JERUSALEM, Feb. 28 (JTA) – It’s not clear if the Labor Party’s decision to join a unity government will turn out to be a blessing or a curse for Prime Minister–elect Ariel Sharon.

Most observers hailed Labor’s decision Monday as a sign that Israel’s recent political instability could be moving toward resolution. But a procedural motion passed at the same meeting threatens to throw a wrench into Sharon’s plans.

Sharon has promised Labor eight portfolios in his government, including two of the heavyweight jobs, foreign affairs and defense.

The other posts are agriculture; transportation; industry and trade; science, culture and sport; and two ministerships without portfolio. In addition, Labor will receive three deputy–minister appointments.

On Monday, however, Labor’s Central Committee voted that it will decide who will fill which position, creating the possibility that Sharon may find Labor’s picks unacceptable.

The 1,650–person Central Committee was scheduled to meet again Friday to choose Labor’s roster.

Shimon Peres, who spearheaded the effort to steer Labor toward a unity government and has been angling for the foreign affairs portfolio, preferred that senior party members draw up their own list.

But Peres’ motion was voted down at Monday’s meeting.

This has prompted speculation that the vote could turn into a settling of scores within the embattled party, which has been rent with infighting since Prime Minister Ehud Barak’s overwhelming election loss to Sharon on Feb. 6.

Sources close to Sharon said the prime minister–elect does not want to meddle in Labor affairs, but will not necessarily accept Labor’s dictates for important Cabinet posts, especially defense.

“We hope the Labor Party will choose people who are suited to the positions and will take into account that these individuals will have to serve in the government and in accordance with its positions and purposes,” Jerusalem Mayor Ehud Olmert, a senior coalition negotiator for Sharon, told Israel Radio.

Olmert suggested an unworkable scenario in which Labor might propose that Foreign Minister Shlomo Ben–Ami – who negotiated the far–reaching concessions Barak presented to the Palestinians – continue in his post under Sharon.

On Tuesday morning, senior Labor members met at Peres’ office to discuss amending the Central Committee decision so that they can choose the party’s Cabinet members. The meeting ended without resolution.

Sharon has until the end of March to present a government. Should the unity effort fail, he can form a narrow coalition with right–wing and religious factions.

Indeed, he resumed negotiations with them on Tuesday as the implications of the Labor vote on the Cabinet positions became clear.

But Sharon’s other potential partners also are grumbling over the distribution of Cabinet posts and parliamentary committee appointments.

The National Religious Party said Tuesday it wants the education portfolio, which the Likud has pledged to keep for itself.

Shas, the large, fervently Orthodox Sephardi party, is engaged in a heated struggle for the powerful Interior Ministry – which handles issues of religious and personal status – with Yisrael Ba’Aliyah, a Russian immigrant party.

As the third–largest Knesset faction with 17 seats, Shas will receive a total of five ministries.

With just Labor and Shas in his coalition, Sharon would only have 58 of the 120 Knesset seats, but could presumably count on right–wing and religious parties to keep him in power, at least in the short term.

A tug–of–war also has erupted over the chairmanship of the Knesset’s influential law committee. Avigdor Lieberman said his right–wing Israel, Our Home–National Union faction may not join Sharon’s coalition if it does not receive the chairmanship.

The post initially was promised to Lieberman’s faction, but he learned this week that Likud and Labor have agreed to rotate the chairmanship between themselves.

Shas and the fervently Orthodox United Torah Judaism also have demanded the committee chairmanship.

One reason for Lieberman’s stance is the fact that the law committee must vet legislation to repeal the direct election of the prime minister, a system that has benefited Lieberman’s political patron, former Prime Minister Benjamin Netanyahu.

This week, the committee approved 14 clauses to legislation that would cancel the direct election system.

Critics blame the system, which enables voters to cast separate ballots for prime minister and political parties, for strengthening smaller parties and creating political paralysis in the Parliament.

First implemented in 1996, when the telegenic Netanyahu defeated Peres in a stunning upset, opposition to the system has grown in recent years.

The bill to repeal the direct election has already won preliminary approval in the Knesset, and reports said the legislation could be presented as early as next week for second and final readings in the full Knesset.

On Wednesday, however, Shas, National Religious Party, Israel, Our Home–National Union and Yisrael Ba’Aliyah all said they would not join the government unless Sharon agreed to postpone any cancellation of the direct election system until the election currently scheduled for 2007.

In other political developments, the Center Party, which was formed prior to the 1999 elections, decided to split into two separate factions.

Dovish members, including Dalia Rabin Pelosoff, Uri Savir and cabinet minister Amnon Lipkin–Shahak, said they were forming a new faction, “The New Way.”

Dan Meridor, who left the Likud to join the Center Party, has been mooted as a possible minister in Sharon’s government.

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