ISRAEL: After a day of see-saw political negotiations, the Labour Party announced last night it was pulling out of Prime Minister Mr Ariel Sharon's broad-based national unity government, in a move that is likely to precipitate early elections in Israel.
"Enough. There is a limit to this disgrace," an exasperated Mr Sharon told the parliament, directing his words at Labour leader and Defence Minister Mr Benjamin Ben-Eliezer, who only moments earlier had handed him his letter of resignation. This followed a last-ditch negotiating session between the two men aimed at salvaging the unity government, which had ended in a shouting match. The remaining five Labour ministers also tendered their resignations.
The first reading of the 2003 state budget, which was at the heart of the dispute between Likud and Labour, nevertheless passed last night by a vote of 67 to 45, with the support of parties from outside the coalition.
The political crisis erupted late last week over Mr Ben-Eliezer's threat to oppose the budget if some $145 million in funding to Jewish settlements in the West Bank and Gaza Strip was not reallocated to the poorer sectors of Israeli society.
Mr Sharon rejected the demand, but throughout yesterday various mediators - including Foreign Minister and Labour veteran Mr Shimon Peres - tried to forge a compromise solution that would satisfy both sides.
Earlier in the day, Likud and Labour members anxious to prevent the government from unravelling, pushed back the budget vote on three separate occasions in a bid to give the sides more time to work out a compromise deal. With the ruling coalition already having been eulogised, reports began emerging toward mid-afternoon that a formula had been found to keep Mr Ben-Eliezer in the government.
But just three hours later the Labour leader concluded his heated meeting with Mr Sharon by presenting his letter of resignation.
"Is this what you have dismantled the unity government over?" Mr Sharon said, addressing Mr Ben-Eliezer, who sat passively in the parliament.
"At this critical hour for the country's economy. The whole world is watching," continued Mr Sharon, referring to fears in Israel that political instability could lead to a drop in the country's credit rating.
"We have been quiet until now because we preferred unity, but now there is no choice but to take from settlements," Mr Ben-Eliezer told parliament in a bid to justify his move, which has been widely perceived as being motivated by partisan politics.
While Mr Ben-Eliezer has worked intimately with Mr Sharon in the military campaign against Palestinian militants, and has rarely criticised the Prime Minister during their 20-month partnership, many view his focus on settlements - he also recently ordered the evacuation of 24 illegal settlement outposts in the West Bank - as a bid to boost his flagging hopes ahead of a party leadership primary next month.
Mr Ben-Eliezer, who has a hawkish image within his party, faces two dovish opponents, both of whom are ahead of him in the polls. By quitting the government over the settlement question, some commentators suggested, Mr Ben-Eliezer might be hoping to win over voters in the party.
The departure of the moderate Labour Party from the coalition does not automatically precipitate an election. Mr Sharon, whose coalition now has 55 seats in the 120-seat parliament, indicated last night that a narrow government based on far-right parties was his preference, and his aides began initial contacts with several factions. "We will continue to lead the country in a responsible and clear-headed way," he told the parliament.
But being dependent on the far-right, which has demanded the government step up military action against the Palestinians even further, would almost certainly put Mr Sharon on a collision course with Israel's closest ally, the US.
This might ultimately push Mr Sharon in the direction of early elections, some time in the first few months of next year.
If Mr Sharon resigns, then elections must be held within 90 days, although election dates in the past have traditionally been agreed on by the two major parties, Labour and Likud.
Before going to the polls, however, Mr Sharon faces a tough leadership primary in the Likud, where he is being challenged by former prime minister Mr Benjamin Netanyahu. Recent polls give Mr Netanyahu a narrow lead over the Prime Minister.
Under Israeli law, ministerial resignations only go into effect after 48 hours, leaving open the possibility of a last-minute reversal, although politicians across the political spectrum estimated last night that the possibility of such a development was extremely remote.
Asked about the coalition crisis, Palestinian Cabinet Minister Mr Saeb Erekat warned: "If there is a new coalition between the Likud and the right-wing in Israel, it will also be at the expense of the Palestinian people and against the peace process."
A Palestinian police intelligence officer was shot dead by Israeli troops near Nablus in the West Bank late yesterday, Palestinian police said.
AFP adds: About 40 Israeli writers, artists and businessmen went to pick olives with Palestinian villagers south of Nablus yesterday in protest at rising violence from Jewish settlers.
At the demonstration in olive groves near Aqraba village were veteran writers Amos Oz, A.B. Yehoshua and David Grossman, who protested alongside Rabbi Menachem Froman, a pro-peace rabbi from Teqoa settlement south of Jerusalem.
"We have come here to call for justice," said Mr Oz, a past nominee for the Nobel prize for literature.
"I came to protest against what I regard as a crying and vicious plunder of the Arab olive harvest."
Hardcore settlers have launched an unprecedented campaign of intimidation and harassment against Palestinian farmers during the olive harvest, Israeli and international aid workers say.
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