Israel's Quiet Crisis

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"Kadima has filled a vacuum," said Dan Meridor, a prominent former member of the conservative Likud Party who is now drifting toward the new party. "We had two beautiful visions of the future--one from the left and one from the right--and both collapsed." The left-wing Labor Party's vision, of negotiating a two-state settlement with the Palestinians, was rendered irrelevant by the failure of successive 1990s peace negotiations. Meanwhile, the vision of the old Likudniks--of a Greater Israel, stretching from the Mediterranean to the Jordan River--has been rendered just as untenable by the rapid growth of the Arab population in the Palestinian territories, which would eventually make Israel an apartheid state, with a Jewish minority ruling over an Arab majority. Sharon and Olmert accepted that reality before most others on the right did. "We cannot have Israel without a Jewish majority," Olmert said in 2004, explaining the rationale for Sharon's disengagement policy in Gaza, which Olmert clearly hoped would be "the first step," followed by a West Bank withdrawal to the borders marked by the controversial security fence that Israel is now building.

Sharon's policy was arrogant, perversely brilliant. It shattered the old Middle East paradigm, leaping past the old negotiate-or-not logjam. It allowed for a Palestinian state, but absent a reliable negotiating partner, Israel would decide what that state would look like. Suddenly Sharon had positioned himself to the left, and also to the right, of the traditional Israeli parties. "It was a perfect reflection of the country's mood," says David Makovsky of the Washington Institute for Near East Policy. "After 40 years of occupying the territories, people are sick and tired of it. They don't want to have anything to do with Palestinians. They were going to give Sharon a big victory in the [March 28] elections. If he plays his cards right, Olmert may win a smaller but still significant victory, too, because unilateral disengagement is what the public wants."

But Olmert doesn't hold all the cards. The Palestinians, as ever, have the ability to influence the Israeli election through the use of violence--and through their own elections, scheduled for Jan. 25, which may increase the power of the radical Islamist group Hamas. Likud, led by the unloved but undeterred Benjamin Netanyahu, 56, has been the beneficiary of Palestinian mayhem in the past. In 1996, for example, Netanyahu overtook Shimon Peres in the race for Prime Minister after a series of terrorist acts by Hamas. "Bibi rises and falls with Hamas," Makovsky said.

And Hamas clearly seems to be rising. The conventional wisdom is that Hamas will finish a strong second to Palestinian President Mahmoud Abbas' ruling Fatah party in the election. But Fatah seems in complete disarray, unhinged by corruption and incompetence. Its factions appear to be literally at war with one another. "It's Somalia in Gaza," a prominent Palestinian security official told TIME's Jamil Hamad. "There's a different government on every street corner." The official says he sent Abbas a memo last week begging him to call off the elections for fear of violence so severe that "there will be no wounded people this time, only dead people." Palestinian sources also told TIME that Abbas was worried about his fate in the elections and exploded at a meeting of top aides last week, saying, "Where is my campaign? I need a campaign."