Olmert won't exclude any party in Israel coalition

Ehud Olmert

JERUSALEM - Interim Israeli Prime Minister Ehud Olmert said in comments published last night he would not rule out including right-wing parties in a coalition government he is building after winning elections.

Negotiations to form a coalition headed by Olmert's centrist Kadima are expected to intensify next week after the party's smaller than expected win in the parliamentary election.

Kadima secured just 28 seats in the 120-member parliament, meaning it will have to align with at least three other parties.

The leading candidates were the centre-left Labour Party, the new Pensioners Party and one representing ultra-Orthodox Jews. These parties are seen as most likely to agree to his plan for withdrawals in the occupied West Bank.

But in an interview with Maariv newspaper, Olmert raised the possibility of bringing the right-wing Likud, which fared poorly in the elections, or Yisrael Beitenu into the government.

Yisrael Beitenu is an ultranationalist party formed by Jewish immigrants from the former Soviet Union and headed by Moldovan-born Avigdor Lieberman.

"There is no reason not to talk to the Likud. I will also call on the Likud to hold negotiations. Nobody is ruled out," Olmert said.

Olmert has said all partners would have to accept his plans for setting final borders, ideally through talks with the Palestinians, or failing that by unilaterally dismantling many settlements in the West Bank while bolstering larger blocs.

"If Lieberman accepts our diplomatic plan, I don't see why he can't be in the coalition," senior Kadima official Roni Bar-On told Israel Radio.

Palestinians, who seek to establish a state on West Bank and Gaza Strip land occupied by Israel in the 1967 Middle East war, condemn Olmert's unilateral plan and say it would deprive them of a viable state.

Israeli President Moshe Katsav is expected next week to officially ask Kadima to form the next government, setting in motion formal coalition talks likely to last weeks.

But already the main point of contention has shaped up as the Finance Ministry, which Olmert has insisted Kadima control.

Investors have reacted nervously to the prospect that Labour, which advocates raising the minimum wage and increasing welfare spending, may control the key economic portfolio.

Stocks fell yesterday as economists speculated demands from Labour and other partners could cost as much as 4 billion shekels ($1.4 billion) in social spending.

"As long as it depends on the Labour Party, Amir Peretz will be finance minister. He will be a good finance minister and we will do our utmost to receive as many ministries are possible," Eitan Cable, a senior Labour Party official, told Army radio.

Olmert told Maariv that Kadima's narrower than predicted victory caused "some discomfort" but would not hinder the party from forming a stable government.

"We can form a coalition very quickly but this may undermine its stability ... or we can take our time and design a coalition government that will be stable and stay the course for four years," Eyal Arad, an adviser to Olmert, told Israel television.

- REUTERS