Israel's two main political parties have agreed to hold early elections next year. A vote dissolving parliament is expected next Monday.

Israeli Prime Minister Ariel Sharon (file photo)

Prime Minister Ariel Sharon agreed on Thursday to hold early elections. He immediately began meeting with different party leaders to determine the exact date for the vote, which will be held in late February or early March.

Elections in Israel were scheduled to be held by November of next year. However the date was moved up after labor union leader Amir Peretz defeated longtime Labor Party leader Shimon Peres last week in a leadership contest to head the Labor Party.

Amir Peretz

Immediately following the political upset, Mr. Peretz said he would pull the Labor Party out of Prime Minister Sharon's coalition government, and force new elections. Akiva Aldar, a political columnist for the Haaretz newspaper, says Amir Peretz has completely changed the political landscape in Israel.

"I think that Amir Peretz is benefiting from the fact that since he was elected chairman of the Labor Party it seems that he takes over control and he dictates the political agenda in Israel. It seems that this historic alliance between Likud and Labor, maybe it is not history yet, but it is far away from where it was just a few weeks ago," he said.

Under the current coalition between the Labor and Likud parties, Israel has been able to disengage from the Gaza Strip and agree to a U.S. proposal this week which opens Gaza's international border with Egypt, and allows Palestinians movement between the West Bank and Gaza Strip. Political analysts say Israel's coming election, and legislative elections in the Palestinian territories scheduled to take place in January, will likely postpone any further talks between Israelis and Palestinians for the time being.

Akiva Aldar of Haaretz newspaper says Prime Minister Sharon might also benefit from a newly invigorated Labor Party.

"What it does to the Likud is that this threat [from Peretz] puts them in a position where they want to feel more cozy and stick together, against this external threat. This is what Sharon is doing, using Peretz as a kind of a club coming from outside saying let us put our differences behind us," he said.

Ariel Sharon recently faced down a challenge to his leadership within the Likud Party from dissidents angry over his disengagement from Gaza. There has been speculation he would leave Likud to form a new party in a bid to win reelection as prime minister on his own. For his part, Amir Peretz says he supports the peace process with Palestinians but his major concern is to restore social welfare programs and reverse privatization efforts taken recently.