Israel: Background and Relations with the United States [Updated December 31, 2007] [open pdf - 271KB]
"In September 2007, Vice Premier Haim Ramon, sometimes viewed as a surrogate for Prime Minister Ehud Olmert, floated a peace plan for maintaining a democratic Israel with a solid Jewish majority; one provision calls for Israel to cede control of Arab neighborhoods in Jerusalem to the Palestinians and for each religion to administer its holy sites. Then, in October, Olmert himself questioned whether Israel needed to retain outlying Arab neighborhoods in East Jerusalem. Shas Party leader Eli Yishai reacted by stating that his party would leave the coalition if Jerusalem is a subject of negotiations, and Rabbi Ovadia Yosef, the Shas spiritual leader, emphasized that position on November 27. Meanwhile, Avigdor Lieberman, leader of another coalition partner - Yisrael Beiteinu, asserted that while refugee camps near Jerusalem could be handed over to Palestinian control, the Jewish holy sites should not be discussed…The Labor Party may be reconciled to remaining in the government, although the final Winograd Commission Report on the 2006 war between Israel and Hezbollah could prompt the party to reassess its position and push for early elections. Six out of seven Labor ministers and other prominent Labor personalities oppose leaving the government because, they argue, supporting the peace process is more important than the Winograd Report. They also may be influenced by public opinion polls which predict a Likud victory in the next election. On December 26, Prime Minister Olmert declared that he did not plan to resign after the final Winograd Report."
CRS Report for Congress, RL33476