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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Israel David Rosenberg – Bahrain and Yemen aside, the turmoil in the Middle East has turned into a boon for Saudi Arabia, as the country’s coffers swell with the proceeds of climbing oil prices and production. And, a series of subsidies and other measures worth as much as $133 billion will help ensure the bounty reaches ordinary Saudis.

National Commercial Bank, a Saudi lender, raised its outlook this week to 5.1% from a previous 4%. Barclays Capital is planning to revise its forecasts shortly as is Bank of America. A Reuters poll of economists taken last week before the second of two government spending plans was unveiled showed the Saudi economy growing by 4.5% this year, slightly faster than previous expected.

Where unrest and uncertainty are weighing down on most regional economies, Saudi Arabia is an exception these days to the trend in the Middle East.

As supplies from Libya have fallen and worries that other exporters may cut output as well, oil prices have risen about 20% this year. Benchmark Brent crude for May delivery traded at about $115 for a barrel on Thursday. Economists estimate that for every $10 increase in the price, Saudi Arabia can increase its budget by 6% of gross domestic product.

And, with the world’s biggest reserves and excess capacity, Saudi Arabia is benefitting twice over by raising output to fill the Libyan gap. Official figures aren’t available, but the country is believed to have boosted output by about 700,000 barrels a day to 9.2 million barrels.

“On the oil side, recent events have been unambiguously positive,” Daniel Kaye, senior economist for National Bank of Kuwait, told The Media Line.

Meanwhile, two royal decrees announced over the past month call for $133 billion in new government spending – a figure equal to an eye-popping 30% of the country’s GDP. The money will be spent for everything from pay raises for civil servants to building homes to adding more people to the security forces.

No one doubts that the measures are aimed principally at assuring Saudi Arabia’s 26 million citizens aren’t drawn into the spirit of rebellion that has brought down the leaders of Egypt and Tunisia and threatens those in Yemen and Libya. Riyadh has been fearful enough of unrest that, in a rare military action, it dispatched troops to neighboring Bahrain last week to help the king put down protests.

But Kaye of National Bank of Kuwait and other economists said the extra spending will also give another boost to the economy and address some of its structural problems, like a persistent housing shortage and high unemployment.

National Commercial Bank estimates the two initiatives will generate some150,000 jobs directly and indirectly, equal to nearly a third of the estimated number of jobless. Another 60,000 jobs will be creating by hiring more security personnel at the Interior Ministry, a measure that will do double duty by aiding the economy and helping to clamp down on any emergent unrest.

Civil servants will get a pay hike equal top two months’ salary and a minimum wage was set for them at 3,000 riyals ($800). Those seeking jobs – an estimated 10% of the country’s labor force – will be entitled to a monthly allowance of 2,000 riyals.

The $15 billion set aside to build new homes and fund more generous government loans to buyers will go part of the way to easing Saudi Arabia’s housing shortage, economists said. Credit Suisse forecast the country will need some two million more housing units by 2014.

The amounts involved are huge, but economists said it was too early to gauge the impact they will have on the broader economy. UBS on Wednesday affirmed for now its Saudi growth forecast of 4.5% for this year, said Reinhard Cluse, an economist who tracks Saudi Arabia for the Swiss bank.

“We don’t know how big the overlap is between them [the two announced programs], or how quickly the money will be spent, so that makes it difficult to speak about the impact on GDP growth,” Cluse told The Media Line. “In regard to social spending, it will go to investment in housing and into wage spending. As such, the multiplier effect should be quite good.”

Indeed, the largesse is so enormous that it has sparked jealously among the 800,000 or so Saudis employed in the private sector. A Facebook page “We Are Also Saudis” has served as a forum for griping. “We’re treated as if we’re foreigners,” the page’s administrator writes.

In fact, many private sector businesses have decided to match the government bonus, among them Saudi Basic Industries Corp., American Express in Saudi Arabia, Samba Financial Group, Al-Rajhi Bank, Saudi Electricity Co. Saudi Aramco, Saudi Arabian Airlines, Saudi Telecom Company, Kingdom Holding Company, and Saudi Arabian Mining.

Some analysts have raised the specter of accelerating inflation as all this money percolates through the Saudi economy. Annual inflation slowed to a 10-month low of 4.9% in February, but economists like John Sfakianakis, chief economist at Banque Saudi Fransi, have warned that the government’s handouts may reverse the trend.

Cluse said it was premature to talk about their inflationary impact. The government has the resources to increase subsidies to contain the impact of higher global food prices, which is the chief threat to price stability right now, he said. In can also enforce price regulations if needed, said Cluse, who forecasts consumer price rising between 5% and 6% this year. The handouts may even help cool inflation.

“Housing costs were a big driver of inflation in the past, so spending on new housing can bring down inflation in the medium term,” Cluse said. “But we don’t know how quickly money will be spent, so we don’t know how inflationary it will be.”

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Amman, Jordan (TML) – Jordanian authorities have put security forces and police on red alert during the past two weeks as concern that Tunisia’s unemployment revolt which toppled President Zine El Abidine Ben Ali could ignite an already angry Jordanian public.

The army, gendarmerie and other police units have been banned from leaving their bases as concern grows that ripples of Tunisia’s political earthquake could reach the small kingdom.

A demonstration last Friday organized by the opposition to call for economic and political reform was the latest in a spate of protests around the cash-strapped kingdom.

Nearly 4,000 people showed up in an event dubbed “The Day of Rage” to vent their anger at Prime Minister Samir Refai, whom many accuse of being out of touch and imposing economic policies that impose intolerable burdens on ordinary people.

A key U.S. ally in the heart of the Middle East, Jordan is more strategically situated than Tunisia since the kingdom borders Israel, Iraq and Saudi Arabia. But in many other respects, the Jordan and Tunisia have much in common. Both have sought to build progressive and stable societies based on the rule of law, secularism, women’s’ rights and rising standards of living.

But neither has ever developed a full-fledged democracy, nor have they been able to cope with joblessness, poverty and inequality – all factors that brought down Ben Ali earlier this month. Joblessness in Tunisia is about 13% and the rate among young people is considerably higher.

“The economy in Jordan has certain contradictions. It suffers from unemployment of 14% — 150,000 who are people looking for jobs,” Jawwad Anani, an economist who served as royal court chief and finance minister for the late King Hussein, told The Media Line. “We need a strategy, a well-thought-out strategy that everybody believes in and can take this society to a higher level.”

Even before the situation in Tunisia exploded five weeks ago, Jordan was experiencing a wave of unrest amid growing tension between the country’s Bedouin tribes and its urban Palestinian population. But economic problems are looming as an increasingly important factor as global food prices rise.

Under guidance from the International Monetary Fund (IMF), Jordan’s government two years ago lifted subsidies on fuel and raised taxes to generate badly needed income that could help trim a yawning budget deficit of $2 billion. Economists estimate the government generates nearly 600 million Jordanian dinars ($900 million) in profits annually from selling fuel to its own citizens.

Meanwhile, many of the jobs that the economy is creating are going to expatriate guest workers. Anani estimated that about 750,000 jobs are filled by non-Jordanians, including a half million Egyptians and smaller numbers from Syria and Iraq.

For now, the situation in the conservative kingdom remains under control. There have been no violent confrontations between police and protestors. The government has embarked on a flurry of activities aimed at absorbing the anger of the public and the opposition.

The government last week approved a $225 million package to contain rising commodity prices and lower some fuel prices, including $28 million to subsidize prices of basic food items sold in state-run supermarkets. The government also promised to create jobs in the army and security forces to appease disenchanted Bedouin tribes, which make up the majority of the army and security forces and are the firmest backers of the royal family.

Some of the government’s most experienced politicians, including Interior Minister Saad Hayel Srour, Parliamentary Speaker Faisal Fayez and government spokesman Ayman Safadi, have opened up communications channels to opposition leaders to calm the atmosphere. But opposition leaders have greeted the campaign with skepticism.

“They have been a great many meetings with the minister of interior and the speaker of parliament, but what we want is ongoing dialogue and a genuine desire of change,” MP Ablah Abu Elbeh, who is also secretary-general of the leftist Hashed Party, told The Media Line.

The Day of Rage protestors called for the prime minister to step down. Hamzeh Mansour, secretary-general of the Islamic Action Front (IAF), the political arm of the Muslim Brotherhood, called on Abdullah to dismiss the government and dissolve what he called an inept parliament.

Even in parliament, which recently gave the government a confidence vote of 111 out of 120, lawmakers last week lashed out at the government for its fuel-pricing policies. But lawmaker Jameel Nemri told The Media Line that changing the government wouldn’t solve the problem.

“It’s meaningless to call on the government to be dismissed. This will just lead to musical chairs game among influential parties in the kingdom. The core issue of helping the poor stand on their feet is what should be addressed, not who is a prime minister,” said Nemri.

Anani, the economist, warned that the kingdom could be facing uncertain future if the government continues to resort to temporary measures, like the make-work schemes it announced for Bedouin tribesmen.

“If we continue to allow the status quo to prevail, we will lose our ability to even develop crash programs to take care of emergency in difficult situations,” he said. “Putting small fires is not going to work very well.”

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Tel Aviv, Israel (TML) – A tsunami of intolerance and discrimination against Arabs, ultra-Orthodox Jews and African refugees has washed over Israel in recent weeks, causing concern among many that it may be undermining Israel’s democratic character.

The past week has seen an explosion of street protests calling to deport Africans who have congregated in neighborhoods in south Tel Aviv and against Israeli Arabs moving to the cities. A group of municipal rabbis signed a letter earlier this month declaring that it was forbidden by religious law to rent or sell homes to non-Jews.

“We see it as a racist call,” Ron Gerlitz, the co-executive director of Sikkuy – the Association for the Advancement of Civic Equality in Israel, told The Media Line. “If someone says we should not rent to some people just because of their nationality then this is racism.”

There are an estimated quarter of a million foreign workers in Israel, about half of these in the country illegally. This doesn’t include the estimated 30,000 Africans who have flooded into the country by foot over the past few years, mostly from war-torn Eritrea, and Sudan. While these numbers are small compared to more than seven million Israelis, the foreigners tend to live in a limited number of neighborhoods where their presence is felt especially strongly.

Gerlitz said the attacks on Israel’s Arab minority, which makes up some 20% of the population, was an “attack against democracy, because there is no democracy without uncompromising protection of the rights of the minority.”

Foreign Minister Avigdor Lieberman, head of the nationalist Yisrael Beitenu party, has also fanned the flames of incitement against Arabs. “Every day, every week, you have another case of Israeli Arabs that are talking part in terrorist activity,” he said in an interview with Newsweek published last week.

Some demonstrators advocating for the expulsion of African migrants from south Tel Aviv last week held placards saying: “Lieberman, where are you when we need you?”

Intolerance has grown to encompass Israelis Jews as well, with ultra-Orthodox Jews targeted for their refusal to serve in the army or join the job market, enjoying government allowances that enable them to engage in religious studies well into adulthood.

Eli Yishai, head of the ultra-Orthodox Shas party, protested what he called the “witch hunt” being waged by the secular Israelis against ultra-Orthodox. But, in fact, the ultra-Orthodox have traditionally disparaged secular Israelis and many of their political leaders have taken on the fight against Africans.

“I call on all the leaders of all the parties to stop this wave of incitement. It creates rifts within the nation, and is completely unnecessary,” Yishai said at a news conference last week.

He was referring to the repeated headlines against the government stipends given to yeshiva students and angry protests by mainly secular Israelis.

Yair Lapid, a popular on-air personality on the Channel 2 television network — who has been toying with following the political footsteps of his father, the secularist champion, Yosef (Tommy) Lapid — published a front-page editorial in the nation’s largest daily lambasting the burden that tens of thousands of African migrants were putting on the economy. He has also been a leading voice in curtailing government funding to ultra-Orthodox.

Nahum Barnea, one of the country’s most influential columnists, opined that the arguments about foreigners were the byproduct of the failed peace process with the Palestinians, which has left politicians looking fro something to quarrel about.

And yet, in an unprecedented appeal, Prime Minister Binyamin Netanyahu last week addressed the incitement against illegal migrants in a video message posted on his Facebook and YouTube pages.

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“We are a country run by the rule of law, we are a country that respects all peoples, whoever they are,” Netanyahu said. “I insist that citizens of Israel not take the law into their own hands, not through violence nor through incitement.”

Earlier this month, Israel police arrested a gang of Jewish teenagers in Jerusalem on suspicion of attacking Arabs for nationalist reasons. No arrests have yet been made, however, in the case of a burning tire being tossed into building housing Sudanese refugees in Ashdod two weeks ago.

The liberal newspaper Ha’aretz appealed to President Shimon Peres to step in and express compassion for the illegal migrants and victims of hate crimes. It also called on him to show the Arab inhabitants that they are equal citizens and Israel values them.

Netanyanhu has vowed to put an end to the wave of African migrants flooding the country and his government is building an impermeable security barrier along portions of the 240-kilometer border with the Egyptian Sinai. Israel is also mulling building a detention camp for those who do manage to cross, until they can be returned to their countries.

A recent poll by the Institute for Immigration and Social Integration found increasing apprehension among low-income and religious Israelis that foreign workers would take their jobs and threaten the Jewish character of the state.

On the other hand, the poll also found that a majority believed that once an African made it into the country, the state should provide them with social benefits.

“Israel is going in a direction which understands that the margins of society should be included into society. We are talking about foreign workers, about people who cross the border illegally, about people who are married to immigrants and other parts of society who start to become a part of society,” Gerlitz said.

“But this creates a counter effect in which the people who were inside the mainstream of society want a society that will be exclusive. They don’t want those parts to be part of the society. I would agree that the fact that new groups want to join in Israeli society caused this effect and people end up saying ‘We don’t want the Arabs in our cities. We don’t want the illegal immigrants. We don’t want the foreign workers’.”

Gerlitz added that the solution was to create a shared society “where all the people who live in this society believe it belongs to all its members, to Jews and Arabs alike.”

Yohannes Bayu, director of the African Refugee Development Center, which helps refugees in Tel Aviv, said nationalists and ultra-Orthodox in Israel were fanning the flames of hatred for political gain.

“They are trying to create fear in the minds of the people,” Bayu told The Media Line. “They’re not talking about these people as refugees, but are saying things like they are bringing diseases threaten the Jewish demographics.”

Bayu, who isn’t Jewish, was taken in by Israel as a refugee 15 years ago, when he was forced to flee his native Ethiopia. He said he has never seen the animosity against Africans so bad as it today.

“It’s like when the Germans started attacking Jews. They didn’t start all of a sudden. They brought all sorts of excuses and tried to raise the fear among the public that [Jews] were taking from them and were a demographic threat. And that turned into violence. It’s the same here now. It’s very scary,” Bayu said.

(Michael Grubb contributed to this report)

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Palestinian Territory Benjamin Peim – Six years after he died in a Paris hospital, leaving behind a failed peace process and a Palestinian government plagued by inefficiency and corruption, Yasser Arafat remains the object of veneration by Palestinians even as they are divided between nationalist and Islamic factions.

Construction on a museum dedicated to his life and containing many of his personal effects – including the black-and-white keffiyeh he turned into a symbol of Palestinian nationhood – has begun in the Muqata compound in Ramallah, where Arafat spent his last years besieged by Israeli troops.

With the Palestinians split between the followers of Arafat’s Fatah organization and the Islamic Hamas movement, many rue the loss of a leader who for all his faults succeeded in keeping the Palestinians united under the single rubric of the Palestine Liberation Organization for close to four decades.

“The Gaza split would never have happened had Arafat remained alive,” Daoud Kuttab, a Palestinian political analyst based in Jerusalem, told The Media Line. “He is missed for his ability to keep the Palestinian people united.”

Arafat died at the age of 75 on Nov. 11, 2004, in a Paris hospital of an undisclosed ailment. An autopsy was never performed.

He commanded such respect among Palestinians that he was able to steer the PLO away from its declared aim of destroying Israel and seek a negotiated peace agreement that would lead to a Palestinian state. Today, Israeli leaders are engaged in on-again-off-again talks, but most are skeptical that the current generation of Palestinian leaders is strong enough to deliver on any peace agreement.

Mahmoud Abbas, the president of the Palestinian Authority and Arafat’s successor, remains committed to negotiations, but his writ is limited to the West Bank. The Hamas movement, which rejects negotiations and claims to speak for all the Palestinian people, controls the Gaza Strip. On Wednesday, the two sides failed again in efforts to end their rift.

The Arafat museum, which will cost about $3.5 million to build, will showcase thousands of objects: photographs, sunglasses, pistols, and the former PLO chairman’s trademark military-style suits. It will also feature an archive of his writings, and the last keffiyeh he wore.

“It’s not washed. It even still has his smell,” Tami Rafidi, one of the museum’s curators, told The Media Line.

The museum is scheduled to open by November 2011, and will be free to the public. It is being financed by the Yasser Arafat Foundation, which was founded in 2008 to preserve Arafat’s legacy by Abbas and Arab League Secretary-General Amr Moussa, along with other Palestinian and Arab leaders, politicians and intellectuals.

Rafidi said Hamas, which controls the Gaza Strip, has so far refused to hand over Arafat-related items it holds, including the Nobel Peace Prize Arafat was awarded in 1994 along with Israeli leaders Yitzhak Rabin and Shimon Peres for signing the Oslo Accords

While Hamas officially venerates Arafat, it is arch enemies with his Fatah movement, which is still led by Arafat’s allies. At an Arafat memorial in Gaza Thursday, Hamas’s security forces detained international television crews filming and ordered them to turn over their footage. The Islamist organization also banned photographers from covering the event.

In a recent poll conducted by the Palestinian Center for Public Opinion, over 86 percent of those polled said they missed Arafat, even if some said he left behind a mixed legacy.

“He was a very complicated character,” said Ghaith al-Omari, advocacy director at the American Task Force in Palestine and a former adviser to Abbas. “On the positive side, he founded the movement, but on the negative he brought in a lot of corruption.”

Al-Omari told The Media Line that Palestinians miss Arafat so much because he was a “mythical leader” with great charisma. “For Palestinians he’s imprinted into the collective consciousness,” al-Omari said.

By comparison, the people leading the Palestinians today have failed to capture popular imagination. The economy of the West Bank is booming while security and government efficiency have improved under the leadership of Abbas. But polls show little support for the Palestinian Authority president, who only garnered an 18.9 percent approval rating in a recent survey from the Jerusalem Media and Communications Center.

Hamas doesn’t fare much better among Palestinians, even though it scored a historic victory in 2006 elections, ending the near monopoly of power Fatah wielded over the Palestinian movement. Hamas’ Ismail Haniyeh, the Palestinian prime minister, received just a 9.7 percent approval rating.

In Israel, Arafat is little respected even though he opted in 1993 to go the route of negotiations rather than violence to achieve his dream of a Palestinian state. Indeed, many Israelis doubt Arafat was a genuine advocate of peace and question whether Palestinian moderates, like Abbas, are any different.

“Arafat never had any intention to make peace with Israel,” Mordechai Kedar, research associate at the Begin Sadat Center for Strategic Studies at Israel’s Bar Ilan University, told The Media Line. “He used and abused naive Israelis who fell in love with some of his expressions and thought he was serious about making peace.”

But for Palestinians, Arafat remains a symbol and the father of their national movement.

“He was responsible for keeping the Palestinian issue on the table for years,” said al-Omari. “For a lot of people, the rest is just details.”

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