JERUSALEM, June 6 (JTA) — Ehud Barak is edging closer to naming his new government, and aides to the Israeli prime minister-elect say it may wind up being a narrow one, rather than the broad-based coalition he originally intended. Barak had originally hoped to include either the Likud or Shas parties in his government, to give him the broadest possible mandate to reach peace agreements with Syria and the Palestinians. But after difficult negotiations with Likud in recent days, his aides say he is prepared to announce a coalition that would bring together 66 of the Knesset’s 120 members. That message, delivered Sunday, a day before the incoming legislature was scheduled to hold its first session, was seen as a signal to Likud and Shas that they should not demand too much from Barak in the ongoing coalition negotiations. The more narrow coalition would include the following parties: * Barak’s One Israel bloc, which has 26 Knesset seats; * the dovish Meretz Party, 10 seats; * the Center Party, 6; * the secularist Shinui Party, 6; * the immigrants rights Yisrael Ba’Aliyah, 6; * the moderate Orthodox National Religious Party, 5; * the fervently Orthodox United Torah Judaism bloc, 5; and * the trade union-based One Nation Party, 2. Despite Barak aides’ optimism, a number of obstacles still existed Sunday to the announcement of the new government. The United Torah Judaism bloc objected to Barak’s plan to end draft exemptions for fervently Orthodox yeshiva students, while Meretz and Shinui were insisting that Jewish settlements in the West Bank and Gaza Strip should no longer enjoy any special government subsidies. Yisrael Ba’Aliyah representatives, meanwhile, walked out of coalition talks Saturday night, demanding that some settlements continue to receive government support. Settlements are among the issues covered in a draft of Barak’s government guidelines that was distributed to potential coalition partners. Barak plans to cancel economic subsidies to Jewish settlers, according to the guidelines, which also call for accelerated negotiations with the Palestinian Authority, approval by a national referendum of any final- status agreement reached with the Palestinians and a resumption of negotiations with Syria. In addition, the guidelines call for the completion of legislation to create Israel’s first constitution and for a separate law to end yeshiva students’ draft exemptions. Still harboring hopes of forging a broad coalition, Barak met Sunday for a lengthy meeting with Likud leader Ariel Sharon, who said it was still too early to say whether his party would join the coalition. One major difficulty stemmed from Barak’s reported unwillingness to name Sharon foreign minister, a post that Barak was said to have promised David Levy, the leader of the Gesher Party, which ran in the recent elections under the One Israel umbrella. In a separate development, Sharon announced Sunday that Likud primaries for a new leader would be held on schedule in early September. His announcement came in the wake of a decision last week by the party secretariat not to elect a successor to the outgoing party leader, Benjamin Netanyahu, for another two years — which would have meant that Sharon, the party’s acting leader, would hold the post until 2001. This brought immediate protests from two other likely candidates for the party leadership, outgoing Finance Minister Meir Sheetrit and Jerusalem Mayor Ehud Olmert. Meanwhile, Barak aides are not ruling out a coalition that would include Shas. Several One Israel officials spoke Sunday of bringing Shas into the government even if its recently convicted leader, Aryeh Deri, remains party chairman. Observers point out that Shas, which has 17 Knesset seats and is relatively dovish on territorial compromise, would make a more reliable partner on crucial peace process votes than would Likud, which has 19 seats.