It was poverty not disengagement that determined the outcome of the Israeli elections, writes Graham Usher in Jerusalem The emotions said it all. Israel's next prime minister, a subdued Ehud Olmert, said the victory of his Kadima Party in the Israeli elections on Tuesday was an endorsement of his "convergence" plan. Over the next four years, he averred, Israel will determine its permanent borders, mostly in the occupied West Bank, to ensure its "Jewish and democratic" character. "If the Palestinians are wise enough to act, then in the near future we will sit together at the negotiating table to create a new reality. If they do not, Israel will take its destiny in hand," he said. Kadima clearly won the elections and will form the next government but with nowhere near the mandate anticipated. Kadima will have 28 seats in the next 120- member parliament. Less than a week ago polls were predicting 35. Amir Peretz -- with tears in his eyes -- said under his leadership the Labour Party had ceased to be the party of Ashkenazi (European) privilege. It had become the "truth" of "social justice" and "the right to earn a living in dignity". This too was stretching things. Labour will have 20 seats, only one more than it got in the "defeat" of 2003. But it had survived the "tsunami" of Kadima and the fear of a racist backlash against Peretz's Arab origins. Binyamin Netanyahu presided over the worst performance of his Likud Party's 23-year history, reducing its 38-seat majority in the last parliament to a rump in the next. He looked pale and sweated profusely on Tuesday but vowed to "continue on the path we started to ensure the movement recovers. If we unite the ranks, we will restore Likud to its rightful place in leading the country," he said. Netanyahu then went to a crisis meeting of the Likud leadership. Israel's former foreign minister, Silvan Shalom, did not attend. He is preparing to challenge Netanyahu, "un-uniting the ranks". So were Israel's 17th elections a "referendum" on "convergence", the euphemism for Olmert's plan to consolidate Israel's permanent rule over Jerusalem and the West Bank? The answer is only a little. There was no doubt one of the deepest sentiments in the elections was most Israeli Jews desire to "separate" from the Palestinians as well as to give up on futile attempts to resolve the conflict through negotiation. This was most clearly seen in the 12 seats won by Avigdor Lieberman's racist Yisrael Beiteinu Party. Lieberman seeks not only separation from the Palestinians in the occupied territories but also from the 1.3 million Palestinian citizens of Israel, either through transfer or redrawing Israel's borders "demographically" to exclude them. But separation has been a feature of Israeli policy since at least the Gaza disengagement last year. The elections merely confirmed it. More than separation these elections were a referendum on Netanyahu's economic policies during his tenure as finance minister in the last Israeli government. These enhanced Israel's growth rates and created an investor- friendly economy. But they also pushed 1.4 million Israelis into poverty, devastated entire towns and massively increased the disparity between Israel's rich elite and mass poor. It was "swinish capitalism" of the worst kind and Likud's traditional constituencies rejected it in droves. The middle classes voted for the "gentler" capitalism of Kadima. The hard-line nationalists went to Lieberman. And the poor went to Shas (13 seats), the Pensioners Party (seven seats) and, in some cases, to Labour. But it was Peretz who inserted the social agenda into the election campaign, denting Kadima's rise and precipitating Likud's fall. "It was his biggest political achievement," said Isaac Herzog, number two on Labour's parliamentary list. But it is a problem for the Palestinians. Israeli elections determine their fate every bit as much as Israelis. And while few believe negotiations -- let alone peace -- are anywhere on the horizon, Palestinians are aware the kind of coalition Olmert puts together will affect the dynamic, severity and temper of the conflict. If it is a "centre-left" government -- made up of Kadima, Labour and religious parties like Shas -- the future could be one of conquest but containment, where Israel and the Palestinian Authority observe a practical détente on the ground. If it is a centre-right coalition -- with Lieberman -- the future could be one of conquest, confrontation and collapse of the PA. Neither coalition is especially stable. There are differences within Kadima on how to proceed with the Palestinians, let alone across the coalitions as a whole. Shas and the other orthodox parties are against any un-negotiated withdrawal from occupied Palestinian land. So is Lieberman. Labour is in favour of disengagement if negotiations fail. Peretz has also said he won't sit in a coalition with Lieberman, a man he describes as "a new kind of Le Pen". The only sure thing is that the conflict will continue. On Tuesday Palestinians in Gaza for the first time launched a Katyusha rocket into Israel. It was claimed by Islamic Jihad as an attempt to disrupt the Israeli elections. It landed harmlessly south of Ashkelon. But one day a Katyusha will hit Ashkelon and Israel will respond with something more than assassination and artillery fire. And separation will then visibly become what it has always been, even if denied by the Israeli electorate -- a war by other means.
