A kid with a new toy

James Heartfield reports from Israel as the new Prime Minister arrives in London

Prime Minister Ehud Barak's diplomatic offensive promises a fresh start to Arab-Israeli relations. Barak has suggested that an agreement with Syria could lead to a compromise over the Golan Heights, occupied by Israel. Turkey's President Suleyman Demirel visited Barak in July, offering a deal over much-needed water supplies, and even Palestinian leader Yasser Arafat welcomed Barak's election, calling him a friend. In Washington and London Barak has suggested that the peace process, in abeyance under his hawkish predecessor Benjamin Netanyahu, is back on track. In his excitement, President Clinton let slip not just his feelings about Barak, but also the American estimate of Israel's status: saying that he was 'as excited as a kid with a new toy'.

As toys go, Israel is quite expensive. The US defence grant alone to Israel is $1.87bn, and now a further $1.2bn in 'peace process' aid has been unfrozen. Happily the Israeli Defence Force have repaid the favour, offering to buy a new fleet of F16 long range bombers that can reach 'as far as Tripoli or Iran' from America's Lockheed Martin, price $2.5bn. (Understandably, the Syrian President Hafez Assad asked why one needs long range bombers to make peace.)

Financial support for Israel is a long-standing American commitment, but one that has been called into question in recent years. When Likud's Netanyahu was elected on a ticket of resisting concessions to Palestinians, America reined in the money, leading to the most serious breach between Israel and its most important sponsor to date. Netanyahu's aggressive support for new settlements on Arab land in the occupied territories was seen as a rejection of the US-brokered peace process, along with the newly created Palestinian authority under Yasser Arafat. Now with Barak in charge, Clinton is looking forward to playing with his new peace process toy.

Ehud Barak's new Labour regime appears on paper to have the broadest possible base, but in many ways his election as Prime Minister owes more to the demobilisation of militant Zionism. The outgoing regime's confrontational approach was rejected by many Israelis as divisive. Barak's achievement is to have welded together a coalition behind him that is as shallow as it is broad. Where Netanyahu mobilised militant support from settlers and from the hitherto despised oriental Jews, Barak has gathered the old Labour elite, won over the newer Russian immigrants and even received 93 per cent of the votes of Arab Israelis.

Barak's loose coalition is beholden to no particular constituency, which is the secret of its success. Rising above the entrenched positions of Israeli political life, Barak has created greater room to manoeuvre. The newly galvanised elite around the Labour party is likened to Tony Blair's New Labour. Like Blair, Barak is intuitively conservative, an army man who ordered raids against Islamic militants. But he is also pragmatic in his style, keen to cut the Gordian Knots in Israeli politics with technical solutions. His proposed solution to the Palestinians' complaint that Israeli land and checkpoints separate their territories in Gaza and the West Bank was to build a vast motorway on stilts across the desert. It certainly sounded like a practical solution - until it was costed at five times the total budget of the Palestinian Authority to date.

Barak's new broom has alarmed the ancien regime. Israeli settlers in the Golan have promised a campaign against withdrawal. Likud are up in arms about the first Arab appointment to the defence committee - Hashem Mahameed, they claim, has in the past called for an 'armed Intifada' by Israeli Arabs.

There are tensions between the settlers and the Israeli government. The finance minister has put a freeze on cash for new developments. A conveniently timed report on the state of Israel's environment warns of a catastrophe due to over-irrigation and building. The very promise to make the desert bloom is now portrayed as an ecological disaster. Doubtless the building in the settlements is unsound, since it is almost entirely done for reasons of political control, creating a dictatorship of real estate over the cramped Arab homes. Each Israeli consumes 85 times as much water as one Palestinian. But the real significance of the report is that, however tentatively, the ideology of settlement is being called into question.

That does not mean that the Palestinians can expect to gain their freedom from the new regime. What it means is that the mechanisms of control are being adapted. The Justice minister Yossi Beilin is proposing to end the state of emergency that has been regularly renewed throughout Israel's fifty years, saying 'that will be much less convenient' but 'we must exploit these moments of government to relinquish power'. Beilin's 'relinquishing of power' in emergency regulations is accompanied by a commitment by the new Internal Security minister Shlomo Ben-Ami to put more police on the streets, to tackle crime 'especially in Arab towns and villages'.

The most marked change in the apparatus of repression is in the creation of the Palestinian Authority itself. According to Barak, the point of the PA for Israel is to rid it of the burden of ruling the Palestinians. The minimal amount of land released to the PA (just 3 percent) underscores the humiliating terms of the deal. The key to the Israeli's policy towards the PA is that they have relinquished responsibility for policing to a Palestinian police force, who boast of co-operating with the IDF and the CIA in suppressing the Islamic Hamas opposition.