News Analysis: Crisis over Peace Plan Fueling Tensions Within Likud and Labor

An undercurrent of tension is discernable in the top echelon of the Labor Party as it considers whether or not to end its coalition with Likud.

At the same time, Prime Minister Yitzhak Shamir is still contending with a daunting challenge from Likud’s right wing.

The recurring leadership battle between Labor Party leader Shimon Peres, who is vice premier and finance minister, and Defense Minister Yitzhak Rabin, Labor’s No. 2 man, appears to have resurfaced as a direct result of the fateful decision facing Labor.

Peres seems the more, determined of the two to break up the marriage of convenience with Likud.

Their differences have somewhat dampened the enjoyment many Laborites feel over the power struggle discomfiting Likud.

Shamir is fighting off, with increasing energy and diminishing success, a determined challenge from his right wing, led by ministers Ariel Sharon, David Levy and Yitzhak Moda’i.

Their weapon is the prime minister’s peace initiative, co-authored with Rabin, which calls for Palestinian elections in the West Bank and Gaza Strip, leading to negotiations over Palestinian self-rule and eventually the final status of the territories.

Sharon calls it the most dangerous proposal in Israel’s history.

While he and his cohorts could not directly kill the plan, already approved by the Cabinet and Knesset, they amended it with conditions that not even moderate Palestinians could accept.

CAN SHAMIR PROVE ‘NOTHING HAS CHANGED’?

Shamir was forced to adopt Sharon’s principles at a meeting of the Likud Central Committee on July 5.

As a result, the Labor Party Executive voted Monday to recommend to the party’s Central Committee that Labor end its alliance with Likud for wrecking the peace plan.

The tone and tenor of Peres’ and Rabin’s speeches to the Labor Executive left little room for their party to stay in the unity government.

But differences between the two men have surfaced.

Rabin’s aides are hinting broadly that Labor will not depart the coalition if Shamir can convincingly demonstrate his oft-repeated assertion that “nothing has changed” with respect to the peace plan.

A more skeptical Peres observed Wednesday that “the longevity of the government will be determined by the longevity of the peace initiative.”

But the split between Peres and Rabin may be small compared to their opportunity to exploit the rift in Likud to the maximum advantage.

Shamir, still refusing to acknowledge he was sandbagged by the Sharon forces, suffered another humiliation this week.

The prime minister’s closest ministerial allies — Moshe Arens, Dan Meridor and Ehud Olmert–let it be known Tuesday that Shamir might seek a showdown with Sharon by submitting the new hard-line Likud conditions to a Cabinet vote.

But that trial balloon was promptly shot down. Construction and Housing Minister Levy, a powerhouse in Likud’s Herut faction, met privately with Shamir.

The prime minister told reporters two hours later that there would be no Cabinet test.

That development should signal the Labor Party that Shamir is wilting under the combined pressure of his three rivals.

But conditions change rapidly in Israeli politics, and the Labor Party may be deliberately taking a leisurely pace.

Its own Central Committee is not expected to meet until mid-August for the crucial vote on whether to leave the government.

That means political uncertainty and tension in the country for at least another month.