In part two of "The Politics of Peace"-- a series of reports on the Oslo peace process-- the NewsHour's Charles Krause profiles Israeli Prime Minister Netanyahu and his attempts to play the rough and tumble game of Mideast politics. Earlier, the NewsHour examined the polticial pressure facing Palestinian Authority leader, Yasser Arafat.
CHARLES KRAUSE: In many ways Benjamin Netanyahu's victory in Israel's general election last year marked a turning point for peace in the Middle East. The election was a referendum on the Oslo peace process, and when it was over Netanyahu had defeated Shimon Peres, the man who had negotiated peace with the Palestinians and who was then Israel's incumbent prime minister.
Netanyahu wins the election with a promise to achieve "peace with security."
Campaigning on a platform of peace with security, Netanyahu promised to get tough with the Palestinians, after a series of suicide bombings that 
preceded the election. His narrow victory reflected a growing concern among average Israelis that the peace process was moving too fast and that the Palestinians couldn't be trusted. Today, 18 months later, even Netanyahu's own supporters acknowledge that his conduct of Israel's foreign policy, his dealings with the Palestinians, and his political style are all controversial. David Bar-Ilan is the prime minister's director of communications.
DAVID BAR-ILAN: His main fault, I believe, is that he's telling, actually telling the truth about the situation--not lying about it, but telling the truth. Instead of the kind of Disneyland wishful thinking, dreams of peace around the corner, which we had until now, he has a very realistic assessment of what's happening here. And he realizes that while there's a possibility and a very strong probability of reaching peace if we stand on our security requirements, if we insist on them, he does not believe the day of the European Union in the Middle East are near.
"Netanyahu has gotten the name for himself as somebody who doesn't honor his own promises."
CHARLES KRAUSE: But David Landau, editor of the English language edition of Ha'aretz, one of Israel's most influential newspapers, says that Netanyahu's problem is not that he tells unpleasant truths, rather that when it comes to the Palestinians and the Oslo peace process, Netanyahu says one thing, then does another.
DAVID LANDAU, Ha'aretz: He promises there'll be a slowdown in building, there's no slowdown. He promises there'll be a negotiation, there's no negotiation; promises they'll come to terms, resume negotiations with the Syrians, nothing happens. So all the promises are broken in the direction of not moving forward. But the world community wants the Israelis and Palestinians, or the Israelis and the broader Arab world, to move in a certain direction, which was set in motion in the early part of this decade. And what the world community is seeing is an Israeli government that pays lip service to that direction but in fact is moving in the opposite direction. And that's why Netanyahu has gotten the name for himself as somebody who doesn't honor his own promises.
CHARLES KRAUSE: Landau says that in Israel there's growing concern that Netanyahu's credibility problem is affecting Israel's relations with its neighbors and allies. Just this past weekend Jordan's King Hussein used the word "betrayal" to describe his relations with Netanyahu.
TUNNEL TOUR GUIDE: This tunnel is leading out to the Muslim quarter--
CHARLES KRAUSE: But it's what Netanyahu's done--even more than what he's said--that's generated the most controversy. Just a few months after his election he approved the opening of tunnel underneath the Arab section of Old Jerusalem. Without warning Arafat the opening of the tunnel was viewed as a provocation and led to rioting. At least 70 Palestinians and 12 Israeli soldiers were killed and many others wounded.
Then last March Netanyahu approved construction of a massive new housing complex at Har Homa in traditionally Arab East Jerusalem. Despite protests from the Palestinians and the United States, construction continues. More recently, Netanyahu did nothing to stop a group of militant Jewish settlers from occupying a house in yet another section of East Jerusalem. Today, the House is guarded by the Israeli army. Dr. Ahmad Tibi says Netanyahu is deliberately provoking the Palestinians in order to undermine the Oslo Accords. Tibi is one of Arafat's closest advisors.
"Netanyahu can destroy the peace process."
DR. AHMAD TIBI: I think that Mr. Benjamin Netanyahu is proving day by day that he can destroy the peace process. He can destroy the belief of both Israelis and Palestinians in the concept of peace and coexistence. He can destroy, and he is destroying the hope of both Israelis and Palestinians, ordinary citizens, in this vast concept of peace.
CHARLES KRAUSE: Yosi Beilin was one of the chief negotiators of the Oslo Agreement and is close politically to Peres. He says that the greatest tragedy--and Netanyahu's greatest mistake--has been to destroy the trust that was so painfully built by Israel's last government with the Palestinians.
YOSI BEILIN: I would not like to portray the relationship between us and the Palestinian leaders when we were in government as paradise. There were differences and there were many headaches and problems and complaints. But there was one thing that is totally missing today and that is a basic trust that the other side is sincere, that it is difficult for the other side; that the other side is not doing all what it can do. But the very sincereness on the other side, that evaporated. And in order to rebuild this trust, both sides will have to work very hard.
CHARLES KRAUSE: But Bar-Ilan rejects any suggestion that Netanyahu's decisions--not even the opening the Jerusalem tunnel--are responsible for the Palestinians' evident and growing mistrust.
DAVID BAR-ILAN: If a government cannot do this kind of thing, improve tourism by opening an archaeological site, which only benefits Arab merchants in the old city, if it cannot do that because it is considered provocative, then our life here is considered provocative. Building a housing project for young couples cannot be a reason to ruin a peace process. Because if it does, it mocks the peace process. There is no peace process.
Netanyahu's political history.
CHARLES KRAUSE: In Israel, Prime Minister Netanyahu is universally known by his nickname, "Bibi," in part because Israel is a small country where everyone knows everyone else, and in part because at 48, he's the youngest prime minister in the country's history. Born in Israel but raised in the United States, he speaks flawless English, is a graduate of MIT, and is a superb communicator and politician. He's also extremely conservative on the issue of Israel's security, influenced by his father, Besione 
Netanyahu, a prominent and controversial Israeli historian. The elder Netanyahu has written that Israel owes its independence from the British in 1948 not so much to diplomacy but to the armed attacks, sabotage, and bombings carried out by Israel's underground, called the Irgun. The lessons this view of history suggest are that Israel must always remain militarily strong and must never entrust its future to its friends or the promises of its Arab neighbors. Landau says the tunnel incident suggested that Netanyahu shares his father's view of history.
DAVID LANDAU: He said, this is the bedrock of our, Israel's existence. This stone under the ground, this tunnel, is the bedrock of our existence. And people began to think, my God, this is not your sophisticated MIT graduate with a lot of experience in diplomacy and in marketing; this is somebody who beneath this veneer is a true believer, is a real hardliner. He's talking about the bedrock of our existence, so people are going to worry.
CHARLES KRAUSE: But Zalmon Shoval says that whatever Netanyahu's philosophy it does not preclude a deal with the Palestinians. A former Israeli ambassador to the United States, Shoval is currently a foreign policy adviser to Netanyahu.
ZALMON SHOVAL: Let's be very, very frank about it. Most Israelis don't trust many of our Arab neighbors. And I could imagine that many Arabs don't trust us. So what's the alternative? To continue not trusting each other? The alternative is to sit down, to try to come to an agreement, which will be less than what we would have hoped for and less than what they would have hoped for. I think that Netanyahu, he may have made mistakes. I'm not sure that he doesn't make mistakes in his tactics and the way he wants to reach the target, which he has set for himself, but basically, I think he wants to reach agreements, but security agreements which are based on more solid foundations.
Navigating Israel's complicated political system.
CHARLES KRAUSE: Israel's political system is extremely complicated--based partly on the British parliamentary system and partly on the American separation of powers. Last year, for the first time, Israel's voters voted separately for the Knesset, Israel's parliament, and for prime minister. Netanyahu won the election, but he had to cobble together a coalition of several different parties here at the Knesset in order to govern. For religious and political reasons many of them are opposed to the Oslo Accords. Since taking office, Netanyahu has on more than one occasion told the U.S. and the Palestinians that his room to maneuver is limited by deep divisions that exist within his cabinet and the coalition. One of those who's deeply skeptical of the Oslo process is Uzi Landau, a member of Netanyahu's Likud Party, and the powerful chairman of the Knesset's foreign affairs and defense committee. Landau says Yasser Arafat simply cannot be trusted.
UZI LANDAU: You can't dress a snake with a western suit and assume he has become a respected gentleman. You still have to be very aware of the nature of this. And Arafat has been a terrorist for many years. His hands are really red of blood of many innocent people. And I don't think he's changed. And the kind of risk Israel has taken upon itself is tremendous.
CHARLES KRAUSE: Do you think the prime minister shares your views?
UZI LANDAU: If the prime minister does not, then Israel is about to make major future mistakes. But I hope, and perhaps I believe I know, that the prime minister has major question marks as to what are the risks we--God forbid--might take upon ourselves if we continue in the future with Oslo.
A fragile coalition supports Netanyahu's policies.
CHARLES KRAUSE: Also in the coalition is MAFDAL the national religious party, which represents many of the Jewish settlers on the West Bank. Most of the settlers voted for Netanyahu and vehemently oppose any proposal that would limit construction of additional Jewish settlements in the occupied territories, or create a Palestinian state on the West Bank, which they call by its biblical name Judea and Samaria. Yehudit Tayar speaks for the settlers.
YEHUDIT TAYAR: We do continue to apply constructive pressure to the prime minister, that he realize and remember that the constituents who really worked so hard to elect him are owed his first loyalty.
CHARLES KRAUSE: And that, you're saying, is the settlers?
YEHUDIT TAYAR: Certainly the settlers. But it's not just the settlers. It's not just the Jews living in Judea, Samaria, and Gaza; it's over half of the country who believed that Oslo was leading us into an abyss, that we were going to crash there and basically have a disaster.
CHARLES KRAUSE: Shoval says Netanyahu cannot ignore this kind of political pressure.
ZALMON SHOVAL: Who was it who said all politics is local? Tip O'Neil, I think. That, you know, that applies to Israel too. It doesn't apply so much to the Arab countries because they don't have a democracy. They don't have--they have public opinion but governments don't usually have to reckon with that.
Judging the will of the people.
CHARLES KRAUSE: But public opinion polls in Israel showed that a majority of Israelis would be willing to give the Palestinians a state of their own if they would guarantee Israel's security. David Landau says the prime minister hides behind the political argument because what he really believes is that the West Bank should remain a part of Israel.
DAVID LANDAU: If he wanted to make peace or make progress towards peace, and he lacked votes in the Knesset from the right wing of his coalition, he could confidently rely on the opposition, on the Labor Party to supply those votes. That's why I say it's just a pretext. It's just a fallacious argument that he makes. I can't move because of my coalition. The Labor Party has said to him, if you move, we'll support you arithmetically in parliament; we will not let you fall for doing things we support.
CHARLES KRAUSE: Bar-Ilan agrees that coalition politics is not the reason the peace process is at a standstill.
DAVID BAR-ILAN: To worry about Netanyahu's internal politics within the coalition is really not called for at all. I think that Mr. Netanyahu can handle that very well. All he's saying is that if we have to reach some kind of an agreement, let it be an agreement on the major fundamental issues.
Netanyahu calls for skipping over several interim steps called for by the Oslo agreements.
CHARLES KRAUSE: To end the current stalemate Netanyahu has proposed that the Palestinians and Israel skip over several interim steps called for by the Oslo agreements. Instead, he proposes that the two sides go straight to so-called final status negotiations over Jerusalem, the settlements, and a Palestinian state in Gaza and the West Bank. It's an audacious plan that reportedly is being discussed this week in Washington. But Shoval says a bold last-ditch effort is the only hope.
ZALMON SHOVAL: The moment the first bomb exploded in a Jerusalem bus, and then a second bomb and a third bomb, people I think lost faith--Israelis anyway--lost faith in Oslo. And the Palestinians, too, if I may speak for them, were frustrated because they were promised all sorts of things which didn't realize, which couldn't be realized; economic betterment, political advancement, and so on. I think what has to happen now is for the sides to sit down and see how we can change the formula, how we can adapt the formula in order really to give a new chance for the peace process.
CHARLES KRAUSE: But given the history of the Israeli-Palestinian relationship and the current mood of suspicion and distrust on both sides, finding yet another formula for peace may prove to be extremely difficult.
A RealAudio version of of this segment is available.
