Shamir, Peres to Meet on Israeli Cabinet Shuffle

Prime Minister Shimon Peres and Foreign Minister Yitzhak Shamir were scheduled to meet here this morning to try to finalize agreement on a Cabinet reshuffle that would avert the threatened imminent collapse of the country’s 19-month-old coalition government.

The proposed arrangement calls for Shamir to exchange portfolios with Finance Minister Yitzhak Modai, whose resignation Peres had demanded on Monday, touching off the crisis. Modai and Shamir are both members of the rightist Likud Bloc, while Peres heads the centrist Labor Alignment--the two major parties joined in the so-called “national unity” government.

Officials said the deal, which began to emerge less than 24 hours after feuding coalition partners had appeared to rule out any compromise, could have far-reaching impact on Israel’s foreign and economic policy, particularly after next October, when Peres and Shamir are slated to “rotate” jobs under the coalition agreement.

‘Tacit Understanding’

There was still some question here this morning as to how the new arrangement would affect the rotation, although the Israeli media reported that there was a “tacit understanding” that would mean Peres would take over the Finance Ministry when Shamir “rotates” into the prime minister’s chair. Modai would remain at the Foreign Ministry.

“This is what is called a constructive ambiguity,” one government official close to Shamir explained about the situation. “Shamir, in order to sell the compromise to Likud, can say the question of what happens after rotation is open and Peres, in order to sell it to Labor, can say he will get the finance ministry,” the official said.

Peres and his Labor Alignment colleagues appeared to be counting on acquisition of the Finance Ministry after rotation. The change would require amending the coalition agreement between the two parties, which states explicitly that after rotation “Mr. Shimon Peres will be alternate prime minister and Foreign Minister.” Likud Ministers, who met in marathon session Thursday night and early today, reportedly want to avoid any firm commitment to the distribution of portfolios after October’s rotation, although their bargaining position appeared weak.

Interviewed on Israel radio this morning, Shamir said: “The Likud ministers have agreed after in-depth discussions to exchange portfolios between the Treasury and Foreign Affairs until rotation.” But he was equivocal when asked what would happen after October. Leaders of Modai’s Liberal Party faction of the Likud are also scheduled to discuss the proposed arrangement this morning. Any deal sealed by Shamir and Peres is expected to be submitted for formal approval to the full Cabinet at its regular meeting this Sunday.

Critical Remarks

Peres had demanded Modai’s resignation because of critical remarks he had made about the prime minister in two published interviews last weekend. Peres said that if Modai did not resign, he would move at this Sunday’s cabinet meeting to strip him of the finance portfolio.

On Wednesday, Modai offered to resign for the good of the country, but his Likud colleagues rejected the gesture. They said that if he were forced out of the Finance Ministry, they would all resign with him.

Shamir warned, “without the slightest doubt or hesitation,” that if Peres tried “to fire or cause the resignation of the finance minister, the Likud will not participate in this government and the government will be dismantled.”

Another Compromise

But on Thursday, Israeli television quoted him as saying that he favors the proposed Cabinet reorganization and that “the national unity government was built on compromise and this is just another one of them.”

An aide confirmed Shamir’s support for the proposed Cabinet changes and said that most other Likud ministers share his view. The main holdout, the aide said, was Housing Minister David Levy, who returned to Israel earlier Thursday after cutting short a visit to Canada.

Israel radio said that Levy fears the new arrangement could lead to more friction between the coalition partners and more frequent crises. Also, the radio suggested, Levy may want the finance portfolio for himself.

Levy Opposition Seen

Another official close to the Likud deliberations said Thursday night that Levy opposed the deal simply because “there’s nothing for him in it.”

Levy has already declared himself a contender for leadership of the Likud’s dominant Herut faction, a post Shamir now holds. Levy presumably has refrained from an open challenge at this time because of the rotation agreement, which specifically designates Shamir as the man to take over the prime minister’s post from Peres in October.

But if the coalition should collapse, political analysts here believe, Levy would move immediately to wrest the party leadership from Shamir.

Hopes for Coalition

For Shamir, whose support with the Likud rank-and-file appears to be declining, the compromise keeps alive his hopes that the coalition will survive until rotation time, giving him what may be his only chance to be prime minister again. He was prime minister from September, 1983, until formation of the national unity government a year later.

Modai made no public comment about the compromise, but he is known to have coveted the Foreign Ministry for some time. The post could be a stepping stone, for he is described as ambitious to become prime minister some day.

For Peres and his Labor Alignment, the attraction of the compromise would apparently be the elimination of what many have called the major flaw in the coalition agreement--its failure to secure one of the important economic portfolios for Labor. That meant that once Peres was rotated out of the top job into the Foreign Ministry, the rightist Likud Bloc would have almost unrestricted control over government purse strings.

This control is important in part because of ideological differences between the two parties. Peres, for example, favors a switch in emphasis in the government’s economic program from austerity to growth; Modai has argued for continued restraint.

Eye on Voters

Also, the party that controls government spending can use that power to woo voters in the event that new elections must be held.

Labor opponents of the compromise feel that Peres should use the clash over Modai to end the coalition government and thereby avoid the rotation. In this view, Labor could win enough additional support in new elections to enable it to form a narrow but more ideologically homogenous government.

A proposal to scrap the coalition and go to elections was offered Thursday night at the closing session of the Labor convention in Tel Aviv, but the delegates backed Peres and defeated it overwhelmingly.

Peres is known to be concerned that any move to break up the coalition could be seen as a move by him to renege on his word--a point on which he is particularly sensitive after having managed in the last 19 months to overcome most of what some here call his “tricky Shimon” image.

On the other hand, a senior government official noted, the proposed compromise will leave Labor without a strong voice in foreign affairs after rotation.