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Last Updated:  Thursday, 27 February, 2003, 00:00 GMT
Israeli foreign minister replaced
Binyamin Netanyahu (left) and Ariel Sharon
Netanyahu and Sharon are party rivals
Israeli Prime Minister Ariel Sharon has removed long-time rival Binyamin Netanyahu as Israeli foreign minister.

In a surprise move, Mr Sharon offered the post to Finance Minister Silvan Shalom, who accepted.

Mr Netanyahu initially turned down an offer from Mr Sharon to replace Mr Shalom in the finance ministry before reconsidering hours later, according to Israeli media.

Mr Sharon's Likud Party, meanwhile, has agreed deals to form a coalition government with two right-wing parties and the secular Shinui.

Correspondents say the removal of Mr Netanyahu from the foreign affairs job was a manoeuvre to shake Mr Sharon's main party rival.

Demands

They say Mr Sharon made Mr Netanyahu his foreign minister last November in the hope of curbing his opposition, but Mr Netanyahu still challenged him for the Likud leadership the following month.

GOVERNMENT LINE UP
Likud: 40 seats
Shinui: 15 seats
NUP: 7 seats
NRP: 6 seats
Total: 68 seats (of 120)

Mr Shalom is seen as a Sharon loyalist with little experience of foreign affairs who is unlikely to change Israel's policy.

Reports from Israel say Mr Netanyahu has said he would take the finance post but only if its powers were expanded.

Israel radio said Mr Netanyahu wants more control over privatisations and the role of acting prime minister when Mr Sharon is out of the country.

It is not clear what the prime minister's response to the demands will be.

The former mayor of Jerusalem, Ehud Olmert, is thought to be next in line for the finance ministry.

Rightward shift

Mr Sharon secured an eight-seat majority in the Israeli parliament or Knesset after agreeing deals with the National Religious Party (NRP), the ultra-nationalist National Union Party and Shinui, which was one of the winners in January's election.

Correspondents say the new line-up represents a setback for efforts to restart the Middle East peace process.

The NRP and NUP are strongly opposed to the creation of a Palestinian state.

Mr Sharon has supported such a state in principle by endorsing an American peace plan which foresees an independent Palestinian state by 2005.

Palestinian chief negotiator Saeb Erekat said the inclusion in the coalition of ultra-nationalist parties and parties representing Jewish settlers meant there would be "no chance left for peace".


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