Political limbo looms in Israel

ISRAEL'S Labour Party yesterday said it will not join a government led

Labour's decision could mean paralysis in post-election coalition talks, with neither Sharon nor Labour leader Amram Mitzna able to form a government, and could even force Israel into another election.

Polls suggest Sharon's Likud will emerge as the largest party but not with enough seats to control parliament, meaning it will have to share power.

Sharon yesterday reiterated he prefers another so-called national unity government of Likud and Labour.

"In light of the challenges facing us ... a national unity government is more important than ever," he said.

Without Labour, Sharon would be forced to seek allies among ultra-nationalist and religious parties. Surveys suggest such a constellation would win 63 seats in the 120-member parliament enough to rule.

Such a slim majority could lead to instability because Sharon would be vulnerable to political demands from the smaller parties. Sharon called the latest elections after he rejected demands by a small, nationalist party and was unable to build a parliament majority without Labour.

Mitzna made the announcement at party headquarters in Tel Aviv, flanked by nearly all of Labour's 26 parliament members.

"We will not be in a government led by Sharon," Mitzna said. "It's us or him. Anyone who doesn't vote Labour is voting for Sharon."

Israeli commentators said the decision appeared to be a desperate attempt by Labour to sway undecided voters, after the latest polls suggested the party would not win more than 20 seats. An internal Labour poll indicated the party could win three to four more seats by declaring unequivocally that it would not join a Sharon government, the Haaretz daily said.

Labour says Sharon is unfit to serve as prime minister because of recent corruption allegations that have been dogging his family.

Police are investigating a $1.5 million loan to Sharon's sons by a longtime friend of the prime minister, South Africa-based businessman Cyril Kern. The money was allegedly used to pay back improper contributions to a 1999 Sharon campaign. Labour left the Sharon government in November in a dispute over settlement funding, forcing the prime minister to call early elections.

At the time, the party was headed by Binyamin Ben-Eliezer, who served as defence minister under Sharon.

Sharon and Mitzna have very different approaches to the conflict with the Palestinians. Sharon is trying to crush the 28-month-old Palestinian uprising by force and has vowed not to resume peace talks until attacks on Israelis stop.

Mitzna says he is ready to resume talks with Yasser Arafat now and will, as one of his first acts in office, withdraw unilaterally from the Gaza Strip.