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Settlement Funding Dispute Threatens Israeli Government - 2002-10-28

A dispute over funding for Israeli settlements in occupied territory could bring down Israel's coalition government. Israel's moderate Labor Party has threatened to vote against the government's budget proposal, and Prime Minister Ariel Sharon says if that happens he will fire Labor Party ministers.

Prime Minister Sharon's government appeared more fragile than ever on Monday. The Labor Party central committee has given its members in parliament the go ahead to vote against the proposed budget prompting Mr. Sharon to say he will call new elections if they do. Labor is threatening to leave the government if the Treasury refuses to cut $36 million allocated to the settlements and to transfer the money to disadvantaged sectors of society.

The Labor Party leader, Defense Minister Benyamin Ben-Eliezer, met with Mr. Sharon in Jerusalem following the regular Sunday cabinet meeting. But no signs of compromise emerged from that meeting. The Labor Party and Mr. Sharon's Likud bloc are Israel's two largest political parties.

In fact, Prime Minister Sharon said on Sunday that he does not want anyone in his government who voted against his budget. The statement was taken as a clear message to his Labor Party coalition partners. Reports quoting sources close to both sides say that if a compromise cannot be reached the government could fall within seven days.

The first reading of the 2003 budget proposal could come as early as Tuesday. If Labor votes against it and Mr. Sharon dismisses the government, new elections must be held within 90 days. Elections are not scheduled until October of next year.

A public opinion poll published in an Israeli newspaper last Friday indicated Prime Minister Sharon would be re-elected if an election were held soon, but by a narrow margin, and he would have to form a new coalition to govern.