TEL AVIV -- The ongoing corruption scandal involving Israeli Prime Minister Ehud Olmert is causing Israel irreparable strategic damage as the politically damaged leader attempts to shore up support, perhaps at the expense of the nation's security.
Israel is being perceived by friends and foes alike as having lost its steadfastness, and is accepting humiliating conditions that weaken its deterrence and distort its image as the strongest military power in the Middle East.
Israel's decision Sunday to accept Hezbollah's conditions for the return of the bodies of the two Israeli soldiers kidnapped two years ago goes beyond a simple prisoner exchange. It implies an Israeli recognition of Hezbollah as a legitimate political force in Lebanon, thus undermining the authority of Lebanese Prime Minister Fouad Siniora. This new situation could help a Hezbollah victory in parliamentary elections in Lebanon next year.
This development with Hezbollah is similar to the indirect negotiations that Israel is conducting with Hamas, via Egypt, for the ceasefire in the Gaza Strip and the release of the kidnapped Israeli soldier Gilad Shalit.
In both cases, Israel acted contrary to its declared principles. In both cases Israel also agreed to release prisoners who are not associated with either Hamas or Hezbollah.
Furthermore, in return for Shalit, Hamas is demanding the release of 1,000 prisoners from all Palestinian factions.
In an effort to help Palestinian Authority Chairman Mahmoud Abbas, Israel agreed to release 450 Hamas members and suggested that they be returned to the Gaza Strip.
Hamas said no and is insisting that the released prisoners should be from all factions, including Fatah members. Hamas wants to show that what Abbas failed to achieve, Hamas did. The negotiations will continue.
Hamas knows that pressure from families would force the Israeli government to yield to its demands. Hamas also believes that Israel's agreement with Hezbollah has weakened its bargaining position.
The implicit Israeli recognition of both Hamas and Hezbollah cannot be detached from the wider developments in the region.
For local players like Saudi Arabia, Egypt and Qatar, the two most serious challenges are Iran's nuclear ambitions and Islamic extremism. Those countries have now reached the conclusion that the United States is not capable of shielding them from these threats. They have supported the U.S. wars in Afghanistan and Iraq, but now they have realized that the U.S. was ill-prepared for the aftermath of these wars.
As a result, Iran has expanded its influence beyond its borders and has become a regional power that endangers the historical supremacy of the Sunni Muslims over the Shiite minority in the Islamic world.
Saudi Arabia has been the most affected by this development. Like Israel, Saudi Arabia doesn't believe that U.S.-led diplomacy can contain Iran's subversion and nuclear ambitions.
But unlike Israel, both Saudi Arabia and Egypt doubt America's and Europe's resolve to contain Iran, if necessary by force.
Hence, all these regional players have decided to look for other ways to contain Iran.
The answer is Syria. Despite the bad blood between Saudi Arabia and Syria concerning Lebanon, Egypt, Saudi Arabia and Qatar are seeking alternative ways to counter Iran.
Qatar, with the assistance of France and Syria, helped elect a new Lebanese president and it is making maximum efforts to establish a new Lebanese government, even if Hezbollah's influence will be enhanced.
These countries also have supported discreetly French President Nicolas Sarkozy in his diplomacy in Damascus. They all realize that it will be imprudent to condition any rapprochement with Syria by loosening its strategic ties with Iran. But they all also know that Syria's economic conditions compel President Bashar Assad to seek additional venues for economic support.
Many Syrians are unhappy with the growing Iranian investments in Syria's economy. Visitors to Damascus recently have observed that the number of Iranian-assembled cars in Damascus streets is growing. Iranian investments in Syria in 2007 totalled more than $400 million. Assad himself told a Western European visitor recently that he is interested in lessening his dependence on Iranian economic support.
Thus, towards the end of American President George W. Bush's presidency, and with broader European support, regional Middle Eastern players appear to be ready for many changes in Middle Eastern politics. By then, it is hoped, Israel, too, will have a new government that enjoys the support of the people and is ready to play its role in shaping the new anti-Iranian coalition in the region -- with Syria or without it.
Sam Segev, the Winnipeg Free Press Middle East correspondent, is based in Tel Aviv.
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