Israeli Spymaster Efraim Halevy Sizes Up Middle East Threats

A man stands in front of the flag draped coffin of former Israeli Prime Minister Ariel Sharon outside the Knesset in Jerusalem January 12, 2014. Sharon's body lay in state on Sunday outside parliament in Jerusalem, where thousands of Israelis waited to bid farewell to the maverick warrior-statesman who reshaped the Middle East. Sharon died at the age of 85 on Saturday after eight years in a coma caused by a stroke he suffered at the pinnacle of his political power. He will be buried on Monday in a military funeral on his farm in southern Israel. Ronen Zvulun/Reuters

Efraim Halevy, the former head of Mossad, said he would be waiting for me outside the coffee shop at Tel Aviv University, wearing a blue "battle jacket." I wasn't sure what that meant until I approached the coffee shop and saw an elderly man with unruly gray hair and plain-frame eyeglasses, talking on a cell phone. The former head of Israel's legendary spy service was dressed in a civilian version of the kind of short-waisted jacket General Eisenhower wore as he mingled with his troops on the eve of the Normandy invasion in June 1944.

A battle jacket, of course, is entirely appropriate attire for Israel, a country perpetually at war to one degree or another. Israel exists in a "bad neighborhood," as they say, but you can't really appreciate that until you sit in a beachside cafe in Tel Aviv, where Iraqi missiles arced down through the night sky in 1991. According to Israeli military sources, Hezbollah has stockpiled 100,000 rockets just 125 miles up the road, in southern Lebanon. Syria, infiltrated by Al-Qaeda, is only a three-hour drive north of Tel Aviv. Islamic jihad has crept into the Sinai, a few hours south. And then, of course, there's Iran - only a few minutes away by ballistic missile - and its nascent nuclear program.

Halevy, 79, folded shut his phone and greeted me impatiently with a British accent, the residue of a childhood spent in wartime London. He led me inside the coffee shop - "his office," according to Israeli espionage historian Yossi Melman. The former spymaster, who once served as Mossad's station chief in Washington, asked what I wanted to drink and went to fetch it from a barista. He toddled off like a secret-world pensioner, an Israeli George Smiley.

The sun-filled restaurant was noisy with students and professors, seemingly oblivious to Israel's unending existential crisis. "We can't live in suspended animation.... " said Halevy, a product of three decades in and out of the shadows, as he returned with my coffee. "We are a serene village in a zoo."

Iran was Topic A when I landed in Israel in late January. Benjamin Netanyahu and his ministers were apoplectic about the interim U.S.-European Union nuclear deal with Iran. It was a charade, a virtual ratification of Iran's status as a threshold nuclear weapons state, they said. In background briefings, officials unanimously characterized Iranian President Hassan Rouhani as no more than a kinder, gentler face for the Islamic regime's relentless drive to eliminate the Jewish state.

"Even if he means what he says, he's not Iran..." one official put it to me. "He's just one figure, and not the most important figure, in Iran. Nobody can say who's running the show there."

But Halevy, confidante to five Israeli prime ministers, including Netanyahu years ago, veered sharply from that consensus. He'd had a number of informal contacts with the Iranians in recent years, he told me, and came away thinking they were people Israel could deal with.

Rouhani "is not a puppet, despite people trying to say so," Halevy said. "It's easy to say it's all a big show, a deception" - referring to Iran's sudden openness to the West, and Israel in particular - "and there are elements of deception, certainly." But isn't that a tool in everyone's diplomatic bag?

"Whatever else they say, the Iranians are dead scared of the Israelis and hide their fear behind their bravado." Even more so the United States, he added.

"I was at a conference in Europe where a retired U.S. Air Force colonel presented a PowerPoint discussion of how an attack on Iran might look," Halevy recalled. "Nothing was classified. I looked at the Iranians, and their faces were bleaching.

"There's no doubt whatsoever: They are coming to the table because there is no other option."

Halevy said he'd joked with the Iranians (whom he declined to identify) about their success in the negotiations. After all, they had pre-empted a U.S. military strike, won a lessening of sanctions and created a split between United States and Israel to boot. "You should take a vacation," he told one of them. "He said, 'We're not there yet.' I said, 'Where do you want to be?' " They had no reply, but they weren't celebrating, either.

"They feel they are on...a precipice," Halevy explained. "One misstep, and they'll fall into a ravine, dashed upon the rocks."

The same might be said of Israel. For all the talk of an "existential threat" from Iran or Hezbollah's missiles, it's the lack of a settlement with the Palestinians that hangs over everything else.

Even Ephraim Sneh, a tough former paratroop commander and former deputy minister of defense, who once served as civilian administrator of the West Bank, says Israel cannot survive without a deal with the Palestinians. "If you want to have other nations stand with you against Iran, you can't deny the right of the Palestinian people to have their own state," he told me in his high-rise office in Herzilya, the technology corridor north of Tel Aviv. Theoretically, he and other tough former military officers say, the hardline Netanyahu could do a Nixon-to-China, reaching out to the Palestinians without fear of being abandoned by the religious right.

But "in order to do a Nixon going to China," Sneh cracked dryly, "you have to have a Nixon." And Bibi's not budging.

"The most important issue for Bibi's party is the settlements in the West Bank" - nothing else comes close, Sneh said. The hard core of extremist settlers are "holding this country by the balls."