Israel's Ruling Party

...Any policy that tolerates the man who started and directs the terror war that has killed 650 Israelis and injured 8,000 more, Netanyahu will insist, is a policy that tolerates terror...

...He will argue that his incrementalist approach to fighting the war against Palestinian terrorism gave Israel the space it needed to strengthen its relationship with the United States while simultaneously striking devastating blows against Palestinian leader Yasser Arafat and his terrorist allies...

...But with the ship now righted, shouldn't it start sailing...

...In a week, Netanyahu went from 10 points behind Sharon to 1 point ahead, according to an internal party poll...

...Meanwhile, Sharon remains prime minister, which gives him an advantage in the Likud primary, although the latest polls show the two candidates neck and neck...

...BY TOM ROSE Jerusalem THE COLLAPSE OF ARIEL Sharon's national unity government last week revivified Henry Kissinger's famous observation that israel has no national or foreign policy, only domestic politics...

...Without realizing it, Sharon had given Netanyahu the very platform he needed to showcase his mastery of Israeli media and politics...

...A third of Israel's children live below the poverty line...

...Capital flight has assumed South American proportions...

...Interest rates are 14 percent and rising, depriving nearly every business of even short-term credit...

...Netanyahu's challenge here will be harder than it looks...

...What Sharon seemed to forget was that this party's leader was Avigdor Lieberman, a Netanyahu protege and one of Israel's shrewdest political minds...

...With opinion polls showing that new elections could double the size of Lieberman's party, his interest lay in hastening the very election Sharon sought to avoid...

...Tom Rose is publisher of the Jerusalem Post...

...Unions are too strong and must be weakened...

...Why, Sharon will ask, would Israelis want to change horses in midstream, handing the reins of power to a man whose previous tenure as prime minister had led to Likud's worst defeat since it first came to power in 1977...

...Sharon will respond by reminding voters that it was Netanyahu who ceded 13 percent of the West Bank and the ancient Jewish city of Hebron to Arafat at the Clinton-sponsored Wye River Plantation talks in 1998...

...Thus, just 12 hours after the prime minister appeared with party allies on Sunday, November 3, proclaiming his determination to prevent early elections at any cost, he was forced to make the humiliating journey to the president's residence to formally request the dissolution of parliament...

...Sharon's aides had convinced themselves and much of Israel's gullible media that this maneuver would end the Netanyahu threat once and for all: No matter how Netanyahu responded, Sharon would come out the winner...

...Investment capital is nonexistent...

...For two years, Sharon has employed every tactic to fight Palestinian terror except the one that Netanyahu and most Israelis believe will work: Exile Arafat, dismantle his terrorist militias, and depose his Palestinian Authority...

...Netanyahu will attempt to break this pattern by arguing that Israel has largely itself to blame for its sorry economic state...

...All he needed to do to establish a new, narrower coalition government was get the leader of the nationalist, right-wing "Israel is our Home" party to sign up...

...Nearly half depend on some measure of state assistance...

...it came apart because maintaining it ceased to serve the political interests of its key figures...

...Tourism, once Israel's leading foreign exchange earner, is down 80 percent...

...Since more than 80 percent of Israelis now identify themselves as either "centrist or conservative," the winner of the Likud party primary is likely to command the largest conservative majority in the country's history...

...And the duel resulted in a surge of Netanyahu support among Likud primary voters...

...Israel faces economic collapse...

...They need solutions, and he is the candidate who can provide them...

...Both Likud and Labor are slated to hold leadership primaries in the next month...

...Once again, petty political causes have brought down an israeli government, with potentially far-reaching consequences...

...While familiar in the United States, this refrain could electrify those Israeli voters it doesn't appall...

...Its GDP has fallen for three consecutive years...

...Sharon will remind voters that he inherited a nation in disarray and stabilized it with remarkable dispatch...

...Sharon will have to tread carefully, however, since he himself, as Netanyahu's foreign minister, urged even more far-reaching concessions at Wye...

...Netanyahu will readily concede that Sharon did right a sinking ship, and for that he deserves the thanks of every Israeli...

...Meanwhile, the leader of the left-wing Labor party—Sharon's defense minister, Benjamin Ben-Eliezer—found himself confronting the same party dynamics but with far worse prospects...

...Twelve percent of Israelis are out of work, another 20 percent are underemployed, and the rest have seen an average income decline of 25 percent...

...With his own party's leadership attacking him in the press and from the Knesset podium, Ben-Eliezer had no choice, he bitterly claims, but to leave the government...

...Taxes are too high and must be cut...

...He would proudly serve as Israel's foreign minister, Netanyahu said: All Sharon had to do was agree to early elections...

...There were four such motions in the first three days, the most preposterous of which, submitted by the Labor party, condemned the economic record of the government Labor had jointly controlled until just two days before...

...While the cocktail of misery described above would spell certain defeat for any incumbent in the United States or Europe, economic failure has long been accepted by Israelis as the "price" of living under permanent siege...

...Just as bad economic policies have put it through the economic ringer, good ones can restore growth...

...This will be hard for Netanyahu to refute, despite the irony of its coming from the man who tried so hard to avoid elections in the first place...

...Terrorism isn't all Netanyahu will talk about...

...But if he accepted and became foreign minister in a Sharon-led government, he would become subordinate to the prime minister just weeks before a party leadership election...

...Should the skipper be a visibly tired 75-year-old man who, after two years in office, has articulated no vision for Israel's future and offered no solution to its mounting political, economic, and social problems...

...If Netanyahu turned down the post, he would reveal himself as the self-interested politician Sharon had long tried to convince the party faithful he was...

...The combined market capitalization of Israel's hi-tech sector, which once accounted for nearly 30 percent of GDP, has declined 90 percent...

...Israeli law requires parliamentary elections to be held no later than 90 days after the establishment of a caretaker government—in this instance, no later than February 4, and probably in late January...

...Sharon's hopes of establishing a narrow government were dealt a fatal blow when his effort to undermine Netanyahu by offering him the position of foreign minister blew up in his face...

...In the Labor party primary slated for November 19, Ben-Eliezer faced not one, but two challengers, both of whom had surged far ahead of him in the polls...

...As the most popular prime minister in years, Sharon will try to convince Likud voters that the party stands to win more seats in a general election if he leads the ticket than if Netanyahu does...

...At first, Sharon seemed to dismiss the crisis...

...Labor, the party responsible for creating and implementing the Oslo peace process, is largely blamed for Oslo's disastrous consequences...

...Fearing for their political lives, Labor moderates have fled the party in droves, leaving hard-leftists in firm control, and as a result, Labor is facing electoral collapse...

...In any case, whoever leads Likud, the party appears to be on the verge of winning a monumental electoral victory that could presage a new era in Israeli politics...

...Once Ben-Eliezer pulled Labor out of the government, Sharon was left with only 55 votes in the 120 seat Knesset, less than the majority he needed to survive the no-confidence motions that started pouring in...

...Exploiting this popularity is clearly Sharon's best chance to remain his party's leader and thus the country's prime minister...

...The government of national unity —uniting the two major parties, Likud and Labor—did not dissolve over policy disputes, though the coalition partners are ideological antagonists...

...Netanyahu will try to convince Likud voters that Israelis need more than unity to solve their problems...

...With polls showing Likud poised to win a massive parliamentary victory, how could the party's leader possibly object...

...While both Likud and Labor party activists viewed the national unity government as an impediment to their respective agendas, a huge majority of Israelis supported it because it seemed to foster domestic peace in a fractious nation...

...Afraid that he might not be able to withstand a challenge from former prime minister Benjamin Netanyahu for the leadership of the conservative Likud party, Sharon saw the preservation of the unity government as his only means of avoiding early retirement at the hands of a man he detests...

...Government is too large and must be shrunk...