Israel elections likely as Sharon coalition falls

ISRAELI Prime Minister Ariel Sharon’s broad-based coalition crumbled yesterday as ministers from the moderate Labour Party pulled the plug on the 20-month coalition which had united bitter political rivals in a common front against the Palestinian uprising.

Sharon told parliament he would continue to lead the country, suggesting he would try to govern with a narrow coalition of far-right and religious parties rather than call early elections.

Earlier in the day, in a three-hour negotiating session in a parliament conference room, Sharon rejected Labour's demands to cut 150m in funds for Jewish settlements in the 2003 state budget. Compromise proposals failed.

Under Israeli law, the resignations only take effect within 48 hours, leaving room for last-ditch manoeuvres but politicians from both sides assessed Sharon's 'unity government' was at an end.

"We must fight terror, but this is the day when we have to present a diplomatic horizon," said Labour leader Binyamin Ben-Eliezer, referring to peace talks with the Palestinians.

"The prime minister is unable to present a diplomatic horizon."

Critics accused Ben-Eliezer, who quit as defence minister, of partisan politics, noting that in the polls ahead of Labour's November 19 leadership primary he trails two more dovish challengers, and leaving the government over a settlement dispute could boost his standing.

"It's the height of irresponsibility," said Education Minister Limor Livnat of Sharon's Likud Party.

The budget was put to parliament after the Labour ministers resigned, and it passed anyway, as expected, with the support of parties outside the coalition by a 67-45 vote. It must pass two more readings in coming weeks before it is final.

Several officials involved in the last-minute talks said Foreign Minister Shimon Peres, who led Labour for much of the past two decades and has been a key supporter of the unity government, tried to convince Ben-Eliezer to back down. Peres then resigned along with Ben-Eliezer and four other Labour Party ministers.

If the resignations go through, Sharon would face the difficult choice of trying to stay afloat with the support of an array of extreme-right and religious parties meaning political instability and constant pressures for even tougher, internationally unpopular policies against the Palestinians.

Sharon aides have said he is more likely to call elections within 90 days, but the prime minister himself suggested otherwise in his speech to the parliament. "We will continue to lead the country in a responsible and clear-headed way," he said.

Although polls show that the bloc of parties led by Sharon's Likud would probably win a majority of the 120 seats, there is no guarantee and Sharon himself would probably first have to beat back a challenge for the Likud leadership by former premier Benjamin Netanyahu.