MIDDLE EAST: The broad-based national unity government of the Israeli Prime Minister, Mr Ariel Sharon, was on the verge of unravelling yesterday, raising the possibility of early elections, as the Labour Party refused to revoke its threat to vote against the 2003 state budget if funding for Jewish settlements was not reallocated to the poorer sectors of society.
The Labour leader and Defence Minister, Mr Benjamin Ben-Eliezer, who said he was "demanding an end in the discrimination in favour of the settlements", declared yesterday that if last-ditch efforts to defuse the crisis failed, he would be ready to go to the polls within 90 days - one scenario which could play out were the Prime Minister to tender his resignation to the President.
Refusing to balk, Mr Sharon said that any minister who voted against the budget when it comes to parliament for a first reading on Wednesday had no place in his government.
Apparently having already given up on salvaging his partnership with Labour, Mr Sharon said yesterday he would try to put together a narrow ruling coalition, but if that failed he was ready to go to the polls.
Despite Labour's position, the budget looks likely to pass, with a far-right opposition faction declaring yesterday it would back Mr Sharon. Without the centre-left Labour Party at his side, however, Mr Sharon will be exposed to demands from hawkish parties, who oppose any concessions to the Palestinians and want the government to step up military action in the Occupied Territories even further.
Members of Mr Sharon's ruling Likud party accused Mr Ben-Eliezer of manufacturing the political crisis in an effort to promote his flagging political fortunes. The Labour leader's sudden demand for a cut in settlement funding comes only three weeks before he faces two more-fancied opponents in a party leadership primary, which polls predict he will lose.
Only last month Mr Ben-Eliezer said it would be "political suicide" to quit as Defence Minister on the eve of a possible war with Iraq.
"The state of Israel does not need elections at this time," Mr Sharon told his Likud party yesterday, referring to the country's deepening economic crisis and the possibility of a US assault on Iraq.
"But if elections are forced on us because of irresponsible political behaviour . . . we will win."
In Ramallah, meanwhile, the President of the Palestinian Authority, Mr Yasser Arafat, was contending with political problems of his own. He postponed a meeting of the 85-member Palestinian Legislative Council which was supposed to vote on his proposed cabinet after Israel, citing security reasons, refused to allow 13 legislators from the Gaza Strip to attend the special session. The Palestinian leader was said to be considering holding the meeting today.
Palestinian officials accused Israel of trying to undermine steps to reform their institutions. "This is a clear indicator that the Israeli government intends to destroy the Palestinian attempt to build a government," said a cabinet minister, Mr Saeb Erekat.
The Palestinian cabinet was forced to resign last month after it became clear the legislative council was on the verge of voting no confidence in the ministers, a move that handed Mr Arafat, who was hoping to push through a cabinet reshuffle, a rare political blow.