Coalition Conundrum

Following fluctuating election results and a media circus surrounding 101 underhand coalition plots, one week after the first exit polls were released, and the shape of the future coalition government looks as everyone expected it would: A Kadima led center-left block with, says Olmert, Labor as a "Senior partner."

One could be fooled into thinking that the speculation of the past week was merely a smoke screen to allow Kadima and Labor to iron out the details of an agreement, but don't be so sure. The decisions facing all of the party leaders, Olmert particularly are far from simple. The hard truth is that these recent elections have left a lot hanging in the air.

When Prime Minister Ariel Sharon, first bolted from the Likud, his new party promised to win the hearts and minds of a third of the nation. A drop from 44 seats to the princely sum of 29 at the almost-final count leaves the acting prime minister hoping to achieve twice the amount that Sharon was able to, with half the amount of support behind him.

If he is to be a fraction of the bulldozer that Sharon was, he will need at least 61 Knesset members in favor of a unilateral withdrawal from the majority of the West Bank - for that he knows only too well, he needs Amir Peretz and his 19 or 20 Labor party colleagues. This however is where the conundrum really begins. Amir Peretz is unlike any labor leader the country has known before, a hard line socialist and brave defender of the working class - Peretz suggests an economic platform that many fear could seriously destabilize the economy.

Mr Olmert could find himself stuck between a rock and a hard place; he needs Peretz to push through the unilateral withdrawal he promised Kadima voters, but the Labor man, wants control of the economy.

Benjamin Netanyahu's economic reforms and drawing back of the welfare state have enabled the country to offer attractive incentives to western firms to invest more in Israel. Although the country has never seen more soup kitchens, ironically the Tel Aviv stock exchange has never been healthier.

So, thinking away from a Labor-Kadima alliance, many point to the religious parties and Israel's right wing factions as possible coalition bed fellows but thoe options don’t provide for such plain sailing either. Israel's Ultra Orthodox parties Shas and United Torah Judaism will be easily pacified in the short term, with a key to the Ministry of the Interior and some increased funding for their religious institutions however no one is quite sure if they can be relied upon to place their combined 18 seats behind Olmert's Disengagement plan II.

It's true that UJT sold out on Gaza in July 2005, but like Shas, their party's support base leans to the right and many in both parties could find a second and much larger unilateral withdrawal impossible to stomach. Shas Leader Eli Yishai has already made his opposition to such a pull-out clear. And so with the religious parties decisively unpredictable, all that remains is looking further to the right. Although Likud and Yisrael Beiteinu would happily sit with Olmert in a coalition block, they would rejoice in toppling the government as and when the West Bank withdrawal plan is tabled in the Knesset; so that too is a dead end.As to be expected in Israeli politics there is always another opinion, and in this case it looks to be in the shape of some shrewd negotiations on Olmert's part to convince Mr Peretz to join the good ship Kadima, onwards and forth to a further disengagement, with the proviso that the larger than life labor leader becomes a silent "senior partner," and agrees not to meddle too much with the economy. Practically speaking that would mean placating the Labor party with the education ministry and other ministries less delicate than the treasury.

Square pegs and round holes don’t usually compliment each other, but rumors suggest Mr Peretz could even land himself the job of Defense Minister even though his stated aim is to slash the defense budget. This would set Olmert up nicely to form the center left government he needs, however it depends on Peretz selling out on his 'Robin Hood policy package' for the poor after what has been an almost one track election campaign.

Tuesday's announcement that Kadima and Labor will stand together, answers some of our questions, but with both men refusing to speculate on the division of ministries, and the stock market trembling in the meantime, there is still so much about Israel's 17th Knesset hanging in the air. AR