Labor May Bolt the Coalition over Issue of Settlement Spending

The Labor and Likud parties, longtime foes in Israeli politics, are squaring off for a fight that could spell an end to Prime Minister Ariel Sharon’s unity government.

As Israel’s Knesset began debate on the nation’s 2003 budget Tuesday evening, a crisis gathered steam over spending for the settlements.

Labor Party chairman and Defense Minister Benjamin Ben-Eliezer said he would pull the party out of the government unless its budgetary demands were met, and called on Sharon to agree on a date for new elections.

“I intend to lead this battle to the end,” Ben-Eliezer said.

Political commentators have speculated that if early elections are called, they will take place some time between February and May.

Earlier Tuesday, Ben-Eliezer said that if no compromise is found to end the coalition crisis, Labor ministers would submit their letters of resignation before a preliminary Knesset vote on the budget Wednesday.

Citing budget cuts that have affected many social programs, Ben-Eliezer is demanding a cut in spending on West Bank and Gaza Strip settlements.

For his part, Sharon showed no signs of budging, reiterating in a meeting with leading industrialists that ministers who oppose the budget will be fired.

Addressing members of his Likud Party on Monday, Sharon said he preferred not to hold early elections, and would first try to assemble a narrow coalition without Labor.

But if elections are held, he added, “we will remain in power.”

With both camps publicly hardening their positions, the Labor minister who was the point person in contacts with Likud over the budget said the industrialists were circulating a proposal to try to resolve the crisis.

According to Agriculture Minister Shalom Simhon, the proposal calls for Labor members to abstain in Wednesday’s vote in exchange for a commitment from Sharon to consider the party’s demands to cut spending for settlements and the fervently Orthodox community, while boosting social programs and measures affecting students and pensioners.

Labor’s threat comes amid its longstanding frustration over the lack of diplomatic progress with the Palestinians and growing calls within the party to pull out of the government.

In addition, Labor is holding a primary next month in which Ben-Eliezer is facing a challenge for party leadership from two dovish candidates, legislator Haim Ramon and Haifa Mayor Amram Mitzna.

Political commentators and conservative politicians accuse Ben-Eliezer of manufacturing the coalition crisis to win support from Labor doves.

Ben-Eliezer staunchly denies the accusation, but even some Labor Party members say it’s true.

Amid the speculation over the coalition crisis, Israeli media reported that the former army chief of staff, Shaul Mofaz, had accepted an invitation from Sharon to serve as defense minister if Labor leaves the government.

Meanwhile, the budget was expected to pass the preliminary vote Wednesday with support from parties outside the coalition.

And if Labor members go ahead with their threat to resign, the letters would take effect only after 48 hours — leaving breathing room for possible negotiations.

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