Bibi Bounces Back

The doily beneath an espresso served at Benjamin Netanyahu's private office still bears the Hebrew inscription "Prime Minister of Israel." After Israel's Attorney General decided last week not to prosecute the 50-year-old former Prime Minister for fraud, the political betting is that Netanyahu will be able to order a new stock of those doilies before too long. The man who 16 months ago bowed out of politics after an electoral pummeling and fought a year-long corruption investigation is now cast by right-wingers as the only leader who can prevent Prime Minister Ehud Barak from handing over the farm to Yasser Arafat.

Netanyahu's future hinges, in many ways, on the tactics of his old adversary, the Palestinian President. If Arafat signs a peace deal in the coming months, Barak probably will call new elections as a referendum on his peace plan. The prospect of real peace would be the one thing Barak could count on to defeat Netanyahu, who's ahead of the Prime Minister in the polls even before he re-enters the political arena and who has the support of most top officials in his old party, Likud. But if Arafat continues to stonewall, Barak's shaky coalition situation may still force him to call an election. Netanyahu could easily oust Ariel Sharon, the aging warhorse who replaced him at the head of Likud, and paste Barak for making concessions to Arafat without getting peace in return.

Sharon has already started to fight off a Netanyahu challenge. He brought forward party primaries to January, toured a Jerusalem market and made a grandstanding visit to the contentious Temple Mount site in Jerusalem, known to Muslims as the Noble Sanctuary. That set off Palestinian protests in which at least six people were killed and an estimated 200 were injured. The violence continued and spread at the weekend across the West Bank and Gaza Strip, with at least nine deaths and hundreds of injuries reported.

Israelis either love Netanyahu or loathe him. To opponents, he ground the peace process into the dirt and incited the kind of extremism that led to Yitzhak Rabin's assassination. Supporters, who know him by his childhood nickname, Bibi, say he forced Arafat to give something in return for the land and weapons Israel turned over to him. When he conceded defeat at the polls in May last year after three years as Prime Minister, Netanyahu retreated to his hotel suite for a 2 a.m. steak supper with friends who described him as relieved to be free of the pressures of premiership. Within months, the heat was on once more with the police investigation.

Attorney General Elyakim Rubinstein decided last week he didn't want to risk a courtroom failure over the allegations that Netanyahu tried to bilk the state for as much as $100,000 in private services he received from a Jerusalem contractor. The contractor had changed his testimony, weakening the case. But Rubinstein released a harsh opinion in which he said the investigation showed Netanyahu had behaved with "ugliness." Netanyahu's supporters seized on the end of the affair to argue that he was the victim of a witch-hunt. Says Yuval Steinitz, a Likud member of parliament: "This was the worst political persecution in Israel's history. It was a very clear attempt to neutralize Bibi."

Netanyahu, who says privately he'll decide in the coming weeks on a comeback, criticizes Barak's failure to conclude a peace deal. At the Camp David talks in July, Barak put his cards on the table, but Arafat tried to winkle more concessions out of him and the talks ended in failure. Netanyahu boasts that Arafat felt bargaining with him was "like pulling teeth," but that at least deals were done in the end. That tough stance is what makes Netanyahu look so good to many Israelis now. Still, leftists are amazed at how quickly voters forgot the electoral drubbing they handed him. "There's still a cloud over Netanyahu," says Naomi Chazan, a leader of the left-wing Meretz Party. "I don't believe the Israeli public would be so foolish as to return to him."

While the investigation was under way, Netanyahu polished his image as a politician who understands Israel's flourishing technology industry. He spent the last year working as a consultant for high-tech companies, augmenting his $800-a-month government pension with lucrative stock options. That income keeps him in the style to which he is accustomed, handing out long Cuban cigars to guests in his office in Jerusalem's new Technology Park. But the lure of politics may be too strong. "He's a great businessman," says Zvi Marom, whose BATM Advanced Communications is one of Netanyahu's clients. "But politics has its own kind of magnetism." If Arafat inadvertently sets the stage for Netanyahu's return, perhaps he'll light up a Cohiba with the Palestinian leader when they next sit down at the negotiating table.