Leading Article: Indicted or not, Netanyahu is already guilty

True friends of Israel ought to welcome the controversy that has engulfed Israel's prime minister, Benjamin "Bibi" Netanyahu. For two reasons. The first is the way the Netanyahu affair reminds us of Israeli freedom. It is a state in which the rule of law is held, still, in high regard. Journalists can and do dig and delve into the affairs of the highest in the land without fear of retribution. The same cannot be said of Israel's neighbours. In Lebanon, television is censored. In Egypt and Jordan the police possess none of that operational independence which has allowed them in Israel to investigate the innermost works of government. Syria is a repressive autocracy. If Mr Netanyahu falls as a result of an indictment, it ought to increase not diminish our admiration for the preservation of democratic reflexes in a society threatened from without by terrorism and from within by religious authoritarianism and fanaticism.

Mr Netanyahu's difficulties are welcome for another, less satisfying reason. They may lead to his eviction from the office of prime minister, and so to the possibility of a new start in the process of making peace with the Palestinians who - ineradicable fact of history and geography it is - inhabit the same quadrilateral formed of Phoenician plains, Judean hills and Jordan Valley. As a stabilisation exercise the Netanyahu "experiment" is not working. The spiral of violence has lately turned upwards. The longer he stays in office, the less possible will be the eventual and necessary accommodation with Yasser Arafat and the Palestinian people which sooner or later must be achieved.

The condition of the state of Israel demands our, British, special attention. We created it. Israel was the product of British resolve, first in the Balfour declaration, then, 30 years on, in the way Britain ended its (League of Nations) Mandate for Palestine. Successive British governments have taken Israel as a special friend. Israel's moral credit stood high with the British public. In the haze of sentiment, political change within Israel was less questioned than it might have been in other nations: the rise of Likud and the Israeli right was obscured by the consequences of its leader, Menachem Begin, going to Camp David and Cairo.

But the arrival of Mr Netanyahu represents generational change - Shimon Peres hanging, albeit by his fingertips, to the Labour-kibbutz-Golda Meier tradition. With Mr Netanyahu a new, indigenous political style has triumphed amid party fragmentation. Of course Mr Netanyahu has not been formally charged with anything. A journalistic investigation of the circumstances of the appointment of Roni Bar-On as attorney general led to the police inquiry, which the new attorney general has now to consider. (We British are in no position to make light of the ambiguities surrounding the role of law officers who are part judicial actors, part party politicians.)

The paradox in this affair is that Mr Netanyahu is accused of trying to win a plea-bargain for the leader of the Shas party in order to secure his assent to the withdrawal of Israeli troops from central Hebron. There will be many who would say such an operation would be justified - if it led to peace. But the failure of the Netanyahu regime has been that peace has not advanced. Withdrawal from Hebron has given no forward momentum to the process. Instead, within weeks of leaving Hebron, Mr Netanyahu approved the go-ahead for the Har Homa construction project. In its aftermath the Hebron withdrawal itself starts to look less and less intelligible.

Some have claimed Mr Netanyahu is pursuing a grand project in which his aggressiveness makes sense. It is, in effect, to shake a mailed fist in the Palestinians' face, soften them up, make them more amenable to what Likud would like to offer - a kind of West Bank and Gaza bantustan, an enclave that falls well short of statehood. The objection to this is not that pejorative notion "bantustan". The final shape of a Palestinian entity might well - given the facts of geography and Israel's legitimate security needs - fall short of a "state" with all the trappings of formal sovereignty. The real objection is that any and all conceivable Palestinian political entities will only get built on the basis of continuous engagement by Israeli politicians with the Palestinian leadership. The phrase in Cold War years was "confidence building" - a series of little steps demonstrating good faith and the incremental willingness of one side to trust the other. This is what Mr Netanyahu has crudely swept aside. This is what Mr Netanyahu looks incapable ever of supplying.

It would be idle to pretend the process of replacing him as prime minister or even as leader of Likud is going to be straightforward, or that there exists in the wings a set of leaders or party able to pull things together in the Knesset or win national elections. That adjustment is essentially an Israeli domestic matter. What Israel's friends abroad must do is keep up the moral and diplomatic pressure for peace. Here is one of the biggest lacunae in President Clinton's foreign policy. His special representative, Dennis Ross, would surely in these past months have been so much more effective if his shuttling had come with more of a threat - to withdraw financial aids, stiffen credits. The Israeli economy is in far from tip- top health. Israeli public accounts are in a mess. If Israeli electors and party bosses consider the future, some material inducements of the kind the Americans command could be usefully deployed. But the decision is theirs. Israelis might, conceivably, forgive a prime minister over whom grave allegations hang if that individual were also offering them a plausible road to peace and prosperity. Mr Netanyahu faces an indictment when he already stands guilty of weakening his country's security and standing.