JERUSALEM -- The Labor Party's resignation Wednesday from the government of Prime Minister Ariel Sharon will force him to call early elections or form a coalition dominated by hard-liners who are unlikely to support resuming peace talks with Palestinians.
The resignations of Defense Minister Benjamin Ben-Eliezer, Foreign Minister Shimon Peres and their Labor Party from Sharon's government threaten to prolong fighting between Palestinians and Israelis. The conflict has killed more than 2,000 Palestinians and Israelis since September 2000.
But analysts say Israel is unlikely to escalate its military response to the uprising. Sharon still faces pressure from the Bush administration to keep the region quiet as the United States prepares for a possible war against Iraqi President Saddam Hussein.
U.S. is key
"By and large the key here is not what Israel is doing, or what the Palestinians are doing," said Eytan Gilboa, political science professor at Bar-Ilan University in Ramat Gan. "The key is what the U.S. is doing, and what they are going to do in Iraq."
Labor's move will likely lead to new elections within 90 days, well ahead of elections scheduled for next November.
Ben-Eliezer, who wants to challenge Sharon for the premiership, would prefer a date in early spring.
Labor quit Sharon's government in a dispute over funding of Jewish settlements, minutes before a parliamentary vote on the 2003 budget. The budget allocated $145 million for Jewish settlements but cut services for the poor.
Ben-Eliezer and his Labor Party said more money should go to fund social programs for all Israelis instead of supporting settlements in the West Bank and Gaza.
Shaul Mofaz, the former military chief of staff who has clashed with Ben-Eliezer over security issues, is expected to become the new defense minister, officials said.
Israelis elected Sharon prime minister because he vowed to take a hard line against Palestinian attacks, which have included dozens of suicide bombings, many directed against civilians. When he took office in February 2001, Sharon created a left-right coalition government that included Ben-Eliezer and Peres, a vocal proponent of peace talks with the Palestinians.
It was the third national unity government in Israel's 54-year history. But Israelis have expressed increasing criticism of Sharon's government, frustrated over its inability to solve serious economic problems and to guarantee protection against Palestinian suicide bombers. In addition, there is a growing rift between secular and religious Jews that the government has not addressed.
"There are a growing number of Israelis who feel enough is enough," said Uri Dromi, former spokesman for the late Prime Minister Yitzhak Rabin and a political analyst. "But what Labor is doing is too little, too late."
The vote on Israel's draft budget was initially set for noon Wednesday, but was repeatedly postponed as negotiators worked frantically to prevent Ben-Eliezer's departure from the Cabinet. Business leaders got involved too, fearing that rejection of the budget would aggravate Israel's shaky fiscal condition.
The budget passed by a vote of 67 to 45.