Jerusalem, Israel (The Media Line) – A score or more of people are hard at work on a balmy winter afternoon at TechLoft’s big open-area office in the center of Tel Aviv. Most of them are quietly glued to their computer screens. A few are meeting in a conference room whose Plexiglas walls are covered by flowcharts and jottings. Others are quietly consulting with one another. Off in one corner is a mini-kitchen and coffee machine and just outside is a big wooden deck used to host networking events.

It could be the offices of any of hundreds of hi-tech start-ups in the city and its environments, but in fact the TechLoft’s space is the shared home to a dozen or more start-ups — or more accurately, seed-stage companies or even pre-seed companies: businesses that haven’t yet reached start-up status. Some of them aren’t companies at all – just teams of people working to formulate an idea.

”We’re trying to fill the gap for early stage companies who need that $100,000 and $500,000 that their friends and family can’t provide on one hand; while venture capital funds won’t provide on the other. There’s a gap, which we have set out to fill,” Gilad Tuffias, one of TechLoft’s two co-founders, told The Media Line.

The facility represents a new generation of investors coming to fill a dangerous gap that has developed in Israel’s high technology, namely a way for budding entrepreneurs to take the germ of an idea and begin turning it into a product and a company.

While Israel has earned a global reputation as the “Start-Up Nation,” the fact remains that it is tougher than ever for nascent companies to get off the ground. Venture capital (VC) funds, the traditional source of finance for new companies, invested more than $2.1 billion in technology start-ups last year, but just 5 percent of that went into seed stage companies, according to Israel Venture Research.

“Even when VCs were thriving, very, very few were investing in start-ups. Many said they did but only a few really did,” says one fund manager, who spoke on condition of anonymity. “I’m an active chairman of a start up and we’re beating our brains out finding money for the company – and we have a product.”

Seed companies are by their very nature small and many fail, but they are critical to the hi-tech industry in Israel. Few Israeli tech companies stay independent and grow for the long term. Instead, they tend to put themselves and their technology up for sale after a few years, usually to be bought out by a big foreign company. That means the industry needs a steady supply of fresh companies embarking on the path of conceiving an innovative new idea and developing it into a workable product for the industry to remain vibrant and grow.

TechLoft’s strategy is to help these new entrepreneurs by giving them workspace; access to lawyers, accountants and others to help them get their new business in order; and a forum for meeting investors and other entrepreneurs at the same stage in the tech lifestyle. An important component of the TechLoft’s concept is for the entrepreneurs to exchange ideas and advice among themselves. It charges a nominal rent of 1,000 shekels ($263) a month per person for the space.

TechLoft opened its doors last autumn and is already at work to double its capacity to 70 people with a new open office one floor above its current location. Tuffias and his partner Tal Marian are now raising money for a micro-fund, one that will invest sums of about $100,000 in the most promising TechLoft’s tenants.

TechLoft isn’t the only one creating an innovative new environment for seed stage companies.

Google is planning to dedicate a floor at its new research and development center in Tel Aviv to an incubator for as many as 20 pre-seed enterprises. When it opens this August, the center will have places for up to 80 budding entrepreneurs who will be hosted for several months, during which time they will have access to desk space, Internet, meeting rooms as well as technology and advice from Google employees.

“The Israeli developer community is hugely innovative,” Yossi Matias, the head of Google’s Israel R&D center, told The Media Line in an e-mail. “This incubator project was initiated with a desire to encourage entrepreneurship and to provide support at exactly the stage when developers are most often in need of it.”

Google will not invest in the incubator companies, but it does aim to “strengthen” its connections with the developer community, explains Paul Solomon, Google’s spokesman in Israel.

Even the Tel Aviv municipality has gotten into the act as its tries to turn itself into start-up city. In the Migdal Shalom Tower, not far from where the city was founded just over a century ago, part of an underused library branch has been turned into a facility for early-stage entrepreneurs. Twenty-eight people who get approved by a screening committee have access to “hot” desks, a conference room, a panoramic view of the Mediterranean Sea and a standing invitation to events and meet-ups.

The library facility is a part of a wider initiative to turn central Tel Aviv into a nursery, not only for Israel’s hi-tech industry but for all of Europe, by encouraging foreign tech entrepreneurs to set up shop in the city.

“What Tel Aviv is doing here is developing an eco-system that feeds Israel’s hi-tech industry,” says Avner Warner, economic development director for the Tel Aviv Global City initiative. “Tel Aviv concentrates 2,000 of the 4,000 start-ups in Israel. We want to promote that and open up to the international market. We want to be the technology center of Europe.”

These technology nurseries are different from the technology incubators of the last generations, which performed a similar role of proving, space, advice and capital. But when telecoms and hardware were at the core of the hi-tech boom, the time and cost of starting up a new company was high. That is still the case for a lot of areas of high technology.

But, nowadays, when Internet and mobile technologies are the hot new growth area, going from idea to viable company can be a matter of as little as 12 to 18 months. Entrepreneurs start off by working on their kitchen table at home or at a café. The entire company’s intellectual property and operations are uploaded to the Internet cloud. Social media can take care of the marketing at little cost. Start to finish, the budding business might need no more than a few-hundred thousand dollars of investment capital.

”Without a doubt, the innovations in technology have brought us to a new level and given opportunities to people without too many means to get something up and running,” says Tuffias, of TechLoft. “If you have a talented team of developers and just one investor who believes in you, with the globalized economy and having the Internet reach every point on the globe, if it’s a good product and people like it, word of mouth can bring it to millions of people within a matter of even minutes.”

“You don’t have to spend millions and millions of dollars on marketing and traveling overseas,” he says. “You do all of that from your home or from the beach – or from TechLoft.”

Nurseries aren’t the only ways early-stage enterprises can get off the ground. Angel investors- wealthy individuals who alone or in groups back new companies providing the first hundreds of thousands or millions in investment-have come into their own in the past two years in Israel.

The cause for that was a Knesset (parliament) law, popularly known as the Angels Law, which gives them an attractive tax break. Private investors who put anywhere between 25,000 ($6,600) and 10 million shekels ($2.65 million) in hi-tech start-ups have the right to record the amount as a capital loss at the time they make the investment. That can be used to offset other capital gains.

The law has brought new angel investors into the market at a time when the quality of angels has risen. That is important because young, often inexperienced hi-tech entrepreneurs need advice as much they need capital.

“Angels have come back into play and angels have changed in quality here,” Ed Mlavsky, founding partner of the VC Gemini Israel Funds, told The Media Line. “In America angels were people who really understood what they were investing in. Here, they were diamond merchants and didn’t really understand what they were investing in. But now we have a generation of people who made money in hi-tech.”

©2012. The Media Line Ltd. All Rights Reserved.

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Damascus, Syria David Rosenberg (The Medi – As the Arab League agreed to go to the United Nations Security Council early this week with a resolution calling for Syrian President Bashar Al-Assad to step down, Russia was reportedly doing a major arms deal with the beleaguered regime.

The $550 million agreement to sell 36 Yak-130 combat aircraft will not do anything to tip the balance in favor of the Al-Assad regime, which has been engaged in a 10-month conflict with anti-government opposition. But Russia is almost certainly providing arms Damascus needs to hold back the rebels as well as mounting a diplomatic defense of its friend at the U.N.

In a rare glimpse into the Russia-Syria arms trade, a ship loaded with ammunition from Russia was briefly detained in Cyprus earlier this month before continuing its journey unmolested to the Syrian port of Tartus. Foreign Minister Sergey Lavrov has vowed that Russia will veto any sanctions as “unfair and counterproductive.”

“Syria is an important customer for the Russian military industry and the industry is quite keen to maintain the relationship,” Fyodor Lukyanov, editor-in-chief of the Moscow based foreign policy journal Russia in Global Affairs, told The Media Line. “Syria is one of the few remaining customers in the region and it hosts the only military base – a small one but still a base – that Russia still has outside its own borders.”

As the West – now joined by the Arab League – presses the Syrian president ever harder, Russia has emerged as his most important ally. Iran also backs the Damascus regime, but Tehran itself faces growing diplomatic isolation over its nuclear program and doesn’t wield a Security Council veto. China is opposed to Syrian sanctions, too, but analysts say it is likely to follow whatever line Moscow adopts.

Russia’s warm ties with Syria, and more exactly the Al-Assad family regime that has ruled the country four decades, starts with arms sales but it goes much deeper.

In the final two decades of the Cold War era, when the Soviet Union was a superpower competing for global influence with the U.S., Syria was its staunchest ally in the Middle East. Bashar Al-Assad’s father and predecessor Hafez armed his troops with Soviet weapons and advanced Moscow’s interests in the region.

With the collapse of communism and with Syria’s deteriorating economy, the relationship is not what it once was. But Russia maintains a naval base at Tartus and the two governments share a distrust of the West and its motives.

Indeed, the view from Moscow of what is happening in Syria is very different than the one in Washington or Brussels. Where the West sees events in Syria as a popular uprising against a repressive regime, Russia shares Damascus’ take, which sees the rebellion as conspiracy by the Gulf countries to bring down an ally of their foe Iran.

“Saudi Arabia, Qatar and others see this as an opportunity, as a chance to push back Iranian influence,” Lukyanov said. “From Russia’s point of view, it’s part of a geopolitical struggle between Iran and Saudi Arabia, where Syria is just a card.”

For policymakers in Moscow, the situation in Syria looks remarkably similar to the one in Libya last year, where another long-time friend, Muamar Al-Qaddafi, faced what was seen in the West as a popular rebellion against autocracy. Russia reluctantly agreed not to veto a U.N. decision to impose a no-fly zone over the country.

The resolution, as Russia’s leaders understood it, was to prevent Al-Qaddafi from killing civilians with aerial firepower. But the NATO forces that largely enforced the decision, Russians say, used it to level the playing field in the Libyan civil war to Al-Qaddafi’s disadvantage. Moscow lost a friend and customer for its arms and is now out of favor with the successor National Transitional Council.

Zvi Magen, a former Israeli ambassador to Russia, said Russia’s Syria policy is driven by memories of its Cold War rivalry with the U.S.

“There’s an element of business in the arms deals, but it’s mainly a political move to show the flag and to show support for Syria. It’s mainly a function of Russian relations with America than with the Syrian regime,” Magen told The Media Line.

For that reason – and because Moscow realizes that Al-Assad’s days are numbered – it may be prepared to make a deal with the U.S. over Syria, he added.

Nevertheless, analysts agree that the importance of the arms trade as a factor in Moscow’s calculations should not be overlooked. In an economy with few other industrial exports, Russia’s military industry is an important earner of foreign exchange and a powerful domestic political force.

The Voice of Russia radio’s website said in December without citing a source that Russian arms exports reached $11 billion last year, a three-fold increase from 2000. While the country’s biggest customers are India and China, the Middle East had been a growing market until the Arab Spring eliminated Al-Qaddafi and sanctions on Iran removed another customer. Syria alone, according to some estimates, accounted for 7 percent of all Russian arms sales in 2010.

A U.S. government study in 2009 estimated Russia’s share of the Middle East arms market grew to more than 15 percent in the 2005-2008 period, five percentage points more than in 2001-2004 as it offered more creative financing and payment options, counter-trade, offsets, debt-swapping, and, in some cases, licensing production locally.

Russia’s Interfax news agency reported in early December that Russia delivered $300 million of Yakhont anti-ship cruise missiles to Syria.

With numbers like that, it is no wonder that Sergey Chemezov, the head of the state arms export company Rosoboronexport, made clear he had no intention of halting business with Syria.

“There are no sanctions whatsoever regarding Syria,” he told Interfax on Wednesday. “If international sanctions are imposed by the U.N. Security Council, everything will change. And if there are no sanctions, why should we refuse to cooperate with this country? This is business after all.”

Nevertheless, Magen said, Russia is careful not to sell Damascus weapons like S-300 surface-to-air missiles that could alter the regional balance of power.

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Deir-Alla, Jordan Abdullah Omar / The Media – In the lush orchards of Abu Emad in this Jordan Valley town, lemons and oranges glisten in the sun as the day of picking draws near. The valley’s year-round mild climate, fertile soils and relatively ample water supply have made it a winter garden of cucumbers, tomatoes and other produce destined for Europe, where they are unavailable from local growers during the winter.

But this season may be different as Arab League sanctions against Syria go into effect. That is because Jordan Valley farmers like Abu Emad send their best produce through Syria to Europe, where prices are better than anything they could expect at home. The farmers, already coping with debts and water shortages, have few alternatives to Syria.

“If I’m not allowed to export products through Syria, it will be a catastrophe for me and all the communities in the region,” said the scrawny 56-year-old farmer. Unemployment in Jordan is already high and poverty is on the rise. This farm employs dozens of workers from impoverished Deir Alla and neighboring towns. “If a war starts, many people will be hurt, not only in Syria, but also in Jordan.”

Unlike Syria’s two other Arab League neighbors, Iraq and Lebanon, Jordan supported the sanctions and King Abdullah has hinted that Syrian President Bashar Al-Assad should step down after more than 5,000 people have died in a crackdown against the government. But the economy of Jordan, an important ally of the U.S., can ill-afford another blow.

Repeated attacks on the pipeline from Egypt have stanched the flow of natural gas that was once Jordan’s primary source of energy. While Abdullah faces no threat to his rule, the country has been shaken by protests calling for reform and an end to corruption. Jordan is already saddled by a record $2 billion budget deficit this fiscal year and high unemployment.

Syria and its Mediterranean ports serve as a lifeline for the kingdom, an almost entirely landlocked country. Close to 30 percent of Jordan’s exports of fruits and vegetables, about $126 million in 2010, went through Syria to Europe as well as the closer markets of Lebanon and Turkey. The ministry has said that about 3,000 Jordanian trucks will have to stop working because of the sanctions.

Syria finally agreed on Monday to let Arab League observers into the country to monitor a deal it agreed to last month to pull troops from rebellious cities, free political prisoners and start talks with the opposition. Nevertheless, the head of the League said there is no immediate plan to lift sanctions that were imposed when Damascus at first refused outside monitors.

Meantime, Jordanian traders are complaining they are being targeted by the Syrian regime, with trucks facing delays at the border and attacks by loyalists as the vehicles head north to Turkey.

The sanctions include a travel ban against scores of senior Syrian officials, a freeze on government assets in Arab countries, a ban on transactions with Syria’s central bank as well as an end to all commercial exchanges with the Syrian government. The sanctions include a ban on dealing with the central bank of Syria as well as major companies that export to the region.

If they can’t find new markets for their fruits and vegetables, the Jordan Valley’s farmers risk seeing everything fall off their branches and rot. The oil-rich Gulf states represent an option, but fierce competition from other countries such as India and strict rules on imports will make it hard to find customers countries such as the United Arab Emirates, Kuwait, Saudi or Qatar, he says.

Experts say other trade partners will have to be considered, including next-door Israel. But with the government already suffering, public opinion over the economy and political reform, expanding trade with the Jewish state would be a risky move. The two countries have a peace treaty but Jordanian popular opinion is hostile to Israel.

Sanctions will not only hit Jordanian farmers, but factories that use Syria as a route to import basic manufacturing products such as textiles and spare parts.

It will also hurt Jordanian families, which get the majority of their fruits and vegetables from Syria as well as wheat, cotton and other basic needs at an affordable price. Jordan imported some $187 million of Syria produce last year, according to Jordan’s Agriculture Ministry. Additionally, as pressure on Damascus intensifies and more refugees start to make their way to the kingdom, officials in Amman are concerned that will compound the economy’s woes by adding more mouths to feed.

All told, two-way trade between Syria and Jordan amounts to $400 million, a significant figure for a country of 7 million people and an economy worth about $27 billion. Traders say imports from Lebanon would also become all too expensive if they are to be shipped through the Mediterranean and into the Red Sea Gulf of Aqaba.

Jordan officials have sounded the alarm about the damage sanctions will impose if the kingdom’s special problems are taken into consideration. Foreign Minister Nasser Judeh has urged the other Arab countries to consider exempting the kingdom from the trade ban on Syria.

Jordan is believed to have received tens of millions of dollars from the Saudi and Qatari governments to help it accommodate an expected surge in the number of refugees. Experts say the kingdom could be given more cash from wealthier Arab League members to offset losses from cutting ties with Syria.

But Khalid Abdel Rahman, a farmer from the Jordan Valley town of Karama, expressed doubt about the aid money being spent effectively or going to deserving pockets.

“There is no transparency in these issues. If we receive aid, the government would give small amounts to certain people and leave others face the hardship by themselves,” he said.

Meanwhile, Amman has started seeking alternative routes for its exports. Talks have already held with Iraqi authorities to send trucks laden with exotic fruits and vegetables through northern Iraq and into Turkey, before reaching the European market. But the route is almost double the Syrian route and it runs through politically unstable areas, which will raise costs.

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Amman, Jordan (The Media Line) – A United Nations organization dealing with refugees has said that land has been designated in Jordan to set up a camp to deal with an expected tide of refugees fleeing unrest in Syria.

Thousands of Syrians have reportedly been pouring over the border into Jordan as a defiant President Bashar Al-Assad has ratcheted up his lethal crackdown on anti-government protesters that has killed over 3,500 as the country slides deeper into civil war.

The UN High Commissioner for Refugees (UNHCR) in Jordan is working with the Ministry of Interior to prepare a refugee camp in Mafraq north of Amman to take in the Syrians who have fled their homes.

“The area where it would be possible to receive an influx of refugees has been designated, but there hasn’t been any kind of action taken on the ground yet. No tents have been set up, but at least the land has been designated for such a contingency,”

Dana Bajali, a spokeswoman for UNHCR, told The Media Line.

Bajali said they have been providing assistance to some 200 Syrian refugee families, but that it is estimated that over 3,000 have sought sanctuary in Jordan, some legally, others illegally. Hundreds are thought to be army deserters.

“This includes urgent cash assistance, some blankets and mattresses. We also try to provide some food items to these families, kitchen sets, hygiene kits, utensils, school kits and food packages,” Bajali said, adding that most of the refugees were being housed by relatives and friends since there were close family and tribal ties on both sides of the border.

Many have come from the Syrian town of Dara’a, the birthplace of the Syrian rebellion that erupted in mid-March when dozens or more youths were detained by security forces for spray painting anti-government graffiti. Since then, despite the massive presence of troops and attacks on the city’s main mosque, Dara’a remains in turmoil.

But others have been coming from the area around Homs, the heart of the anti-Assad revolt, north of Damascus.

“We have noticed a steady influx of Syrians into Jordan and the number of those registered with us has increased. There is a plan to receive an influx of refugees if that happens and one of them is to set up a reception center, but that hasn’t started yet,” she added.

Another UNHCR official told the Ammon news website that the cost of the refugee camp would be about half a million dollars and that the tents would come from their stocks currently stored in warehouses in Zaraq. But it also quoted government officials as saying they are not formally cooperating with the UN organization.

Syria has periodically sealed its 380-kilometer (236 miles) border with Jordan since the revolt began. Last week, Syrian army defectors clashed with loyalist troops near the border along the Damascus-Amman highway and at least 40 people were reportedly killed.

Since the fighting began tens of thousands of Syrians have fled to neighboring countries. Some 5,000 are estimated to have sought shelter in Lebanon and another 19,000 are reportedly in Turkey. Hosting the refugees and allowing Syrian opposition to organize on its territory has plunged relations between Turkey and Assad’s regime to their lowest point in years.

Syria’s 22 million people are not only feeling the pressure of growing causalities and fighting but the economic fallout. Syria has been hit by international sanctions and other measures that may cause the economy to contract by as much as 10% this year. Even those who can’t or won’t leave have been sending capital out of the country.

Two rocket-propelled grenades hit a major ruling party building in Damascus on Sunday, residents said, the first reported attack by insurgents inside the Syrian capital. Meanwhile, the Arab League said it rebuffed a request by Syria to amend plans for a 500-strong monitoring mission after Al-Assad disregarded a deadline to halt violent repression of protesters.

Unlike Turkey, Jordan is not allowing Syrian opposition groups in the kingdom. Still, there are tensions between the countries, particularly after King Abdullah last week became the first Arab ruler to call for Al-Assad to step down. Following the monarch’s statements, pro-government mobs attacked the Jordanian Embassy in Damascus.

Syria reportedly apologized to Jordan over the attack. Jordan’s state-run Petra news agency quoted Syria’s Deputy Foreign Minister Faisal al-Mekdad as apologizing for the attack on the Jordanian Embassy as well as other diplomatic missions, including the Turkish Embassy.

Last month, Jordanian Minister of Foreign Affairs Nasser Judeh said in a joint press conference with his Turkish counterpart, Ahmet Davutoglu, that the kingdom would be ready for the receiving any new numbers of refugees from Syria in the event of deterioration of the security situation there.

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Palestinian Territory David Rosenberg / The Med – Mahmoud Abbas, the Palestinian Authority (PA) president, was on a roll last spring and summer, announcing with great fanfare plans to end the Hamas-Fatah rift and to seek recognition of statehood in the United Nations. Israel was livid and the United States scrambled to create a blocking majority against statehood in the Security Council.

But now the grand strategy seems to be unraveling.

Last week, Palestinians officials admitted off the record that the statehood bid in the Security Council was dead in the water, although the PA might still push for a symbolic vote in the General Assembly. Unity talks have stalled for now on the composition of a joint cabinet of technocrats and personal animosities.

Abbas won Palestinian admission to the UN Educational, Scientific and Cultural Organization (UNESCO) by a thumping majority and to the thunderous applause of delegates. But membership came at the cost of the organization’s losing its U.S. funding, prompting UN Secretary-General Ban Ki-moon and other officials to call on the Palestinians to refrain from trying to join other international bodies.

Nevertheless, observers of the Palestinian scene say that as much as his strategy is dead-ended, Abbas, popularly known as Abu Mazen, has emerged as an unlikely hero in the Palestinian street. He is seen now as a leader who brought the Palestinian cause back to the world stage and had the gumption to say ‘no’ to the U.S.

“He did his best. He didn’t buckle under tremendous pressure. People give him credit for that. They don’t blame him for the failure,” Daoud Kuttab, a Palestinian journalist and analyst, told The Media Line. “His personal standing has improved.”

Abbas’ standing is critical as he engages in an ideological battle with the Hamas movement in Gaza. Together with the failure to get peace talks with Israel off the ground, his statehood setback has undermined his case for creating a Palestinian state through diplomacy and has given Hamas more evidence that its strategy for so-called armed resistance is the only choice.

Palestinians are not of one mind about how to pursue the goal of a state. A September opinion poll by the Harry S. Truman Research Institute for the Advancement of Peace and the Palestinian Center for Policy and Survey Research found that 83 percent of the Palestinians supported the drive for statehood via the UN. But just over a quarter of the respondents said they supported armed attacks on the Israeli army and Jewish settlers as a way of forcing Israel out of the West Bank and Gaza Strip.

Last spring, Abbas’ prospects looked promising. Negotiations with Israel never got off the ground despite heavy pressure from the Obama administration, but the onus for the talks’ failure was placed by most on the government of Israeli Prime Minister Binyamin Netanyahu. The Palestinian economy was booming and the West Bank and Gaza were spared the mass protests exploding across the Middle East.

In April, Egypt brokered the terms for Abbas’ Fatah movement to begin national unity talks with Hamas to end a four-year-old rift that had been extremely unpopular in the Palestinian street. Not long afterwards the PA formally unveiled its bid for statehood and insisted it would settle for nothing less than a Security Council approval. It lobbied hard around the world and won seals of approval for good governance from the UN and International Monetary Fund.

The Palestinians were admitted to UNESCO Oct. 31 in a vote of 107 in favor to 14 against (52 abstained). But in the Security Council, the Palestinians have failed to get the minimum nine votes out of 15 they need. Meanwhile, a Security Council admission committee was unable last week to formulate an agreed stance concerning the Palestinian bid for full UN membership.

Ido Zelkovitz, a lecturer in Middle Eastern history at Israel’s Haifa University, said Abbas had nevertheless scored some important victories along the way.

“The Palestinians won UNESCO membership despite the fact that the Americans opposed it and cut off funding to the organization. That was quite an achievement internationally,” Zelkovitz told The Media Line.

In doing battle with Washington, the Palestinian leader won favor in public opinion by articulating a widely held view among Palestinians that America is an imperialist power that is incorrigibly pro-Israel. Abbas also raised the Palestinian profile at a time when Arab Spring turmoil had directed attention to places like Libya and Syria.

“In last years what was the biggest problem of the Palestinians?” he said. “It was that no one listened to them because the West Bank was quiet and economy was thriving. No one was paying attention to them.”

National unity talks are showing signs of thawing. On Monday, Salam Fayyad, the PA prime minister and a figure loathed by many in Hamas, signaled that he was prepared to step aside if that would bring the two movements together. Abbas is due to hold face-to-face talks in Cairo this month with his arch-rival, the exiled Hamas leader Khaled Meshaal.

Zelkovitz said he is skeptical that Hamas and Fatah will be able to put aside their differences, or more importantly, agree to share the financial resources of the Palestine Liberation Organization. Indeed, Abbas and Fatah leaders fear Hamas might try to wrench control of the PLO from them. But Kuttab is more sanguine.

While Abbas will not resort to violence, he still retains options to pursue his agenda through diplomatic and political means, Kuttab said. The Security Council rotates its non-permanent members every six months and the Palestinians can wait until “the magic nine” votes they need emerge.

“Abu Mazen has instructed his team to look for other options to the UN statehood and independence,” he said. “He’s against violence, so that is off the table. That increases the need for national unity, the need to work for massive non-violent protests and to take advantage of the 100-plus countries that support Palestine to encourage them in a boycott divestment campaign against Israel.”

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Beirut, Lebanon David Rosenberg – Lebanon may finally have a new government, ending a nearly half-year political vacuum, but it’s got a lot of catching up to do in order to set right an economy upset by regional turmoil and domestic uncertainty that has kept investors and tourists at bay.

Economists and investors are doubtful that the country’s new leadership – a 30-member team of ministers dominated by the Shiite Islamist movement Hezbollah – has the political wherewithal to address the problems. Since Prime Minster Najib Mikati unveiled his cabinet June 13, analysts have been lowering the forecast for economic growth while market capitalization on the Beirut Stock Exchange has declined about 3 percent.

“Clearly there is skepticism, given the challenges the new government faces,” Nassib Ghobril, chief economist at Beirut-based Byblos Bank, told The Media Line. “Whether it will be able to focus on the socio-economic and financial issues or be engulfed in the political scene, given what’s happening in Syria and increasing likelihood of indictments related to the Special Tribunal for Lebanon, remains to be seen.”

Democratic Lebanon escaped the unrest that has swept over much of the Middle East this year, but its $60 billion economy is reliant on foreign investment, tourism and regional trade. Just as the mass protests engulfed the region last January, Lebanon’s government was forced to resign, leaving the country largely leaderless until Mikati assembled his coalition just two weeks ago.

As a result, the coincident indicator, a monthly estimate of Lebanon’s gross domestic product pointed to real annualized growth of less than 1 percent in the first quarter of 2011 following strong performances in each of the previous two years. Barclays Capital last week cut its outlook for GDP growth this year to 3 percent from a previous estimate of 5.3 percent.

Barclays is among the more bullish estimates for the economy. The International Monetary Fund is predicting growth will slow to 2.5 percent for the year while the Economist Intelligence Unit is looking for just 1.3 percent. Economists are looking for some improvement in the second half of the year by virtue of the fact that now there is a government in power.

“It’s better to have a government than the vacuum we had in last five months,” said Ghobril.

Mikati is a billionaire businessman who enjoys the confidence of the business community, and both the economy and finance ministries are assigned to people close to him. But the power behind the scenes in his new government is Hezbollah, which the U.S. government has designated a terrorist organization.

Adding to his troubles, Mikati enters office at a particularly delicate time in Lebanon.

Next door in Syria, President Bashar Al-Assad is struggling to put down mass protests that have left more than 1,400 dead and sent refugees fleeing into Turkey and Lebanon. Syria is a conduit for Lebanese trade with the Arab world while Damascus plays the role of political kingpin in Lebanese politics, creating a source for stability or for chaos. Many Lebanese worry that Al-Assad may fan the flames of sectarian violence in Lebanon to prove to the U.S. and Israel that only his rule is capable of keeping the region quiet.

“The situation adds to the uncertainty of the environment. Investors delay investment decisions to have a clear outlook of the political situation,” Marwan Barakat, chief economist, at Bank Audi, told The Media Line. “In the best-case scenario, it will be year of moderate growth given what happened in the first half and given the uncertainties prevailing even after the formation of new governments.”

The most immediate political test facing Mikati, however, is the United Nations Special Tribunal for Lebanon (STL), which is probing the 2005 assassination of Saad Hariri, a former prime minister. Hezbollah engineered the fall of Lebanon’s last government, led by Hariri’s son Rafik, after he refused to reject the STL.

On Monday, pan-Arab newspaper Asharq Al-Awsat reported that the STL was expected to make a request to Lebanese authorities to question five Hezbollah members in the next few days. Other media reported that the three Lebanese judges on the tribunal were summoned to the STL’s Hague headquarters three days ago in an effort to protect them ahead of the release of the indictment and in its aftermath.

The hardest hit segments of Lebanon’s economy have been tourism, where a sharp 15.5 percent drop in tourist arrivals in the first quarter helped to create Lebanon’s first current account deficit since 2005, according to the Barclays report. Foreign investment also declined and to a lesser extent so did the money that Lebanese expatriates send home, which is a key driver for the economy.

While Lebanon was a rare island of stability in the Middle East, the absence of a government meant it couldn’t exploit the opportunities to lure tourists who had to cancel their Egyptian and Tunisian holidays, said Ghobril of Byblos Bank. Nor did it act to attract capital flowing out of the Gulf countries.

The tourism outlook will probably improve in the second half, but it will be constrained by Ramadan’s timing this year in August, which will dent travel by Muslims. Consumer spending by Lebanese is also offsetting the adverse effects of the Arab Spring, added Barakat of Audi Bank.

Economists say that the Mikati government has a long list of structural and fiscal reforms to address, but at this point, Barakat said investors would be happy if Lebanon’s leaders ensure peace and quiet.

“The main aim of the government should be to foster stability. Any political or economic action has to focus on maintaining stability in a difficult domestic and regional environment. This is the challenge, much more the structural reforms,” Barakat said.

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Damascus, Syria David Rosenberg – Faced with growing pressure at home and abroad to end his crackdown on opposition protestors, Syrian president Bashar Al-Assad struck a more conciliatory and compromising tone in an address to the nation on Monday.

In his third such speech since unrest broke out in the middle of March, Al-Assad conceded that the nation suffered serious problems that exposed it to protests. He said the government was ready to listen to the Syrian “street” and proposed a formal national dialogue.

“We in a position of responsibility have to listen to them,” Al-Assad said in remarks broadcast live from Damascus University. “The patriotic elements have expressed their demands. They aren’t connected with any external force. They want to participate. They want justice. They don’t want to be marginalized.”

The president’s speech may have been directed at leaders overseas as much as at Syrians. European foreign ministers were due to meet on Monday to discuss Syria, as pressure grows for foreign powers to act. Syrian security forces have killed some 1,300 civilians, according to the Syrian Observatory for Human Rights. Nearly 10,000 refugees have fled to Turkey, provoking a diplomatic crisis with Ankara.

While the plan was short on details, Al-Assad offered to begin a formal national dialogue that would lead to the creation of political parties alongside his Baath Party, which now has a monopoly on political life. It would prepare proposals for a freer press and possibly a new constitution for the country. He promised parliamentary elections in August and a reform package by September.

Al-Assad also addressed the country’s economy, which has been paralyzed by strikes and protests. But he offered no proposals for economic reform, except for national dialogue on the matter.

“The most dangerous thing we face in the next stage is the weakness or collapse of the Syrian economy and a large part of the problem is psychological,” Al-Assad said. “We cannot allow depression and fear to defeat us.”

While the Syrian leader struck a more muted tone than in his previous addresses, analysts and opposition leaders said it didn’t go nearly far enough.

“I don’t see this speech as anything new or significant. It was a deeply disappointing speech. This isn’t the man to conduct any significant dialogue,” Salman Sheikh, director of the Brookings Doha Center, a Qatar-based think tank, told The Media Line.

Assad did acknowledge the grievances of ordinary Syrians, but he framed them as part of a conspiracy and blamed the protestors for stunting Syria’s economic development. “It would have been a real miss if he didn’t acknowledge any of the people’s grievances,” Sheikh said.

Shortly after the 75-minute address was over, protesters took to the streets of Damascus’ suburbs and several cities, activists told Reuters news agency. “No to dialogue with murderers,” 300 protesters chanted in the suburb of Irbin, a witness told Reuters by telephone.

“A national dialogue cannot happen when one side refuses to talk about the REAL issues and REAL situation,” said a Syrian activist based in Beirut who blogs under the name Malath Aumran. “We are on the 98th day of protest today and the Bashar is still in denial.”

Even as he admitted Syrians had real grievances, Al-Assad returned to the themes of foreign conspiracies and religious extremism that had been the focus of earlier addresses. Nevertheless, he termed the number of alleged terrorists “very few” albeit “very influential.” He signaled that he was prepared to share blame with the opposition for the deaths and chaos over the last three months.

“Imposing peace and security doesn’t justify killing people,” Al-Assad said. “Legitimate demands don’t create an excuse for people to create chaos.”

“It’s hard to interpret what this all means, because it was difficult to understand what Al-Assad was pitching. He just didn’t sell it, and we don’t know who is supposed to big part of this national dialogue,” Issandr El-Amrani, an Egyptian journalist wrote on the highly regarded The Arabist blog site. “It still feels too half-hearted.”

Syria can count on few influential friends, short of Iran and Turkey, the latter of whom had worked hard to improve ties with Syria over the last several years as part of its drive for improved diplomatic and commercial relations with the Middle East. But the strategy has run aground as Al-Assad has used violence to put down mass protests.

On Sunday, Ersat Hurmuzlu, an adviser to Turkish President Abdullah Gul, told the Dubai-based Al-Arabiya television channel that Turkey would be watching closely what Al-Assad and warned him he had little time left to save his regime by implementing reforms.

“The demands in this field will be for a positive response to these issues within a short period that does not exceed a week,” Hurmuzlu said.

Al-Assad, however, can still count on Russia and perhaps China to save him the embarrassment of a United Nations Security Council resolution condemning his actions. While several European countries have submitted a draft resolution, Russian President Dmitry Medvedev, whose country has veto power in the council, indicated he wouldn’t support it.

At home, however, there was little evidence that either the crackdown or appeals for stability and reform were working for the Syrian leader. On Sunday, opposition groups, which until now have operated as an assortment of independent and private efforts, announced they were setting up a “National Council” to coordinate the rebellion against the regime.

“We announce the creation of a National Council to lead the Syrian revolution, comprising all communities and representatives of national political forces inside and outside Syria,” reporters near the Turkish-Syrian border were told by Jamil Saib, a spokesperson, on Sunday.

With reporting by David E. Miller

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Sanaa, Yemen Judith Spiegel – It is early morning in Change Square, as the opposition has dubbed the epicenter of their months’ long sit-in in the Yemeni capital. Abdulmajid Ali, a sheikh of the Arhab tribe, is standing at the front of the tent his tribe has set up at the site as tribesmen start the day by sweeping the floors and folding blankets.

“We want a new system. We don’t care if the tribal rules no longer play a role in that system, it should be the rule of law that prevails,” Ali, who is in charge of the Arhab tent, told The Media Line.

It is a view echoed among the thousands camped out at Change Square and, if it prevails, it could bring about a new era in a country whose government and society have been built on edifice of tribes, clans and families, with a central government perched precariously atop trying to keep its balance.

Indeed, Change Square is already acting as a laboratory for a new Yemen. Not so much a square as a warren of streets and allies abutting Sana’a University, Change Square is both a temporary city replete with cafes, shops and art exhibits, but a place where tribal rivalries have given way to the common cause of ousting Yemen’s president of three decades, Ali Abdullah Saleh.

Saleh ruled by keeping the countries’ tribes loyal through a complicated system of payoffs and patronage. The strategy unraveled earlier this year when many tribal leaders turned on him, bankrolling the opposition movement. Saleh is gone for the time being after he was wounded two weeks ago during a battle with tribesmen and is now convalescing in a Saudi hospital.

His exit could open a new chapter in the history of Yemen, the poorest country in the Arab world. Few doubt that the countries’ tribes and their leaders will play a decisive role. But while the tribes are in the democratic opposition, many analysts fear that they are a barrier to change, opposed to economic development and the emergence of a modern, centralized government employing the rule of law. Indeed, they have been accused of providing aid to Al-Qaeda.

In Change Square, however, the tribesmen themselves say they are ready for modernization.

Arif Al-Sabri belongs to the Madhazj, a small tribe from the area of Taiz. He doesn’t fit the stereotype of a turbaned man with a grizzled face and a rifle in his hand wandering a barren desert landscape. An unemployed engineer, Al-Sabri wears Western clothes and speaks near-perfect English. He has been protesting against Saleh’s regime since strikes broke out in February. But he is a loyal tribesman nevertheless.

“Of course, I belong to a tribe. We all do. Belonging to a tribe gives people a sense of dignity, of pride. Tribes are the root of Yemen,” he told The Media Line. “It doesn’t matter whether Yemen is tribal, it matters whether people are educated.”

Tribal divisions are an essential part of Yemeni society and no one doubts they will disappear in the post-Saleh era. Almost every Yemeni belongs to one and can identity another’s affiliation usually by their last name. The only major exceptions are people at the very bottom and top of Yemeni society — the qarar, who are unaffiliated and considered of lower class, and families believed to be descendants of the prophet Mohammed and therefore enjoy a higher status than the tribesmen.

Many experts argue that it isn’t the tribes that bring underdevelopment but the other way around: Tribes fill the gaps of a failing state apparatus with their own law and order. Daniel Corstange, who teaches at the University of Maryland, came to that conclusion after conducting a survey of attitudes among 1,400 ordinary tribesmen.

While he found variations among those who view tribal law and institutions positively, depending on education, tribal affiliation and gender, Corstange concluded that Yemenis fell back on tribal law for lack of a better alternative from the central government. “The second-best alternatives provided by tribal law are clearly preferable to nothing,” he wrote in a 2008 study.

“Of course conflicts happen, like in Western societies. There, however, the police step in,” Nadwa Al-Dawsari, director of Partners Yemen and expert on the tribes in Yemen, told The Media Line. “Here, the tribal areas have no functioning institutions like the police or courts, so the tribes maintain security and stability by mediation. That is their traditional role and we have to admire the fact that conflicts aren’t escalating.”

Al-Sabri, the engineer, admits that the tribes play host to Al-Qaeda fighters, which the U.S. regards as the single biggest danger in Yemen today, not because they sympathize with the movement’s Islamic extremism but out of a tradition of hospitality and protection. “If you ask a tribe for protection, they will give it to you. This is tribal custom,” he says.

But Al-Dawsari disagrees. Under tribal custom, he says, criminals cannot be protected and must be brought to justice. Some Al-Qaeda militants who belonged to important tribes were expelled by their tribes and have been forced to stay on the run. Moreover, he says, Al-Qaeda is competing with the authority of the tribes, for whom it has little respect.

“They preach an Islam that isn’t compatible with the version of Islam of the tribes,” Al-Dawsari says. “In fact, the Islam of Al-Qaeda speaks very poorly of tribes.”

That doesn’t mean that if the state becomes stronger, tribes will disappear, but they will become repositories of culture and tradition. Saudi Arabia, for example, has many tribes, but they no longer play a role in the maintenance of law and order, Al-Dawsari says.

For Al-Sabri, being a member of a tribe is a matter of tradition and identity, not of politics. He waves his arm towards the tent behind him. There, his fellow tribesmen are chewing [the narcotic-like plant] qat, watching television and discussing the situation. “Silmia!” they shout to passersby, which means peaceful.

“If this revolution succeeds, this country will be modernized and, of course, the role of the tribes will change as well. The current influence of the tribes is caused by a failing state system” Al-Sabri says. “Because the state-based law does not work in Yemen, tribal power is still strong.”

Yemeni tribal leaders aren’t after political power in their own right, says political analyst Hassan Al-Haifi. They prefer to throw their support behind leaders, typically the one who pays them the most. “Tribal leaders don’t want responsibility, and other tribes would never allow that. They are only after the overthrow of the regime,” he says.

Al-Dawsari says the tribal system is disintegrating. While the sheikhs have retained their power, they have lost the loyalty of many of the younger generation by growing rich on government subsidies and favoring their children with education and other benefits while their followers remain poor.

“We saw that during the uprising. Many of the young and educated tribe members joined the youth. They no longer follow their sheikhs. They are enrolled in the normal political process. Within a tribe, people vote for different political parties,” he says.

Because Saleh never tried to break the power of the tribes, that job awaits Yemen’s next leader. But many fear that he will be replaced by a president who continues with his policies. Among the likely candidates are Saleh’s son and military leader, Ahmed Ali Abdullah Saleh, and Hamid Al-Ahmar, a businessman and one of the leaders of the Islamic Islah-party, both of whom are regarded as too stuck in the ways of the old regime.

Indeed, the failure of Yemen’s next generation of leaders to reform the system and revive the economy could provide Al-Qaeda with an opening to seize power. Poor and frustrated and lacking any role in the political decision-making process, younger people are likely to turn to Islamists.

“That is the biggest danger,” says Al-Dawsari. “If the youth on the squares in cities like Sana’a or Taiz don’t get what they want, they will be extremely frustrated. They are the new recruits for Al-Qaeda.”

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Rafah Terminal, Gaza Strip, Palestinian Territory Omar Ghraieb and David Ro – The Rafah terminal on the Gaza-Egypt border is a subdued place these days.

When Egypt made good on its promise and eased controls governing entry and exit from the Gaza Strip on Saturday, the events received worldwide attention. Hatem Awideh, of the Gaza border, called it “a cornerstone for a new era” while The New York Times headlined it: “Egypt Lifts Blockade, Along With the Gazans’ Hopes.” Israel’s opposition Kadima Party declared the opening a “national failure.” The Turkish organizers of a flotilla due to leave for Gaza with aid supplies next month felt compelled to defend their decision to go ahead with the mission.

But on the first day Rafah was open, only 450 of the 1.6 million Gazans packed into the enclave’s 360 square kilometers (139 square miles) opted to cross. The next day it was just over 590 coming. On Monday, the number declined slightly to about 580. No goods or merchandise, except as much as can be stuffed into a large suitcase, can pass through Rafah at all.

Billed as a major event with multiple political ramifications for Israel, Egypt and the Palestinians, the Egyptian move, in fact, marks just a small step in a gradual easing of a four-year-old blockade of Gaza. Imposed by Israel after the Islamic Hamas movement seized control in 2007 and backed by Egypt, the lockhold on Gaza is aimed at preventing weapons from reaching Hamas and encouraging Gazans to rebel against the movement’s rule.

But a year ago, the two countries removed its most onerous terms following a bungled Israeli commando raid on a Turkish attempt to break the blockade. Egypt eased controls further

By one estimate, more than 130,000 Gazans passed through the crossing in 2010 and another 30,000 passed through it since the start of upheaval in Egypt last January. The difference since last Saturday is that Rafah now operates six days a week instead of five and working hours have been extended by two hours daily. Visa requirements have been lifted for women, children under 18 and men over 40.

“It’s revolutionary compared to what was happening in the past year. It was not revolutionary over what has happened over the past (few) years,” Mkhaimar Abusada, who teaches political science at Gaza’s Al-Azhar University, told The Media Line. “Basically, it’s an upgrading of the facility and mechanism for travel.”

Sami Khader, 48, should have been among the first to line up at the exit ramp from Gaza after it opened. His family came to the enclave in early 2010 for a short vacation to see their relatives and then head back to Saudi Arabia, where they have lived for years. But the family ended up trapped in Gaza and they have lost their permits to reside in the kingdom.

With the Israeli blockade eased and more goods arriving, Gaza’s economy has grown strongly over the past year even though it remains poor and reliant on international aid. The International Monetary Fund estimates Gaza’s gross domestic product grew in the double-digits last year and Palestinians investors are building the coastal strip’s second shopping mall.

On Monday, Palestinian officials pledged $200 million for rebuilding Gaza and hope to raise an additional $800 million from private Arab investors.

“I’m happily living in Gaza now with my family and I don’t need to go back to Saudi Arabia,” Khader told The Media Line. “Who could have known that in one year many things could change? Why can’t you quit one life to lead another one in Gaza, your own home?” Khader said.

The Hamas government in Gaza staged a campaign to ensure a big turnout at Rafah on Saturday, hiring buses to transport people to the terminal and sending activists to encourage people to cross. But, in fact, many people who might want to leave can’t because officials for now are limiting exit permits to people who had previously registered to leave under the older, more restrictive terms.

Sarah Ahmed said she never gave up hope. Her cousin Ahmed Ahmed, she said, gave up hope of finishing his studies abroad, threw away his British visa and enrolled in the Islamic university in Gaza. But even though she has been trapped in Gaza for close to a year after coming back for a family visit, she declined to enroll in any local university.

“I’m still waiting for my turn to leave Gaza and renew my British visa and continue my studies at Glasgow University,” Sarah Ahmed, a student studying in Britain, told The Media Line. “I love it there, and I can’t wait to go back”.

Abusada of Al-Azhar said the registration system is a holdover from a 2005 agreement governing border controls at Rafah. They date from just after Israel evacuated Gaza and before Hamas took over Gaza. Egypt required a list of people seeking to cross to prevent people regarded as security risks from entering the country.

But now with the border open to everyone except men between 18 and 40, it is mainly in Hamas interest to keep the pre-registration policy in force, he said.

“If there was no pre-registration the border would be flooded with tens of thousand who want to leave, so they are regulating the movement,” Abusada said. “Once the border is open for three months or six months, and Palestinians have become accustomed to it, they will cancel registration.”

He predicted a crush at Rafah come summer. Gazan school children are taking year-end exams now, which means many families would prefer to wait till the vacation begins. The limited hours at the terminal, which during the 1990s was open 24 hours a day, will exacerbate the problem.

No goods are permitted through Rafah, but the terminal was never designed as a transit point for merchandise and none of the sides involved would want to see that change, analysts said.

Israel allows more goods than ever in the past four years through its border with Gaza – on Monday around 240 truckloads of goods entered, including 60 containing construction materials – and collects customs duties on import wares that is then passed over to the Palestinians Authority. Meanwhile, Hamas collects it own taxes on good smuggled through the many tunnels dug under the border with Egypt.

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Jerusalem, Israel David E. Miller – Two years into office is about the time most Israeli governments are fraying at the edges if not already teetering at collapse. But as Binyamin Netanyahu readies to mark the second anniversary of his government this Thursday, the prime minister’s position looks as strong as ever, analysts and opinion surveys say.

A survey by the Dialog Institute for the daily newspaper Ha’aretz published at the end of last week showed that Netanyahu remains the leader of choice for most Israelis, besting his closest rival, Tzipi Livni, chairwoman of the opposition Kadima Party, by 9 percentage points.

The poll found Netanyahu’s Likud Party running neck-and-neck with Kadima in the Knesset, each receiving 31 seats. But the Likud has a wider choice of likely coalition partners and in an election draw would probably be called on to form the government, as happened in 2008 when Kadima was the biggest vote-getter. Together with religious parties and those of the right, the Likud could garner a 68-seat majority in the Knesset.

Israel isn’t scheduled to hold elections until 2012, but governments typically fall long before their term is over, with the average life expectancy at about 23 months.

“If you compare it to what we had in the past, it definitely looks very stable,” Avraham Diskin, who teaches political science at the Herzilya Interdisciplinary Center, told The Media Line. “Netanyahu really invested a lot of effort when they formed the government in all kinds of measures to strengthen the coalition.”

The media made fun of Netanyahu when he created a cabinet of 29 ministers representing six parties, but Diskin said stuffing the government with office holders has kept a broad and often disparate alliance together. Netanyahu was also helped by new legislation creating two-year budgets, thereby avoiding the traditional coalition crisis that erupted every year over the spending package.

More than that, analysts said, Netanyahu has also presided over a period of relative peace and prosperity. The economy sailed through the global financial crisis with virtually no turbulence. Tensions on its border with Lebanon and Gaza haven’t boiled over into war. And, while Israel suffered two terror attacks in the past two weeks, violence remains very low.

The greatest crisis Netanyahu had to deal with in his first two years was with the U.S., said Dan Schueftan, director of the National Security Studies Center at Haifa University. Ultimately, the prime minister resisted U.S. demands for a lengthy suspension of settlement construction, but the victory came at great cost to relations between Israel and its most important ally.

But Netanyahu faces critical challenges ahead that could rapidly reverse the period of prosperity and relative peace the country has enjoyed since he took office.

Turmoil in the Middle East has undermined allies like Egypt and Jordan. Trouble even among traditional foes, like Syria, could boomerang on Israel in unexpected ways, heightening the risk of conflict or putting into power even more hostile regimes. Recent terror attacks may portend a surge in Palestinian unrest. Domestically, Israel’s economy is at risk to a global downturn spurred by higher energy prices and Japan’s woes.

Schueftan said Netanyahu’s great mistake was opting back in 2009 as he was enlisting coalition partners to go with parties mainly from the right of center and religious parties, instead of the center-left Kadima Party. Schueftan is particularly critical of Netanyahu’s decision to bring Shas, which he sees as the driving force behind campaigns to enable Israel’s ultra-Orthodox Jewish minority to avoid army service and employment.

“The most important thing for him [Netanyahu] is the stability of the government and he starts on the assumption that you need a stable government and that means bringing in Shas,” he told The Media Line. “He mortgaged an important interest of Israeli society when he gave precedence to government stability over policy.”

While Netanyahu’s government is perceived by many abroad as right-wing and hawkish, in Israel Netanyahu succeeded in capturing the political center, analysts said. Netanyahu publicly accepted the idea of Palestinian statehood early in his government and agreed to a one-month settlement freeze, two moves that have distanced him from Israel’s right, Diskin said.

That has cost him some votes, which have drifted to Yisrael Beiteinu, but has almost certainly brought in others, Diskin said. Indeed, in spite of his foot-dragging on peace, Netanyahu probably does accept the need of reaching a peace agreement with the Palestinians as does the majority of the Israeli public.

“He understands that partitioning the land is inevitable and necessary,” Schueftan of Haifa University said. “I don’t think he has a fantasy of greater Israel. The question is whether he is willing to take the risk.”

Nevertheless, the Israeli voter isn’t particularly enamored of either Netanyahu or his government. While he outscores Livni on suitability as a prime minister, only 44 percent told Dialog they felt that way about him. Only 39 percent said they were satisfied with his performance, well below the 50 percent that Ha’aretz political correspondent Yossi Verter said was the minimum to make a leader feel secure. His key ministers don’t score much better.

“This is a government that is neither hated nor loved. Both parts of the public [the left and the right] see the glass half empty,” Verter wrote.

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