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Monday, 17 February, 2003, 17:14 GMT
Q&A: Israel's early elections
Israel is heading for elections following the collapse of its national unity government. BBC News Online looks at the issues surrounding the latest political crisis.

Why has Prime Minister Ariel Sharon called early elections?

Israel was once again plunged into political turmoil when the Labour Party objected to Mr Sharon's proposal in the budget to spend money on Jewish settlements in the West Bank and Gaza Strip. Former Labour leader Binyamin Ben-Eliezer quit the governing national unity coalition.

Mr Sharon's attempt to build a small majority coalition with right-wing parties failed. His main rival for the leadership of the Likud party, Binyamin Netanyahu, agreed to join Mr Sharon's government as foreign minister but still aims to challenge him for the party chairmanship.

Had Mr Sharon chosen to lead a minority government, he would have been vulnerable to no-confidence votes at every turn.

As it was, he chose to seek a new mandate, but that means he has to face a direct challenge to his leadership from Mr Netanyahu in primaries for the Likud candidate for prime minister.

Who are the leading contenders?

Likud:
There is little question that by calling these elections, Mr Sharon is taking a big political gamble, though he looks likely to see off the challenge of Mr Netanyahu.

But while Mr Sharon has been a very popular leader, Mr Netanyahu is very popular within Likud and has sought to gain support by striking even more right-wing stances that Mr Sharon.

Labour:
The Labour Party has also held leadership elections, in which leading dove Amran Mitzna came out ahead of rival Binyamin Ben-Eliezer, who had previously served as defence minister in the Sharon government.

The party is still suffering because of the failure of their last government to bring peace with the Palestinians and is struggling to establish a distinct identity and polices after an internally divisive period in Mr Sharon's national unity government.

Other parties:
As usual in Israeli politics, the smaller parties of the left and right are likely to hold the balance of power when it comes to coalition building.

What does it all mean for the Palestinians?

There is no peace process to speak of at the moment, so the actual electoral process is not putting any negotiations on hold.

Under a future Likud-led government, Palestinians would probably expect more of the same. Under Mr Netanyahu, Israel might get even more hard-line.

Were Labour to lead the next government, change would probably not be dramatic in the short term. There is a general consensus in Israel that negotiations cannot be held while this level of violence continues.

However, Mr Mitzna has pledged to "fight terror as if there were no negotiations and negotiate as if there were no terror attacks".

How is Washington likely to view the situation?

Political uncertainty in Israel at a time when the US is planning a campaign against Iraq will not be welcomed in Washington.

This said, whoever emerges to lead Israel at the end of the process will almost certainly back American intentions in Iraq fully.

An Israel distracted by election campaigning might well suit American purposes. Washington has sought a period of quiet in the West Bank and Gaza as it tries to win over Arab and Muslim governments to its campaign against Iraq.

What are the other main election issues?

As usual, these are going to be security and the peace process.

Mr Sharon should be in a very strong position - his policies towards the Palestinians have been popular.

However, despite massive military campaigns in the West Bank and Gaza, Israelis have not got security - the suicide bombers keep coming.

Again, Israelis face the a fundamental choice: do you pursue security through military means, or do you pursue security by trying to make peace?

The Labour party's chances in the election may to some extent be in the hands of Palestinian militant groups. If the militants step up their suicide attacks, voters are likely to lean to the right.

In 1996, Shimon Peres famously lost elections to Mr Netanyahu after a series of Palestinian bombings inside Israel.

Is the economy a factor?

Mr Sharon is vulnerable on the economy. The military campaigns in the Palestinian areas have been very costly and trade and tourism have suffered massively since the start of the intifada in September 2001.

Had Mr Sharon not gone for early elections, he would have faced a no-confidence vote tabled by Labour in the economy.

A recent report on poverty in Israel showed that 1.2 million Israelis - almost half of them children - are living below the poverty line because of the collapse of the economy.


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