could remove him, and force new prime ministerial elections only, by an absolute majority of 61; this would be a likely scenario if he were indicted but did not resign.

A more complicated picture emerges, however, from the very real possibility that the State Attorney will not indict Netanyahu -- indeed, may not indict any of the principals. In this case, the language of the State Attorney's public statement regarding the moral and ethical behavior of the principals and their decision-making in this case will be crucial.

The principals and their political allies have already begun their counterattack, charging police and media bias against the government. Early polls reported on Israeli television this evening indicate that only about 30 percent of the public accepts this argument.

In the event that the Prime Minister is not indicted, the police recommendations are likely to yield continuing debate about the legitimacy of the government and the issue of the rule of law in Israel. Here the behavior of certain individuals will be critical. For example, will key Likud ministers -- like Dan Meridor, a former Minister of Justice and a quiet critic of Netanyahu -- resign as a matter of principle, as they have threatened in the past, on the basis of charges of criminal activity within the government? More critical -- assuming Netanyahu does not lose the overall support of the Likud, his stronghold -- will be the behavior of the Likud's moderate coalition partners: Shas, Gesher, the Third Way, and Yisrael b'Aliyah. Shas, for example, has threatened in the past to resign if Deri (who is already on trial for embezzlement) is again indicted.

Possibly the central figure in the controversy ahead will be Natan Sharansky, Minister of Commerce and Industry and head of the Yisrael b'Aliyah Russian immigrant party. When the scandal first broke, Sharansky took the high moral ground and declared that "if only ten percent of the charges are true, the government has to resign." Now that virtually all the charges have been confirmed by the police, many in the public and in his own party will be watching his behavior. Sharansky's seven MKs, if joined to the opposition, would be sufficient to force new elections for both the prime minister and the Knesset.

One clear political casualty of the looming crisis is the prospect of a national unity government. Labor Party leader Shimon Peres, who almost alone in his party had championed this cause in recent weeks, declared on April 16 that "the only issue now on our agenda is the Bar-On scandal." Even before the police report the majority within Labor appeared to oppose joining Netanyahu in a new, national unity government; now this prospect is far less likely, as voices within Labor warn against the consequences of appearing to collaborate in any way with a Prime Minister whose ethical behavior has been called into question. Indeed, Labor leaders are calling for his immediate resignation.

Then too, the peace process will almost certainly suffer as a result of the scandal. At a time when Dennis Ross appears likely to succeed in restarting Israeli-PLO negotiations, Netanyahu and his Cabinet will be heavily preoccupied with the scandal and its political costs. In the most extreme case, new elections -- of the Prime Minister, the Knesset, or both must by law take place within 60 days, and would place the entire peace process on the back burner for several months, along with controversial legislative initiatives like the Conversion Law.

Even assuming the government survives the scandal more or less intact, and in view of the external and internal pressures to advance the peace process, its medium term future is uncertain. Netanyahu is being pressed to deliver a sizable second further redeployment -- at least 10 percent of area C -- in September. It is very doubtful whether he can muster a government majority to support this and similar peace moves. Thus, now that Netanyahu appears to have lost the option of a national unity government because of the Bar-On scandal, it is not clear how the government could continue to function for more than six months or a year in view of the internal contradictions built into it regarding the peace process - assuming it intends to continue with the process as set forth under Oslo and later agreements.

As noted, the State Attorney and Attorney General have undertaken to render their judgment within days, probably before the Pesach holiday begins on Monday evening. This is the next significant official step anticipated in the unfolding Bar-On affair. Upon that judgment, Israel and its neighbors and supporters anxiously await.

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