Cabinet Crisis Resoived: Finance Minister Modai and Justice Minister Nissim to Switch Portfolios

The Cabinet approved an exchange of portfolios Sunday night that preserves the Labor-Likud unity coalition government and the prestige of Premier Shimon Peres. The climactic session lasted two minutes.

The week-long crisis which threatened to bring down the 19-month-old government was resolved by having Finance Minister Yitzhak Modai switch jobs with Justice Minister Moshe Nissim, effective Wednesday when the Knesset meets to approve the move.

Modai and Nissim are both Likud Liberals and each admits freely that he has neither experience nor expertise in the other’s job. But the unlikely Cabinet shuffle was the only way to satisfy Peres who announced last Tuesday that he intended to fire Modai. Had he done so, in violation of the coalition agreement, Likud would have had no choice but to leave the government. Peres, for his part, could not and would not back away from his insistence that Modai leave the Treasury.

A FACE-SAVING COMPROMISE

Sunday was the deadline. The Cabinet, which usually convenes in the morning, postponed its session until late evening to allow the Likud leadership to hammer out a face-saving compromise. An earlier formula which would have had Modai switch portfolios with Foreign Minister Yitzhak Shamir was rejected by Peres because Modai would have returned to the Treasury when Shamir becomes Prime Minister after the rotation of power next October 13.

The rotation of power, only six months away, spurred Likud to pressure Modai and Nissim to accept the exchange which neither of them likes. Nissim, by his own testimony never in his “wildest dreams” expected to take over responsibility for Israel’s shaky economy.

He was prevailed upon to accept it by two young Likud MKs, Ehud Olmert and Dan Meridor, who argued the case for preserving the coalition. Even so, he did not agree before consulting his wife, Ruth. Modai, too, was reluctant to give up the Treasury where he achieved considerable success. His economic austerity program is credited with reducing the rate of inflation to single digits for the first time in years.

But Peres wanted him out because of remarks published in newspaper interviews last weekend which the Premier construed as deliberate attacks on government policy by Modai.

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