Labor Quits Sharon Government

For a year and a half it was predicted, and this week it finally came: The Labor Party handed the Likud a bill of divorce, ending Israel’s national unity government.

What the divorce will mean for the country amid the ongoing conflict with the Palestinians, the prospect of an American-led war against Iraq and a staggering economy is far from clear.

The pretext for the divorce was Wednesday’s preliminary vote on the 2003 budget. After negotiations on a compromise ended in a shouting match, Defense Minister Benjamin Ben-Eliezer submitted his resignation to Prime Minister Ariel Sharon, and the other Labor ministers followed suit.

The resignations take effect in 48 hours, which means the country is likely to be in political limbo at least until early next week.

Barring new developments in that narrow window, Labor will join the opposition after a 19-month experiment in national unity in the face of the violent Palestinian uprising.

The ostensible sticking point was some $150 million in budget allocations for Israeli settlements in the West Bank and Gaza Strip that Ben-Eliezer said should go instead to social programs. But pundits — and, polls showed, many Israeli voters — considered that a transparent excuse: Ben-Eliezer faces Labor leadership elections in three weeks, and trails badly behind his two dovish challengers.

Labor’s defection leaves Sharon with four stark choices: Tender his resignation and call new elections in 90 days; limp along for as long as he can with a minority government; set up a narrow, but stable, right-wing government; or agree with Labor on a date for new elections sometime next spring.

The defection means Sharon now commands the support of only 55 of the 120 Knesset members. To survive, Sharon would need to split the opposition on key issues or get the seven-member, far-right National Union-Israel, Our Home faction to join the coalition or, at least, support it from the outside. That makes Avigdor Lieberman, National Union-Israel, Our Home’s leader, a key player.

The trouble is that Lieberman dislikes Sharon with a passion, and is a close political ally of Sharon’s rival for leadership of the Likud Party, former Prime Minister Benjamin Netanyahu. On the face of it, the chances seem remote that Lieberman will help Sharon survive and position himself better for a leadership challenge from Netanyahu.

But it’s not that simple. Will Lieberman want to topple the Sharon government by joining the left-wing Meretz and the Arab parties in voting no-confidence? Will he want to lead a right-wing move to bring down a Likud-led government, taking the chance that the left may then come to power, as happened in 1992 and 1999? And will he want to be blamed for deliberately preventing the formation of an ideologically homogenous right-wing government?

Sharon is ambivalent about the possibility of a narrow right-wing government. On the one hand, by instituting right-wing policies that are pro-settler and tougher on the Palestinians, he could erode some of Netanyahu’s support on the right. But he knows those policies would bring him into the kind of head-on confrontation with Washington that he has tried at all costs to avoid.

What Sharon does next largely will be conditioned by Netanyahu’s leadership challenge. Sharon probably will move to the right, taking care not to go too far. The formula will be to score political points against Netanyahu within the Likud, yet without antagonizing the Americans.

In this context, Sharon is considering appointing the former army chief of staff, Shaul Mofaz, as defense minister in place of Ben-Eliezer, and Jerusalem Mayor Ehud Olmert as foreign minister instead of Shimon Peres. Such new, high-profile political alliances might strengthen Sharon’s standing with the Likud rank-and-file.

Sharon also hopes the appointments would help him stay in office for at least a few months more, so that — if he is challenged by Netanyahu ahead of general elections — the vote will take place after an American strike on Iraq, when Sharon presumably would bear the aura of a successful, wartime prime minister.

That’s why, analysts say, Sharon seems most likely to choose the fourth option: agreeing with Labor on new elections next April or May.

Ben-Eliezer’s moves also have been greatly influenced by internal party leadership challenges. Not long ago, Ben-Eliezer was telling a Labor Party convention how important it was to support the budget as is.

Pundits say Ben-Eliezer’s change of heart stems from polls that show him trailing his challengers for the party leadership, Haifa Mayor Amram Mitzna and Knesset member Haim Ramon. Both Mitzna and Ramon have clamored for Labor to leave the Sharon government, and their message is popular among Labor members who will choose the party’s leader Nov. 19.

With time running out, Ben-Eliezer was advised to make a dramatic move that could bring him back into contention. But pundits aren’t convinced that Wednesday’s dramatic step really will do Ben-Eliezer much good. According to polls, most Israelis believe Ben-Eliezer engineered the budget crisis for partisan reasons, since the settlement spending in question — some $150 million — is a minuscule portion of the $60 billion budget, about one-quarter of 1 percent.

Still, the move to the opposition could help Labor. Party strategists have been saying for months that to have any chance in national elections, Labor must differentiate itself sharply from the Likud.

As a partner in a Likud-led government, where Labor shares responsibility for government policy, it could hardly differentiate itself. In the opposition, however, it can.

Moreover, the issues Ben-Eliezer chose for leaving the government — settlements and a fairer economic deal for weaker groups like pensioners and students — show how Labor intends to fight the coming election.

The main focus will be on socioeconomic issues, which Labor will argue can only be improved by channeling money away from settlements, and by changing the basic economic conditions by making peace with the Palestinians. Only Labor can take those steps, the party will argue, because it is ready to dismantle settlements as part of a peace deal.

In the meantime, it is Sharon who faces the immediate problems.

Though the budget passed its first reading on Wednesday, it’s not clear whether he will be able to maintain the budget ceiling and the deficit target without Labor’s help.

Labor’s departure gives the remaining members of the government coalition far more leverage: Between now and the budget’s second and third readings, each of the small parties could try to force Sharon to make special allocations to the sectors they represent, with disastrous consequences for Israel’s credit rating.

Sharon’s options will be refined very soon: The picture will become clearer next week when the Knesset considers no-confidence motions tabled by the Meretz and Shinui parties.