Levy Resigns, Posing a New Threat for Shamir : Israel: The foreign minister’s dovish stand on peace talks raised hackles within the right-wing Likud Party.

Israel’s Foreign Minister David Levy resigned Sunday night, a move that could cripple the reelection drive of Prime Minister Yitzhak Shamir, whose campaign is concurrently embroiled in a tough struggle with the insurgent Labor Party and in trying to exploit a diplomatic row with the United States for domestic gain.

Levy’s resignation is not final for nine days. It must first be presented to the Cabinet next Sunday and would take effect another 48 hours afterward--and that leaves plenty of time for maneuver.

Levy’s complaint is that Shamir let a coalition of rivals gang up and push Levy and his supporters down in the Likud Party list of Parliament candidates. Levy had demanded that he retain his Foreign Ministry post if Shamir wins the June 23 vote.

During a recent party convention, Levy was the target of competitors who resented his recent dovish stands on peace talks and also his ambitions to succeed the aging Shamir as party leader. His main foes in that quest are the equally aspiring Defense Minister Moshe Arens and Housing Minister Ariel Sharon.

Although the affair is mainly a factional dispute, Levy took his rhetoric to an apocalyptic plane, suggesting that the fate of Israel hangs in the balance. “One thing I must certainly do for the sake of Likud, for the sake of days to come, for the sake of the state: I have decided to resign from the government,” he told supporters in the coastal town of Herzliya.

He took Likud to task for attacking the United States as part of its campaign strategy. “Everyone is declaring war on America. This certainly was a fundamental mistake, all these expressions.”

Levy said he will stay in the party and remain a candidate for a seat in Parliament, although it is not clear what role he will take in the campaign.

The danger for Likud in Levy’s revolt is that the segment of the population he represents--Israelis of North African origin--might vote for a splinter party formed by Levy supporters or even transfer its support to Labor, which under Yitzhak Rabin is mounting an ambitious drive to oust Shamir.

Levy touched sensitive ethnic nerves by suggesting that he was the victim of blatantly racist insults. “In the mouths of some, I was a monkey just come out of the trees,” he told the rapt audience.

Shamir offended Levy last October by denying him the chance to lead the Israeli delegation to the opening round of Middle East peace talks in Madrid.

Levy has also been at odds with Shamir’s top assistant, Yosef Ben-Aharon. Ben-Aharon overruled compliance with a promise Levy made to Washington--that Israel would inform the United States of construction in the occupied West Bank and Gaza Strip. He made the pledge in order to secure U.S. backing for $400 million in housing loans.

The Bush Administration has so far refused to underwrite further loans on the grounds that Israel uses the backing to expand settlements on the disputed land. Bush views the settlements as an effort to sink compromise at continuing Middle East peace talks.

In recent days, the Likud campaign has fallen into a jumble of difficulties over the issue of relations with the United States--an issue Likud has indicated it will use to help its chances.

Running against Washington has proved complicated, however. On the one hand, officials openly accuse the Bush Administration of trying to sink Likud’s hopes by withholding economic aid and by leaking damaging reports about alleged Israeli arms and technology sales to China and South Africa. But Israelis will rally around the flag, Likud officials predicted.

On the other hand, a breach with Washington is a frightening prospect for many Israelis, and there was a sudden feeling that the tactic might backfire.

Hesitancy about how far to go was reflected in reaction to complaints by Health Minister Ehud Olmert, who during a visit to Washington last week claimed that Vice President Dan Quayle shunned him for a lunch date under orders of the State Department. Quayle, who was on vacation, denied any such connivance.

Shamir was reportedly upset with Olmert’s performance, finding it “childish,” a senior official said. Newspapers quoted government officials as branding Olmert “irresponsible.”

Commentators began to attack Likud’s tactics. “It was astounding to hear several Likud members presenting the U.S. as though it were our enemy, as though it sought to prepare us for a new Auschwitz,” wrote defense columnist Zeev Schiff.

The dispute over Israeli arms sales also led to a confused response by Shamir. At first, officials termed the American suspicions slanderous and accused unnamed American officials of trying to besmirch Israel’s name and appease the Arabs.

By week’s end, however, Shamir was extolling “good, friendly” relations with Washington. Defense Minister Arens hosted American military officials at an air base. “Messages from the government are mysterious,” wrote a commentator in Yediot Aharonot, Israel’s largest newspaper.

Levy, formerly one of the party’s most aggressive hawks, preached conciliation with Washington. In his speech Sunday night, he criticized the Shamir government for endangering the alliance with Washington, Israel’s most generous benefactor. “It’s true we have a disagreement with the United States. But there is no substitute for this friendship,” he argued.

Such comments will undoubtedly come in handy for Rabin. Through all the recent hubbub, he has been able to stand in the background and imply in somber tones that if elected, he will repair relations with the United States. Rabin said he will limit settlement construction and persuade Washington that any building that takes place is strictly for defensive purposes. “Relations with the United States can be rehabilitated,” Rabin assured supporters the other day.

Private comments of Likud officials suggest fear that the party may be ousted from outright or shared power for the first time in 15 years.

BACKGROUND

David Levy is a classic Israeli melting-pot story: a humble immigrant from Morocco who went from ditchdigger to foreign minister. As a Sephardi, a Jew of Middle Eastern origin, he represents Likud’s strongest constituency. The Labor Party is perceived as the base of Israel’s Ashkenazim, or European-descended Establishment. Levy, 53, emigrated to Israel in 1957 and settled in Beit Shean, an immigrant town on the Jordan River. His rise through trade union politics began with a 12-day jail term for raiding an employment office in protest of the lack of jobs.