Israeli governing coalition collapses

Labour and Likud have had an uneasy alliance

Talks to prevent Israel's fragile coalition government from collapsing have failed and Defence Minister Binyamin Ben-Eliezer and Foreign Minister Shimon Peres have both resigned.

We made every effort... to preserve the national unity government. These efforts failed

Silvan Shalom
Finance minister, Likud

Mr Ben-Eliezer, leader of the Labour Party, and Mr Peres pulled out of the government after the failure of three hours of talks with Prime Minister Ariel Sharon to resolve a dispute over the state budget.

Mr Sharon was asked after the talks if this resignation spelt the end of his 18-month coalition with Labour: "Yes, it looks that way," he replied.

Correspondents say the developments cast a further cloud over the prospects of ending Israel's violent confrontation with the Palestinians.

Warning

Mr Sharon later told the Israeli parliament, the Knesset, that Mr Ben-Eliezer had "provoked the rupture of the national unity government".

"The whole world knows the importance that I place on a national unity government," the prime minister told deputies.

Mr Peres said all of his Labour colleagues in the government were giving in letters of resignation.

They would take effect after 48 hours.

The Labour Party joined forces with Mr Sharon's Likud Party in response to the Palestinian uprising, or intifada, which started two years ago.

Mr Ben-Eliezer had earlier warned he would quit the coalition if Mr Sharon did not divert millions of dollars earmarked for Jewish settlements in the West Bank and Gaza.

He was insisting that $150m allocated for the settlements be channelled into social spending and job creation.

But Mr Sharon, a long-time supporter of the settlers, rejected Labour's demand, warning he would force out any party voting against the budget.

Ben-Eliezer wants more spending on jobs and social services

Reports say the talks were acrimonious. The Associated Press news agency says shouts were heard coming from the meeting and at one point Mr Ben-Eliezer stormed out before being persuaded to return.

Later Mr Ben Eliezer urged Labour Party deputies to go into parliament "and vote all of us as one party against the budget."

However, parliament approved the budget by 67 votes to 45.

'No choice'

Mr Sharon left the talks surrounded by bodyguards and walked, without expression, to a meeting with Likud Party colleagues.

Without the support of Labour, Mr Sharon could cobble together a narrow parliamentary majority based on small right-wing and religious parties.

But such a narrow government could prove unstable and unpopular, and the prime minister may have no choice but to call an election within 90 days.

Jewish settlers mourn a teenager killed by Palestinians

That would delay any efforts to find a new path to peace with the Palestinians.

And after an early election there could well be a prolonged period of political bargaining before a new government is formed.

A poll published in Israel's Yediot Ahronot newspaper says that if an election was held now, Labour would slide from 26 seats to 21 seats and Likud would rise from 19 to 29.

There are more than 140 Jewish settlements in the West Bank and Gaza Strip.

Their presence causes great disruption to the Palestinians and many Israelis believe settlements should be abandoned in the interests of reaching a compromise peace with the Palestinians.

The resignations were welcomed by Labour deputy Haim Ramon, who is planning to challenge Mr Ben-Eliezer's leadership of the party.

"I'm happy that we will not be partners in a government that is a failure in all aspects of life," he said.

"We need to leave the government and present an alternative."