JERUSALEM, Oct. 30 (JTA) — What went wrong? Israel’s national unity government collapsed Wednesday after several tense days of haggling over settlement funding that analysts said masked internal party politics. Following intense bargaining Wednesday in search of a compromise, Prime Minister Ariel Sharon’s budget passed by a vote of 67-45, with two abstentions. But the victory cost Sharon his major coalition partner: The Labor Party chairman and defense minister, Benjamin Ben-Eliezer, gave Sharon his letter of resignation after negotiations on a compromise ended in a shouting match. Other Labor ministers also submitted their resignations. Barring any new developments in the 48-hour window until the letters take effect, Labor will join the opposition after 19 months in the unity government. At the crux of the dispute was Labor’s demand that some $150 million in spending for settlements be cut in favor of social programs. Given that the figure is just one-quarter of 1 percent of the total budget, analysts and right-wing politicians said Ben-Eliezer really was motivated by political considerations: He faces a Labor Party primary next month in which he trails two dovish challengers, Knesset member Haim Ramon and Haifa Mayor Amram Mitzna. The budget dispute also follows long-standing frustration in Labor over the lack of diplomatic progress with the Palestinians and pressure within the party to pull out. Throughout the day, Likud and Labor officials were involved in last-ditch efforts to find a compromise to keep Labor in the government. At times it appeared the sides were close to agreement on a compromise drafted with the help of two prominent Israeli lawyers. The draft explicitly stated Sharon’s commitment to address the needs of people on pensions and students in exchange for Labor’s support of the budget. In addition, it stated that allocations would be determined only by “relevant and equal” criteria, based on state objectives and not sectoral interests. Ben-Eliezer’s rejection of the proposal drew accusations from the right that he was never serious about reaching compromise. Speaking in the Knesset, Sharon accused Ben-Eliezer of failing to act responsibly. “We did not agree to divert the negotiations to hurt an entire public to serve political considerations,” Sharon said. “I appeal to the Labor Party and its chairman, on this you are dismantling the unity government? At this fateful hour for the Israeli economy? There is a limit to contempt.” In his remarks, Ben-Eliezer said Labor never had any interest in breaking the budget framework, but felt morally compelled to take a stand. “It is incomprehensible that in the State of Israel in the year 2002, tens of thousands of children” are hungry, Ben-Eliezer said. “It is unacceptable that in the State of Israel, the basic right of pensioners to end their lives in dignity will be taken from them.” Ben-Eliezer’s remarks outraged Finance Minister Silvan Shalom, from Sharon’s Likud Party. “Since when are you so interested in pensioners? When was the last time you visited a nursing home?” Shalom shouted. Opposition leader Yossi Sarid of the left-wing Meretz Party welcomed Labor’s decision to leave the government. While calling the move “a little late, a little muddled,” he said he was immediately passing on the post of opposition leader to Ben-Eliezer. But Sarid said that, after nearly two years in the government, Ben-Eliezer would be watched closely to see how he delivered an alternative message. In contrast to Ben-Eliezer, Foreign Minister Shimon Peres was praised by Sharon and other Likud members for his efforts to find a way to preserve the unity government. During the vote itself, however, Peres heeded party discipline and opposed the bill. The budget passed with support promised earlier by two opposition parties, Shinui and National Union-Israel, Our Home. However, Shinui also said it would submit a no-confidence motion against Sharon next week. The plenum already is slated to debate and vote on a no-confidence motion from Meretz on Monday. Labor said earlier that it planned to support the measure.