LIKUD, LED by Israeli prime minister-designate Binyamin Netanyahu, yesterday signed a coalition agreement with the far-right Yisrael Beiteinu party, whose controversial leader Avigdor Lieberman will become Israel’s next foreign minister.
Under the deal, Yisrael Beiteinu, Israel’s third-largest party after last month’s elections, received another four ministerial portfolios.
Likud negotiators hope to wrap up talks with four other religious and right-wing parties and present a narrow government by the end of the week representing 65 of the 120 members of the Knesset parliament.
Likud and Yisrael Beiteinu negotiators left the door open for the centrist Kadima, led by outgoing foreign minister Tzipi Livni, to join the Netanyahu-led government.
However, addressing Kadima parliamentarians after the Likud-Yisrael Beiteinu agreement was signed, Ms Livni said the recent contacts between Likud and Kadima had failed to achieve a breakthrough.
She reiterated that Mr Netanyahu refused to commit to the key Kadima demand to endorse a two-state solution to the Israeli/Palestinian conflict.
“Joining a narrow coalition government and serving as a fig leaf in order to bolster a different policy is certainly not the right thing to do,” she said.
Mr Netanyahu has criticised the US-sponsored peace talks aimed at establishing a Palestinian state.
Instead, he advocates efforts to bolster the Palestinian economy, leaving the contentious final status issues of borders, refugees, settlements and Jerusalem for a later stage.
He also favours expanding West Bank Jewish settlements.
US secretary of state Hillary Clinton, when she visited the region earlier this month, made clear Washington’s continued support for a two-state solution.
EU foreign policy chief Javier Solana warned that bilateral relations would suffer if the new Israeli government did not pursue the peace process.
“Let me say very clearly that the way the European Union will relate to a government that is not committed to a two-state solution will be very, very different,” he said.
“We will be ready to do business as usual, normally, with a government in Israel that is prepared to continue talking and working for a two-state solution. If that is not the case, the situation would be different.”
The Israeli cabinet will meet this morning and is expected to decide on a prisoner swap deal with Hamas under which the militant group will release kidnapped soldier Gilad Shalit in return for hundreds of Palestinian prisoners.
The meeting was originally scheduled for yesterday but was delayed to allow two Israeli envoys to conduct another day of talks with Egyptian mediators in Cairo who were holding parallel negotiations with Hamas representatives.
The envoys returned to Israel last night and briefed prime minister Ehud Olmert ahead of the cabinet meeting.
All sides are remaining tight-lipped on details of the emerging deal.
It is believed that Israel agreed to release some of the militants involved in deadly terrorist attacks against Israeli civilians on condition that they go into exile in Gaza or abroad rather than return to their West Bank homes.
A sign that a deal was imminent after almost three years of tortuous negotiations came with the decision last night by Israel’s top general, Lieut Gen Gabi Ashkenazi, to cut short an important visit to the US to return home.