Israel political crisis may force early elections

An embarrassing defeat in parliament on Monday over two cabinet appointments has left the Sharon camp sandwiched between the prospect of early elections or finding a way to reassert control over the party.

"This measure will have consequences," Sharon told parliament Monday, even as MPs ratified his appointment of chief ally Ehud Olmert as finance minister at a separate vote.

Leading the rebel camp is the charismatic darling of Israel's right and Sharon nemesis, Benjamin Netanyahu, who makes no secret of his desire to drive the premier out of the Likud leadership and replace him as prime minister.

With the Labour party on the cusp of a crunch leadership election on Wednesday, the crisis may come to a head over the state 2006 budget, which the Sharon government has until March 31 to force through parliament.

Should the government fail to stitch together the majority it still lacks in time, the government will fall automatically and early elections -- which are normally scheduled for November 2006 -- will become a matter of course.

Eight votes rejecting Sharon's cabinet appointments and three Likud MPs who absented themselves were enough to put his promotions on the back burner.

"The current situation cannot last," Olmert declared Tuesday.

Various Likud party rebels have threatened to torpedo the budget unless the government makes substantial provisions for settlements in the occupied West Bank and earmarks money for the 8,000 settlers evacuated from the Gaza Strip.

One Sharon adviser told AFP that any the possibility of early elections depended on the results of the Labour leadership election.

The latest opinion polls suggest that current Labour leader and Deputy Prime Minister Shimon Peres is primed to narrowly beat chief rival Amir Peretz, secretary general of the Histadrut trade union.

"In this case the government could continue, but if Amir Peretz wins, there will be no budget and parliament will have to be dissolved," the Sharon aide said on condition of anonymity.

The crisis in the heart of Israel's main right-wing faction was precipitated by anger over Sharon's historic pullout of all Jewish settlers and troops from Gaza following a 38-year occupation.

Bickering and backbiting has laid bare deep ideological rifts.

The top-selling Yediot Aharonot newspaper was divided over whether Sharon would wrest back control of Likud or call early elections.

"The trend becoming evident is not that Sharon will form a new party outside the Likud, but rather Sharon will make an effort to take over the Likud from within," ran one editorial.

"The prevailing belief among political circles as of last night was that elections would be held this spring," ran another.

"It could very well be that this winter session is shorter than expected," Lior Horev, a Sharon advisor, told army radio.

The Maariv newspaper said Sharon's threats will gain substance if his government should begin to crumble as the vote on the budget approaches.

"In this sense, Sharon's people are correct: the continued rebellion in the Likud must lead in the end to the complete collapse of the Likud government."

Foreign Minister Silvan Shalom has warned that party in-fighting could see Likud fail to repeat its electoral success in January 2003, when under Sharon, the faction won a third of the seats in the 120-member Knesset.