Griff Witte
The Washington Post
July 28, 2008 - 4:26pm

American businessman Morris Talansky has riveted Israel with tales of bankrolling the plush lifestyle of Prime Minister Ehud Olmert: the expensive cigars and five-star suites, a fine watch and an Italian vacation.

While most Israelis have been galled at the extent of the alleged corruption, no one has been surprised by the source of the funds. Politicians in Israel have long known that if they want to raise large amounts of money, for whatever reason, they'll find it in the United States.

Foreign donations are banned for general elections, but Israeli leaders routinely get half or more of their campaign contributions for party primaries from overseas, and mostly from American donors.

The fundraising trend is especially pronounced on Israel's political right; politicians who advocate aggressive military action against Iran and Hamas and who maintain an uncompromising stance against ceding land to the Palestinians have typically found generous support for their views in the States.

Former prime minister and Likud Party leader Binyamin Netanyahu, for instance, received approximately $400,000 -- 75 percent of his donations for a 2007 primary -- from U.S. contributors, according to the Israeli comptroller's office. By contrast, Israeli donors accounted for less than 5 percent of reported contributions to Netanyahu, who hopes to return to power if Olmert falls and who has sharply criticized the current government for its willingness to cut deals with Israel's enemies.

Another former prime minister, Labor Party leader Ehud Barak, picked up about a third of his campaign money from donors in the United States. Barak, a driving force behind a recent cease-fire with Hamas who favors negotiations with the Palestinian Authority, received slightly more than half of his donations last year from within Israel.

Financial backing for Israeli politicians is just one dimension of a much broader role here for American supporters, one that includes immigration to Israel, copious philanthropy and long-standing advocacy among American Jews for Zionism.

Talansky has insisted that he received no quid pro quo for the $150,000 he allegedly gave to Olmert over a nearly 15-year period. Talansky, who was cross-examined this week by Olmert's attorneys, has said he simply liked Olmert's right-wing politics and wanted to help him become prime minister.

"Israelis wouldn't do for Olmert what Talansky did for Olmert," said Menachem Hofnung, a political scientist at Hebrew University who specializes in campaign finance. "The important consideration for many American donors is that they can help change Israel in the way that they support. An Israeli businessman, on the other hand, may look at it as an investment. And for an investment, you have to get something in return."

Olmert has acknowledged receiving money from Talansky but has said the funding was purely for political purposes.

Israeli law allows politicians to receive donations from overseas, but until recent rule changes they had not been required to disclose much information about that type of fundraising.

Political observers say that far more cash flows from U.S. shores than anyone knows because of a traditionally weak oversight system and loopholes that have allowed candidates to skirt the law. Instead of using the money to further their careers, some politicians have used it to enhance their own standards of living, Israeli political analysts say.

The exposure of the Talansky-Olmert relationship has prompted speculation over just how many other Israeli politicians have similar U.S. benefactors. A recent cartoon in the Israeli newspaper Haaretz depicted a group of Talanskys milling about, each one sporting his distinctive shock of white hair and stubbled face. One turns to another, asking, "Whose Talansky are you?"

Indeed, Olmert is far from the first Israeli politician to be tripped up by allegations of taking money improperly from overseas donors. The previous four prime ministers -- Shimon Peres, Netanyahu, Barak and Ariel Sharon -- have all faced ethics complaints over their dealings with foreign businessmen.

Each of the major players in Israeli politics today has enjoyed prominent foreign support. Netanyahu, for instance, has long had the backing of Las Vegas casino magnate Sheldon Adelson. Adelson has launched a daily Hebrew-language newspaper that is widely seen as a mouthpiece for Netanyahu's views.

Both Adelson and Netanyahu are stalwart opponents of the U.S.-backed Annapolis peace process, which is aimed at creating a Palestinian state side-by-side with Israel, and believe Israel should resist pressure to halt its settlement of the West Bank.

The Labor Party's Barak, meanwhile, has received support from Slim-Fast diet company founder S. Daniel Abraham, who is also a prominent Democratic Party donor. During Barak's tenure as prime minister, Abraham was deeply invested in trying to help achieve Arab-Israeli peace, going as far as to personally broker a meeting between Barak and Palestinian leader Yasser Arafat.

Abraham H. Foxman, director of the Anti-Defamation League and a prominent Jewish American leader, said he's uncomfortable with the idea of Americans playing such an important part in determining who gets to lead Israel. "It is the height of arrogance," Foxman said, "for someone living in Great Neck to make life or death decisions on behalf of someone living in Israel."

The fact that non-Israelis can give at all is controversial. The United States, for instance, does not allow foreigners to contribute to political campaigns. Israel has contemplated a similar ban. But Israeli leaders are reluctant to change a law that has served them well.

"The question is: Is this how you want to organize your political system, so that to succeed you need to raise money from foreign philanthropists?" asked Larry Garber, executive director of the New Israel Fund, which pushes for progressive changes in Israeli law.

Michael Eitan, a member of Israel's parliament from Netanyahu's Likud Party, has led efforts to change Israel's campaign finance rules. Although he calls Israel's finance system for general election campaigns "one of the most advanced in the world," he said work remains to be done on the primary system.

"My position has been that the donations should come only from Israel citizens. But the majority of Knesset members did not agree," Eitan said. "When you raise money abroad you feel less committed to the donors than when you raise it in Israel."

Those involved in the fundraising say the process is more informal than the sophisticated fundraising machines built by American politicians. Internet campaigns, or even direct mail, are rare.

Instead, said Hofnung, "it's dinner. It's small meetings in houses. It's meeting with people in the hotel." It's also occasional speeches to intimate groups, where donors are asked to leave contributions on their chairs if they like what they hear.

Jeremy Ben-Ami, executive director of J Street, a new U.S.-based lobbying firm that supports dovish Israeli positions, said it is no surprise that hawkish Israeli politicians benefit most from U.S. money.

"The American Jews who hold the more conservative views toward Israel are also the ones who tend to be most actively engaged with Israel," Ben-Ami said. "Liberal American Jews tend not to single out Israel as the focus of their philanthropy."

Israel may be turning into a wealthy country, thanks to its booming high-tech sector. But the trappings of life in its public sector are still rooted in a time when the country was much poorer: Knesset members have small staffs, official residences for top officials are modest and the salary of the prime minister is less than $150,000 a year.

As they hobnob with tech moguls and real estate tycoons, many of Israel's top leaders seem to get the impression "that if they are prime minister, they deserve much more," said Bar-Ilan University political scientist Eytan Gilboa. "They want to fly first-class, and they want to smoke fine cigars."

And to get the money to do that, they know who's eager to give.

"Israelis are here. They can organize. They can demonstrate. They can petition," said Eran Lerman, Jerusalem-based director of the American Jewish Committee. "For American Jews to have political influence, there's basically one avenue: money."


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