October 31, 2002	Thursday	Sha’aban 24,1423

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TEL AVIV, Oct 30: Israel’s coalition government collapsed on Wednesday as Defence Minister Binyamin Ben Eliezer and other Labour members quit right-wing Prime Minister Ariel Sharon’s cabinet, throwing the country into crisis.

Ben Eliezer, leader of the centre-left Labour, handed in his resignation after last-minute talks with Sharon failed to reach a compromise over an austerity budget that had enraged Labour with its high subsidies allotted for Jewish settlements.

Foreign Minister Shimon Peres, Labour’s senior politician and leading dove, and Culture Minister Matan Vilnai immediately followed Ben Eliezer in walking out.

The crumbling of the 18-month national unity government created fresh upheaval as Israel finds itself bogged down by the Palestinian intifada.

It also comes as Israel’s chief ally, the United States, is weighing an invasion of Iraq, which could further jolt the region.

Finance Minister Sylvan Shalom, from Sharon’s right-wing Likud party, blamed Ben Eliezer for sabotaging a compromise which the sides were on the verge of clinching.

“Today the national unity government collapsed,” he said.

“There was an agreement. It was accepted by the foreign minister, Mr Shimon Peres, and his colleagues, but unfortunately, the leader of the Labour party, the defence minister, didn’t accept it. He gave his resignation,” said Shalom.

He accused Ben Eliezer of sacrificing the government for his political career as the defence minister looks to fend off his more dovish rivals in Labour’s leadership primaries on Nov 19.

“I must say it was only because of the internal politics of the Labour party. They are facing an election, a primary in two weeks from today and that’s the reason he wanted to resign,” Shalom added.

The government had already teetered on the edge of collapse with Labour threatening to vote against Sharon’s budget unless he levelled out spending on settlements with funding for poorer sectors of society throughout Israel.

In turn, Sharon had warned he would sack any minister who voted against his budget.

But the two sides appeared to move away from the precipice, agreeing to delay a parliament vote by four hours while they hammered out a compromise.

Two lawyers acting as intermediaries between Ben Eliezer and Sharon told reporters they had come up with a formula whereby the same amount of money allocated to settlements would go to development grants for poor sections of the Israeli population.

Sharon and Ben Eliezer then headed into a meeting and had been expected to sign an agreement.

But the talks broke down after two hours, with the defence minister tendering his resignation and storming out of the meeting.

With Labour out of the government, Sharon could seek a narrow coalition dominated by the far-right or ask President Moshe Katsav to dissolve parliament and call elections within 90 days, some nine months earlier than scheduled.

Israeli radio said Sharon had already tapped former army chief of staff General Shaul Mofaz to replace Ben Eliezer as defence minister.

Labour refused to back the budget, designed to tackle the country’s worst-ever economic slump brought on at least in part by the Palestinian uprising, unless Sharon cut a 150-million dollar allowance to settlements.

The party wanted the funds re-routed to social spending and job creation. The current budget proposal foresees cuts of 1.8 billion dollars, much of it from social services.

While Ben Eliezer prepared to battle it out with his Labour rivals, Sharon looked set to win a runoff in his Likud party against rival and former prime minister, Binyamin Netanyahu.

And his Likud party is also well ahead of Labour in popularity ratings. —AFP