Obama and Netanyahu's Complex Relationship

One morning this past summer, Barack Obama sat down around a conference table in Jerusalem's King David Hotel with Benjamin Netanyahu, the leader of Israel's Likud Party. Neither man ran a country but both had high hopes. The talk was "like a hypothetical business discussion" among "two people who knew they might be working together," says a Netanyahu associate who was present but requested anonymity to speak freely. But that's where the similarities stop. Netanyahu, 59, is an unreconstructed hawk, raised in the cold war's shadow. Obama listened politely, but the gap was obvious. "Obama, clearly, is a product of a new age," says the Israeli.

The Jewish state, on the other hand, may be on the verge of slipping into an older one. Israel's doves are struggling. Foreign Minister Tzipi Livni announced last week that she had failed to form a government; lawmakers set elections for February. The biggest beneficiary is likely to be Netanyahu, who's now even with Livni in polls. The Likud leader seems the most American of Israeli politicians. His uncompromising rhetoric would probably mesh well with a McCain administration. Yet at a moment when both Israeli hawks and American neoconservatives have been chastened, Netanyahu's rebirth appears slightly incongruous, even atavistic.

Consider Israel's relationship with Hamas. Netanyahu came to power in 1996 following a wave of suicide bombings. He later ordered Mossad agents to assassinate Hamas leader Khaled Meshaal. (Meshaal survived.) Israelis today have no love for Hamas, but they have become "more flexible," says the Netanyahu confidant. In a recent poll, 57 percent favor talks with Hamas, up 10 percent since June. In this economy, too, Netanyahu seems slightly out of place. As finance minister he slashed welfare rolls and privatized banks. It worked: for five years, Israel's economy grew at an average of 5 percent. Still, when even the United States is nationalizing banks, Bibi's free-marketeering gives some Israelis pause. Among them are the Levantine equivalent of Reagan Democrats: working-class Israelis who suffered from the reforms.

So why is Netanyahu surging in the polls? Partly because the Likud leader was one of the few secular Israeli politicians to push back against Ariel Sharon's "disengagement" plan from Gaza. Netanyahu has long opposed unilateral measures, and when Hamas seized power just months after the withdrawal, many Israelis thought events proved Bibi right. There also aren't many appealing alternatives; Ehud Barak is viewed as a has-been, and Livni is weakened by her role in the 2006 Lebanon war. As for Obama, it is yet to be seen how the dovish American would work with a hard-line Israeli counterpart. At the King David meeting, Obama smiled and tried to find common ground. Still, according to the Israeli source, "They didn't really go into the details."