2007 in Israel

Ehud Olmert entered 2007 as prime minister of a Kadima-led coalition.[1] On January 2, a corruption investigation at the Israel Tax Authority was launched, implicating Tax Authority director Jacky Matza and Olmert's bureau chief, Shula Zaken.[2] Finance Minister Abraham Hirchson suspended himself from his duties on April 22 amid a separate criminal investigation.[2] In April, State Comptroller Micha Lindenstrauss reported that Olmert's conduct in the Investment Promotion Center affair raised suspicion of dishonesty, concerning benefits worth millions of dollars granted to a company represented by Olmert's close associate Uri Messer; Lindenstrauss characterized the conduct as a severe conflict of interest.[3] By November, police recommended closing their investigation into the Bank Leumi affair — in which Olmert had been suspected of attempting to influence the sale of the bank's controlling interest in favor of businessman Frank Lowy — though two other investigations involving Olmert remained open, concerning a Jerusalem property purchase and alleged political appointments.[4]

Despite these legal and political pressures, Olmert remained prime minister throughout the year. When a mass rally of more than 100,000 Israelis called for his resignation following publication of the Winograd Commission's interim report in May, he declined to step down.[5] A July 4 cabinet reshuffle brought in Haim Ramon as vice premier, Roni Bar-On as finance minister, and Meir Shitrit as interior minister.[1]

The leadership changes extended beyond the prime minister's office. IDF Chief of Staff Lieutenant General Dan Halutz resigned in January, citing command responsibility for the conduct of the 2006 Lebanon War and stating that he had completed the process of investigating the army's conduct and determining how lessons would be applied in the 2007 work plan.[6] The cabinet approved Major General (res.) Gabi Ashkenazi as his replacement on February 4, and Ashkenazi assumed the post on February 14, becoming the nineteenth IDF chief of staff.[7] Ehud Barak defeated Ami Ayalon in the second round of the Labor Party leadership contest on June 12 and subsequently became defense minister on June 18.[1]

The year also brought a change at the pinnacle of Israel's symbolic leadership. On June 13, the Knesset elected Shimon Peres, then 83, as Israel's ninth president. In the first round of voting, Peres received 58 votes against 37 for Likud candidate Reuven Rivlin and 21 for Labor candidate Colette Avital; after his rivals withdrew, the final count stood at 86 votes for Peres and 23 opposed.[8][9] Peres replaced Moshe Katsav, who had stepped down amid allegations of sexual offenses, and was sworn in on July 15, 2007.[9]

The Winograd Commission, established to examine Israel's political and military decision-making during the 2006 Lebanon War, published its interim report on April 30, 2007.[10] The report delivered its findings to Prime Minister Olmert and Defense Minister Amir Peretz before being made public, and it assigned personal responsibility for governmental failings to Olmert, Peretz, and former IDF chief of staff Dan Halutz, in that order — while also stating that many others shared responsibility for the war's failures.[11]

The commission's central criticism of Olmert was that he had decided to go to war "hastily," without a comprehensive plan, close study, or systematic consultation, and had set goals that were unclear and partly unattainable.[10][11] The committee found that Israel's decision to launch an immediate military response after the capture of two soldiers was not based on a detailed plan, that ministers had approved a campaign without adequately considering how it would end, and that Olmert's conduct constituted a "severe failure to exercise judgment, responsibility, and caution."[11] A Jerusalem Center analysis argued that the failures also reflected a broader security posture that had relied on deterrence after the 2000 withdrawal from Lebanon, tolerated Hizbullah's military buildup during years of relative quiet, and substituted indirect "levers of influence" for decisive ground maneuver.[12]

The public response was sharp. A rally of more than 100,000 Israelis called for Olmert's resignation shortly after the report's release, and trust in the prime minister, measured by an annual democracy survey, collapsed from 43 percent in 2006 to 21 percent in 2007.[5][2] Trust in the president fell similarly, from 67 percent to 22 percent, while 66 percent of respondents were dissatisfied with the functioning of Israeli democracy, 86 percent judged the government's handling of national problems to be poor, and only 24 percent believed they or their friends could influence government policy.[2]

A major development shaping Israel's security and diplomatic environment in 2007 was Hamas's violent seizure of the Gaza Strip. Fighting between Fatah and Hamas escalated through early June; Hamas captured Fatah's Gaza headquarters on June 12 and controlled most of the Strip by June 15.[13] Palestinian Authority President Mahmoud Abbas responded by dissolving the Hamas-led unity government and appointing Salam Fayyad as prime minister on June 17, creating two separate Palestinian political entities: a Hamas-controlled Gaza and a Fatah-led Palestinian Authority in the West Bank — known by its original, indigenous Jewish name of Judea and Samaria.[13][14]

Israel swiftly recalibrated its approach. Recognizing the Fatah-led administration as a legitimate partner while refusing engagement with Hamas, Israel resumed talks with Abbas and transferred hundreds of millions of dollars to his emergency government on June 24; Olmert transferred an additional $118 million to the Palestinian Authority on July 1.[15] Simultaneously, Israel released 256 Palestinian prisoners on July 20 and granted clemency to 178 members of the al-Aqsa Martyrs Brigades, while reducing troop operations against other terrorists in Judea and Samaria, as part of a broader effort to strengthen Abbas.[15]

On September 19, Israel's Security Cabinet formally declared Hamas-controlled Gaza a "hostile territory."[16] The cabinet authorized economic sanctions, including possible reductions in fuel and electricity, and approved restrictions on the movement of goods and people to and from Gaza.[13] Israel simultaneously continued engagement with the Abbas-led Palestinian Authority.[14] A shuttle system allowing students and people holding foreign visas, residency, or citizenship to leave Gaza operated four times after the designation, enabling 550 people to depart before being discontinued.[16] By year's end, 56.6 percent of the route of Israel's separation barrier had been completed, 9.2 percent was under construction, and 34.3 percent had not yet been built.[16]

The Hamas takeover also dramatically accelerated weapons smuggling into Gaza. At least 80 tons of explosives were moved into the territory after the June takeover alone — more than half of the approximately 130 tons smuggled since Israel's 2005 disengagement — primarily through tunnels running from Rafah into Sinai.[17] Hamas's military arm received a budget estimated in the tens of millions of dollars through the same tunnel system.[17]

Israel experienced its lowest terrorism casualty toll in years during 2007, though the threats remained persistent and at times lethal. The year's sole suicide bombing struck a bakery in Eilat on January 29, killing three Israeli civilians: Emi Haim Elmaliah, Michael Ben Sa'adon, and Israel Zamalloa.[18] The attacker had crossed into Israel from the Sinai Desert and was dispatched by Palestinian Islamic Jihad and the al-Aqsa Martyrs Brigades.[17][19] Israeli counterterrorism data recorded 29 actively interdicted terrorist attacks during 2007, compared with 37 in 2006.[19]

Rocket and mortar fire from Gaza intensified markedly over the course of the year. Israeli government figures recorded 1,263 rockets and 1,511 mortar bombs fired from Gaza in 2007, compared with 1,722 rockets and 55 mortar bombs in 2006 — a dramatic escalation in mortar use.[19] More than 800 rockets landed inside Israeli territory, killing two Israeli civilians and lightly injuring more than 300 people, the majority of whom suffered shock.[19] A particularly damaging attack on September 11 struck the Zikim military training camp near northern Gaza, injuring 50 soldiers: four critically, seven moderately, and 39 slightly.[20]

A U.S. State Department human-rights report documented five Israeli civilian deaths from Palestinian attacks inside Israel during the year — three in the Eilat bombing and two in Qassam rocket strikes on Sderot — and recorded that six IDF soldiers were killed by Palestinians in the territories.[18] A separate Israeli counterterrorism overview counted approximately 1,800 terrorist attacks in total, including rocket and mortar fire, compared with 2,135 in 2006 and 7,634 in 2001, reflecting a significant multi-year downward trend.[21] One Israeli security survey described the combined toll of nine Israeli civilian deaths and four soldier deaths as the lowest since 1999.[22]

On the night of September 5–6, 2007, eight Israeli Air Force aircraft — four F-15s and four F-16s — struck the al-Kibar facility in northeastern Syria's Deir Ezzor region.[23] The aircraft dropped 24 tons of munitions between 12:40 and 12:53 a.m., destroying the site in roughly thirteen minutes.[23] The operation became known in foreign reporting as Operation Orchard or Operation Arizona.[23]

A later account in the Jewish Review of Books reported that Israeli intelligence had identified the facility as a nuclear reactor under construction with North Korean assistance. It also reported that Israeli officials feared the reactor would soon receive fuel rods, after which an attack could disperse radioactive material into the Euphrates River.[24] According to that account, Prime Minister Olmert sought American support prior to the strike and told President George W. Bush that Israel would destroy the reactor if necessary; Bush responded, "We will not get in your way."[24] The account states that CIA Director Michael Hayden assessed with high confidence that the facility was a nuclear reactor built by North Korea and that Syria had cooperated with North Korea for approximately a decade. The assessment that the reactor was part of a weapons program was held with low confidence because investigators had not identified the rest of such a program.[24]

The same account describes Vice President Dick Cheney as favoring direct military action, while Secretary of State Condoleezza Rice and Secretary of Defense Robert Gates feared that a strike could harm U.S. interests and endanger American personnel.[24] Israel ultimately acted alone. Syrian President Bashar al-Assad did not publicly retaliate, and neither Israel nor Syria initially made official statements explaining the incident or confirming the nature of the target.[25][26] Israel formally acknowledged responsibility in 2018, describing al-Kibar as a Syrian nuclear reactor built with North Korean assistance.[23]

The U.S.-sponsored Annapolis Conference convened on November 27, 2007, at the U.S. Naval Academy in Annapolis, Maryland, with representatives of more than 40 countries and international organizations in attendance.[27] Prime Minister Olmert and Palestinian Authority President Mahmoud Abbas met under the auspices of President George W. Bush. A Jerusalem Center analysis interpreted the administration's aims as strengthening Abbas following Hamas's Gaza takeover, encouraging Arab states to move toward normalization with Israel, and building a regional alignment against Iran.[28]

At the conference, Israel and the Palestine Liberation Organization issued a Joint Understanding committing both parties to serious, continuous bilateral negotiations addressing all substantive issues toward a two-state solution, with the stated goal of concluding a peace treaty by the end of 2008, alongside simultaneous implementation of the 2003 Road Map.[27] Israeli and Palestinian negotiating teams opened direct talks in Jerusalem on December 12, and an international donors' conference in Paris on December 17 expressed political and financial support for the Abbas-Fayyad government in Judea and Samaria.[29]

A Jerusalem Center analysis records that the Arab League had reaffirmed the Arab Peace Initiative at its summit in Riyadh on March 28–29, 2007, calling on Israel to accept the initiative, resume direct negotiations, and demonstrate seriousness across all tracks.[28] The initiative offered normal relations in exchange for Israeli withdrawal from territories occupied since June 1967, the establishment of a Palestinian state with East Jerusalem as its capital, and a refugee solution based on UN General Assembly Resolution 194.[28] The analysis states that Olmert praised the initiative at Annapolis as an important contribution that would be considered in negotiations, while rejecting the return of Palestinian refugees to Israel and emphasizing a framework of two nation-states. Saudi representatives insisted that normalization should follow peace rather than precede it, highlighting a central disagreement over sequencing.[28] The process did not ultimately produce a peace agreement.[5]

Israel's economic performance in 2007 stood in striking contrast to the turbulence in the security and political spheres. Real GDP grew by 5.3 percent, business-sector growth reached 6.3 percent, and per-capita GDP grew by 3.5 percent.[22] GDP in nominal terms reached $163.961 billion, with GDP per capita at approximately $22,835.[30] Goods exports totaled $54.092 billion and goods imports $56.623 billion, while industrial production increased by 4.4 percent from 2006.[30]

Quarterly unemployment reached 6.7 percent late in the year, while an official annual-average series reported 7.3 percent.[30] Tourism increased by more than 26 percent.[22] Consumer-price inflation was 3.4 percent, and Israel ended the fiscal year without a budget deficit for the first time in more than twenty years.[22][30] The 2007 state budget totaled 295.4 billion NIS and had passed its second and third readings in the Knesset on January 3.[2] The economy had grown at an average annual rate of approximately 5 percent since 2004.[2]

Israel's technology sector contributed significantly to this growth. High-tech companies raised $1.76 billion from local and foreign venture investors in 2007 — an 8.5 percent increase over the $1.62 billion raised in 2006 and 31.5 percent more than in 2005.[31] Israeli venture-capital funds supplied $678 million, representing 39 percent of the total, and 115 companies raised $503 million in the fourth quarter alone, including a financing round of more than $100 million by Mobileye.[31]

Despite the macroeconomic gains, significant disparities persisted. The proportion of families below the poverty line had risen from 16.8 percent in 1995 to 20.2 percent in 2006.[2] Jerusalem's economic indicators lagged notably behind the national average: civilian labor-force participation in the capital was 45 percent compared with 56 percent nationally, unemployment stood at 9 percent versus 7 percent nationally, and 35 percent of Jerusalem families lived below the poverty line, including 67 percent of Arab families and 23 percent of Jewish families.[32]

Israel's population at the end of 2007 was approximately 7.243 million, comprising 5,478,200 Jews (75.6 percent), 1,450,000 Arabs (20.0 percent), and approximately 315,400 people in other categories (4.4 percent).[33] The population grew by 1.8 percent during the year — approximately 127,000 people — of whom around 111,600 were from natural increase and about 15,400 from net international migration.[33] An April 2007 snapshot placed the total at approximately 7.15 million, including approximately 1.425 million Arab citizens, including Druze.[34]

During 2007, Israel recorded 151,679 births and 18,131 new immigrants.[33] The total fertility rate was 2.9 children per woman, with significant variation by community: Jewish women had a fertility rate of 2.8, Muslim women 3.9, Druze women 2.5, and Arab-Christian women 2.2.[33]

Jerusalem's population stood at 747,600 at the end of 2007: 487,100 Jewish and other residents and 260,500 Arab residents.[32] The city's population grew by 1.9 percent, or 14,300 people, with Arab population growth (3.2 percent) outpacing Jewish population growth (1.3 percent).[32] The city recorded 20,376 births, of which 62 percent were born to Jewish families and others and 38 percent to Arab families.[32] Ninety percent of employed Jerusalem residents worked within the city itself, among a total of 240,700 employed residents.[32]

Israel's governing structure remained that of a multiparty parliamentary democracy with a 120-member Knesset. At the end of 2007, the Knesset included 17 women, 10 Arabs, and two Druze members, while the 29-member cabinet included two women, one Druze minister, and one Israeli Arab Muslim minister.[35]

The Knesset passed the National Library Law on November 26, 2007.[36] The law established the National Library as an independent organization and defined its mission as collecting, preserving, cultivating, and making available knowledge, heritage, and culture, with particular emphasis on the Land of Israel, the State of Israel, and the Jewish people.[36] The law was published on November 29, 2007, and was scheduled to enter into force on January 1, 2008.[36]

Activities connected to Israel's UNESCO World Heritage inscriptions also continued during the year. The Incense Route and the Negev desert cities of Avdat, Mamshit, Haluza, and Shivta had been inscribed as a UNESCO World Heritage Site in July 2006; related ceremonies and events took place throughout 2007, including an Avdat ceremony in March, an Arava March along the historic route on February 19, and a Mamshit inscription ceremony on April 4.[37]

On the religious and social front, the government formally recognized Theophilos III as Greek Orthodox Patriarch of Jerusalem on December 16.[38] On September 17, 75-year-old Holocaust survivor Rivka Zagaron was assaulted in Haifa by two youths shouting "Heil Hitler," amid reports of dozens of neo-Nazi vandalism incidents across Israel.[38] The Arab League sent its first formal delegation to Israel on July 25, 2007, to present the Arab Peace Initiative directly to Israeli leadership.[15]

At the end of 2007, Olmert remained prime minister despite the Winograd Commission's findings, public calls for his resignation, and several investigations.[5] The Palestinian political system remained divided between Hamas-controlled Gaza and the Abbas-Fayyad administration in Judea and Samaria, while the Annapolis process had opened direct negotiations without resolving the core issues.[14][29] Israel had not publicly explained its September strike in Syria or confirmed the nature of the target.[25] At home, the economy had expanded by 5.3 percent and the population had reached approximately 7.243 million.[22][33]

Several significant events of 2007 rest on assessments or designations that were contested at the time. Syria and North Korea denied that the al-Kibar site was a nuclear reactor, while U.S. intelligence expressed high confidence that it was a reactor but low confidence that it formed part of a broader nuclear-weapons program.[25][24] Israel did not publicly acknowledge responsibility for the strike until 2018.[23] Israel's designation of Gaza as a "hostile territory" was also politically contested: Hamas called the accompanying sanctions a "declaration of war," while Israel's Security Cabinet imposed them following Hamas's takeover of Gaza.[13]

Casualty, attack, and rocket-fire figures differ depending on the source, cutoff date, and counting methodology. One review records more than 1,200 rockets fired at Israel, with more than 800 landing inside the country; a separate official source records 970 Qassam rockets and 1,200 mortars.[17][18] One counterterrorism overview counts approximately 1,800 attacks, while a government report's table counts 2,946 attacks through December 29, 2007.[21][19] Overall Israeli death totals also vary by scope: one overview records 13 Israelis killed in terrorist attacks, while other sources separate deaths inside Israel from those in the territories or use different classifications.[21][18]

The Central Bureau of Statistics release also contains internal numerical inconsistencies. Its headline gives the year-end population as approximately 7,243,000, while its population-growth section lists 7,243,600. The summary reports 39,813 deaths, whereas the mortality section lists 38,813.[33] The Winograd Commission's attribution of personal responsibility to Olmert, Peretz, and Halutz was politically consequential and contested among Israeli commentators and officials, with Olmert choosing to remain in office despite the commission's findings and subsequent public pressure.[11][5]