10/09/07 "Salon" -- - One of this year's nominees for Israeli TV's "Man of the Year in Politics" award doesn't speak Hebrew. He has vast wealth and a shady past. He was once a circus worker. He isn't even a politician, at least not yet.

But over the past several years Arcadi Gaydamak, an enigmatic Russian-Israeli billionaire, has managed to become a widely influential figure in Israel. And he is now at the center of a right-wing political alliance -- featuring Israeli über-hawk Benjamin "Bibi" Netanyahu -- that could dramatically influence the country's direction. If the rising alliance takes power in the next election, it could push Israel toward military confrontations with Iran, Syria or Hezbollah, while extinguishing any remaining flickers of hope in Israel's peace camp regarding the Palestinians.

Gaydamak has recently been consolidating his influence as a power broker in Israeli politics. He has used his wealth to gain popularity through social and business initiatives, while deftly exploiting the widespread perception of Prime Minister Ehud Olmert's government as corrupt and incompetent, particularly during last year's disastrous war in Lebanon. With his financial capital and cunning political tactics, Gaydamak is like a cross between George Soros and Karl Rove, with a streak of Russian oligarchy at his core.

In a country full of colorful political characters, he may be the most colorful. Gaydamak is wanted in France for illegal arms dealing. He is alleged to have ties, through his former arms-dealing partner, to Halliburton and to corporations that donated to President George W. Bush's 2000 campaign. He has Russian, Israeli, French and Canadian citizenship, as well as a diplomatic passport from Angola, on which he reportedly travels in order to avoid arrest. He owns a Jerusalem soccer team with a notoriously racist, anti-Arab fan base. And he is said to be planning a run for mayor of Jerusalem.

But it is in Israeli national politics where Gaydamak may now be a powerful -- and, some say, dangerous -- force. Along with his new Social Justice Party, formed in July, Gaydamak has allied himself with Benjamin Netanyahu, the Likud Party leader and former prime minister. To this alliance Gaydamak brings his rapidly increasing popularity, especially among Israel's influential Russian population, a growing grass-roots political network, and billions of dollars. Netanyahu brings his credibility as a former prime minister, hawkish bona fides, and resurgent popularity both inside Israel and across the Atlantic, where he enjoys strong support among Washington war hawks and many delegates of the American Israel Public Affairs Committee, the powerful pro-Israel lobbying group.

The goal of this emerging alliance is to make Netanyahu prime minister once again, which would give Gaydamak direct access to the uppermost echelons of Israeli power. Not only does the alliance have the potential to unseat the centrist leadership governing Israel and replace it with one much further to the right -- precisely at a time when Israel may be on the brink of war with Iran -- but some observers believe it poses a threat to Israeli democracy itself.

Back in February, Gaydamak openly cast himself as an Israeli kingmaker. He announced that he would back Netanyahu's bid to regain office, declaring, "Any politician that I will support will be the prime minister."

And he may be right, riding a soaring popularity that he has in some ways literally purchased. For example, in 2005 Gaydamak bought Beitar Jerusalem, a wildly popular soccer team, which also happens to have a core of Jewish nationalist fans who regularly chant "Death to Arabs!" at the team's games. During the Israeli war against Hezbollah last year, when the country's leadership was in chaos and the citizenry felt abandoned and vulnerable, Gaydamak stepped in and fashioned himself as a savior. He opened his coffers and set up a tent city on a Mediterranean beach for Israelis fleeing towns in the country's embattled north. To the south, residents of the Israeli town of Sderot near the Gaza Strip came under constant bombardment by Palestinian rockets, and the Israeli government was not coming to their aid in any substantive way. Gaydamak bused hundreds of Sderot residents to another tent city he had built in a park in Tel Aviv, complete with a stage for entertainment and a mini-amusement park for children. If the government was not going to protect and aid its citizens, Gaydamak seemed to be saying, he himself would.

In doing so, he helped make the Olmert government appear impotent to many Israelis, earning the sitting prime minister's ire, and further establishing himself as a political force to be reckoned with. In August, Gaydamak clashed openly with a parliamentary committee that took issue with his actions during the war, accusing him of acting entirely for political reasons. This year, as his own popularity has continued to rise, Gaydamak has toned down his explicit backing of Netanyahu, but it is still widely believed that he will lend his support to a Netanyahu prime ministerial bid in exchange for greater power.

To his proponents, Gaydamak is simply the natural result of an Israeli establishment that is so wrapped up in corruption and cronyism that it is unable to care for its citizens, let alone advance a peace process with its neighbors or focus on crucial foreign policy problems. Gaydamak is, in this line of thinking, a positive phenomenon, a practical person in a place desperately in need of practical solutions.

But some Israeli analysts and governments officials have a darker view. One senior Israeli official, who has served at the highest levels of the policy-making apparatus, told me that he sees the rise of Gaydamak as the terrible byproduct of an already bad situation. "There is a sense among some people," he said, "that democracy just didn't work for us, and we should be like the rest of the Middle East -- that we tried democracy and failed. But Gaydamak is something else. He's an oligarch. Don't forget that a lot of his supporters are Russians. They're not really familiar with democracy."

Gaydamak has been quietly building a network of activists across Israel and choosing candidates to represent his party in upcoming elections at all levels. He will personally determine his party's platform, with each candidate meeting the approval of his closest aides. Although he has alluded to running for mayor of Jerusalem, Gaydamak seeks to pull strings in national politics, without putting himself in a vulnerable forward position on his party's ticket.

Some observers have labeled Gaydamak as antidemocratic for this, as well as for his actions abroad. For example, in 2005, for reasons that remain murky, Gaydamak purchased Russia's Moscow News, fired some senior journalists, and changed the paper's mandate to a firmly pro-government one, appointing a pro-Putin journalist as editor in chief. This was widely viewed as hostile to free speech and raised questions about Gaydamak's possible ties to the Kremlin.

Within Israel, according to the senior Israeli official, Gaydamak is preying on a sense among the Israeli population that the way Israeli democracy functions has left large groups disenfranchised and the country as a whole vulnerable to outside attack. And Netanyahu, as a political leader who has long exploited vulnerability and fear to obtain and wield power, may be Gaydamak's perfect complement.

Just two years ago, when former Prime Minister Ariel Sharon left Likud to found the Kadima Party, he took many Likud parliamentarians and much of the party's cachet with him. Netanyahu had to make do with the remnants, a has-been exiled to the political wilderness. But now his fortunes are rising again, with Gaydamak's support and the winds of Israeli political insecurity at his back. In the wake of the Israeli military's failure to defeat Hezbollah last summer, and the takeover of Gaza by Hamas, the hopefulness of the Sharon government is long gone. And many in Israel are now anxiously looking rightward again, back at the Likud, and to Netanyahu himself. There are even recent reports that several members of Olmert's own party have been receptive to feelers from Netanyahu, who might be trying to lure Olmert supporters back to Likud. Among the general Israeli populace, Netanyahu enjoys the highest poll ratings of any politician, and many point to him as the next prime minister.

That would be a welcome development for Israel's most hawkish proponents in the United States. Netanyahu is a favorite among those in Washington promoting hard-line Israeli policies, including a bellicose policy toward Iran. In March, while in town for the annual AIPAC conference in Washington, Netanyahu met privately with Vice President Dick Cheney at the White House, where they reportedly discussed stepping up pressure on Iran, with an eye toward military options.

One American defense industry lobbyist with strong ties to Israel told me around then that he thought Netanyahu was "absolutely awesome," and that many of his colleagues were equally staunch supporters. Another Washington lobbyist involved in Middle East affairs told me recently that although AIPAC officially declines to endorse one Israeli politician over another, some of its activists "certainly do." Indeed, when I reported for Salon from the AIPAC conference, many AIPAC delegates were outspoken fans of Netanyahu. Dozens of them told me that he was their preferred Israeli leader, and although Netanyahu wasn't officially on the program of events for the conference, when word went around that he would be doing a closed-door briefing for select delegates, it set off a vigorous scramble to gain access to him. AIPAC is careful not to overtly interfere in Israeli politics, but it is quite clear to even a casual observer that Netanyahu's sensibilities are closely aligned with those of many in the organization, and that much of its membership would like to see Netanyahu running Israel.

But not everyone feels that way in Israel, where Netanyahu is known not only as a fierce hawk but also as an unabashed opportunist. Although Israeli politics can be a blood sport, Netanyahu has drawn criticism, like Gaydamak, for maneuvers seen by some as antidemocratic. In 2005, Netanyahu used the planned withdrawal from the Gaza Strip as a pretense to attempt a putsch against then-Prime Minister Sharon and install himself as prime minister. At the time, one official in the prime minister's office told me that if Netanyahu succeeded he was considering resigning from the office, as were some of his colleagues. "The problem," the official said, "is not only that Netanyahu is right wing but that he is also reckless."

Indeed, some of Netanyahu's statements and actions have been explosive, even by the standards of Israeli politics. Back in 2003 he drew sharp criticism -- and, from certain segments of the Israeli electorate, great praise -- for saying that the nation's own population of Arab-Israeli citizens represented a "demographic threat." More recently, referring to the nuclear standoff with Iran, he has repeatedly said that "we're in 1939," referring to the imminent aggression of Hitler's Germany, and he has all but stated outright that an American or Israeli attack on Iran will soon be warranted.

When Netanyahu was prime minister from 1996 to 1999, his coalition shared power with more moderate Israeli factions, which constrained him from pursuing the more extreme elements of his agenda. His alliance with Gaydamak, however, may obviate the need for that sort of compromise, because of both Gaydamak's money and rising political support.

The timing of the next Israeli elections is uncertain, but with a weak Olmert government and a volatile political landscape, they could be called as early as next year. A new ruling coalition is formed when the leader of the party with the most seats in the Knesset is able to assemble a grouping of parties with seats totaling more than 60.

A recent poll showed that Gaydamak's Social Justice Party would win eight seats in an election, only two fewer than the ruling Kadima Party would now win. Netanyahu's Likud Party is consistently polling at 20 seats or better. Gaydamak's and Netanyahu's parties taken together, with 28 or more seats, would be an almost unbeatable bloc. (When Kadima took power in 2006, it had 29 seats.)

A few other parties would then be needed to form a ruling coalition, which would likely be in the Gaydamak-Netanyahu alliance's grasp: Many in Israel's religious parties are fans of Netanyahu, and they would bring their seats over to him. He would also draw support from right-wing secular leaders such as the ultra-hawkish Avigdor Lieberman, a former chief of staff for Netanyahu, who heads the openly racist party Yisrael Beiteinu. Lieberman has called for the "transfer" of some of Israel's Arab citizens out of the country, has suggested bombing Palestinians' civilian infrastructure in the occupied territories, and has even argued openly for bombing Tehran.

If such additional elements were to join forces with Gaydamak and Netanyahu, it could create the most right-wing Israeli government in decades.

Netanyahu's apparent willingness to ally himself with powerful fringe figures like Gaydamak was perhaps predictable. A former senior Israeli official, who served in various capacities in the government for more than 20 years and interacted with Netanyahu on numerous occasions, told me some time ago that she had no doubt that Netanyahu would happily work with whoever could help him gain and keep power. "He doesn't have any real principles," she said. A former Netanyahu aide echoed this sentiment: "The only thing that's important to him is becoming prime minister, whatever the sacrifice."

If Netanyahu succeeds with Gaydamak in his corner, that sacrifice may include wider regional war and perhaps even the erosion of democracy in Israel.