MIDDLE EAST: The Israeli and Palestinian leaderships were both in upheaval last night as Mr Ariel Sharon's government coalition collapsed after the prime minister broke with his main coalition partner, and a Palestinian military commander launched a challenge from his jail cell to succeed Yasser Arafat in next month's election.
The unexpected decision by Marwan Barghouti, who is serving five life terms in an Israeli prison, to break with the dominant Fatah movement and register as a presidential candidate in the Palestinian election appeared to complicate Mr Sharon's coalition problems.
The Israeli prime minister's administration is facing collapse after his main coalition partner, the Shinui party, caused the defeat of the annual budget in parliament, threatening the planned Israeli withdrawal from Gaza.
Mr Sharon promptly sacked Shinui ministers from his cabinet, leaving the administration with just 40 seats in the 120-seat parliament. The secular Shinui had objected to Mr Sharon "bribing" religious parties with tens of millions of pounds in budget allocations to win their support.
The prime minister appeared to have engineered the confrontation to force a remaking of his minority administration by bringing the opposition Labour party into the government in order to keep alive his plan to pull Jewish settlers out of Gaza.
However, there is strong opposition within Mr Sharon's Likud party to a coalition with Labour, particularly from an influential group opposed to withdrawal from Gaza. It fears that if Labour joins the administration it will push for the closure of Jewish settlements on the West Bank.
Mr Sharon is counting on members of Likud's central committee preferring a deal with Labour to calling elections. But opposition within Likud to the Gaza withdrawal is likely to stiffen following Mr Barghouti's decision to run for president of the Palestinian Authority.
Mr Barghouti has thrown open the ballot by registering as an independent candidate against his own Fatah movement.
An Israeli court found him guilty of complicity in five murders this year, although he insisted he was a political, not military, leader.
His decision lays down a strong challenge to the official Fatah candidate, Mr Mahmoud Abbas, who had been seen as Arafat's heir presumptive after taking over the reins of the PLO.
Mr Barghouti has widespread support as one of a younger generation of leaders committed to political reform, and because he has been at the forefront of the Palestinian uprising, the intifada.
He has denounced efforts by Mr Abbas and others to bring an end to the intifada, saying the armed struggle is a legitimate means of resisting and pressuring Israel. But he has had to break with Fatah to launch his presidential bid, drawing stiff criticism from allies and other reformers who say that splitting the movement plays into Israel's hands.
Recent opinion polls show no clear favourite in a contest with Mr Abbas and Mr Barghouti as the principal contenders.
Israel has said it will not release Mr Barghouti even if he is elected as president because he is a "terrorist". But his candidacy is only likely to harden resistance among opponents of Mr Sharon's Gaza withdrawal plan who argue that pulling out of the territory will encourage more violence by rewarding terrorism.
Last week, Mr Barghouti, under pressure from Fatah leaders, said he would not run in the January 9th election and endorsed Mr Abbas. But yesterday, his wife, Ms Fadwa Barghouti, visited him in prison and went to submit his application to the electoral commission.
Ms Barghouti has had several run-ins with Fatah leaders who she accuses of wanting to keep her husband in jail because of the political challenge he poses.
Mr Barghouti's challenge could provide an incentive for Israel to ease the grip of occupation and shore up support for Mr Abbas by being seen to reward his recent efforts to curb violence.
But Mr Sharon now has his own political crisis to confront as he tries to put together a new coalition.
Senior Labour and Likud officials discussed the possibility of forming a national unity government earlier this week and are expected to meet again today. Mr Sharon has until Monday to strike a deal when he faces a no confidence vote in parliament that could bring him down if Shinui, dissident elements of Likud and religious parties unite against him.