Coalition in Peril As Labor Rejects New Likud Conditions on Peace Talks

The likud bloc’s new conditions for entering a dialogue with the Palestinians have been angrily rejected by the Labor Party, which threatened Tuesday to bring down the government unless the matter is quickly resolved.

The 12-member Inner Cabinet was scheduled to meet Wednesday for what could turn out to be the final confrontation of the Likud-Labor unity coalition.

Labor Party ministers said after a meeting Tuesday afternoon that the government would fall unless the Inner Cabinet responds positively to the latest proposals of U.S. Secretary of State James Baker.

The United States is trying to arrange an Israeli-Palestinian dialogue in Cairo to devise plans for Palestinian elections in the West Bank and Gaza Strip.

But it has encountered resistance from Prime Minister Yitzhak Shamir and his Likud bloc over which Palestinians Israel will negotiate with.

Likud ministers, meeting late into the night Monday in the prime minister’s office, resolved to accept the American compromise proposals “in principle,” but only if the Labor Party agreed to certain conditions in advance of the Cairo dialogue.

They want Labor to pledge it will oppose the participation of East Jerusalem residents in the proposed elections.

Likud also wants Labor to agree that the Israeli delegation will walk out of the Cairo talks if the Palestine Liberation Organization “takes over or penetrates” them.

THE ULTIMATE ‘CHUTZPAH’

Vice Premier Shimon Peres, the Labor Party leader, called Likud’s new conditions the ultimate “chutzpah.”

In Washington, the State Department refused to comment on the exchange between the coalition partners. “We are waiting for an answer from the Israel government,” department spokeswoman Margaret Tutwiler said Tuesday.

The goal of Wednesday’s Inner Cabinet meeting will be to try to come up with that answer by resolving the conflicting Likud and Labor positions.

The Inner Cabinet consists of six Likud and six Labor ministers. A tie vote, indicating a deadlock along party lines, would constitute a rejection of Baker’s proposals.

Neither Peres nor Defense Minister Yitzhak Rabin has said categorically that Labor would withdraw from the coalition in that event. But party insiders say the two men are now united in that resolve.

Peres has been ready for weeks to break with Likud and try to form an alternative government with the religious and leftist parties. Rabin has argued against haste, contending that the unity government is still the best bet for peace.

But the latest developments in Likud may have changed Rabin’s mind. The party’s new demands are being widely seen as an attempt to shift the focus of the political crisis from the divisive issue of Baker’s proposals to the issue of allowing East Jerusalem residents to participate in the proposed elections, which Likud is completely united against.

All Labor leaders favor letting East Jerusalem Palestinians vote, as long as the physical act of casting the ballot is done outside the Jerusalem city limits. Some Laborites, including Peres, favor allowing East Jerusalemites to stand for election.

U.S. HAS DONE ‘ALL WE COULD DO’

But anything to do with Jerusalem’s status as Israel’s united, eternal capital carries tremendous emotional weight in Israel. It is not an issue on which the Labor Party wants to be perceived as being on the unpopular side, which is precisely where Likud would like to put it.

Therefore, when Labor’s leadership bureau meets in Tel Aviv later this week, the general assumption is that it will recommend that the party’s Central Committee be convened in the middle of next week to decide whether to break with Likud.

That meeting would likely coincide with two mass rallies planned by members of the Likud Central Committee. One is being organized by supporters of Shamir’s peace diplomacy.

The other is by hard-liners who believe Ariel Sharon’s warnings that any dialogue with the Palestinians, much less Palestinian elections, would result eventually in a Palestinian state.

In Washington, the State Department appears to be withholding judgment until there is a formal response from the Israeli government.

Tutwiler rejected a suggestion that Shamir no longer has enthusiasm for the peace plan he first proposed last spring. She said Israel faces “very difficult decisions,” and “we recognize that, we understand that.”

But she also repeated a statement made by Baker that the United States feels it has “done all we could do.”

(JTA correspondent David Friedman in Washington contributed to this report.)