Shamir Says Farewell, Looks Back With Pride : Israel: At final Cabinet meeting, the prime minister asserts that his ousted government was probably the best in the country’s history.

Prime Minister Yitzhak Shamir, probably the last member of the revolutionary, pre-statehood Zionist generation to lead Israel, bade farewell to power Sunday with a claim that his government, ousted by voters last month, was probably the best in the country’s history.

The feisty head of the rightist Likud Party opened his final Cabinet meeting to television cameras to make the short valediction. He will be replaced as prime minister by Yitzhak Rabin of the center-left Labor Party, who will present a new coalition Cabinet today to the Knesset, Israel’s Parliament.

Claiming advances in employment, in securing Israel against foreign attacks and in opening relations with a host of foreign countries during his last two years in power, Shamir concluded: “I seriously doubt if any past government in Israel has had such achievements.”

The defense minister, Moshe Arens, in a parting self-pat-on-the-back, claimed to have put an end to the Palestinian uprising that began 4 1/2 years ago in the occupied West Bank and Gaza Strip. Arens argued that force has prevailed and has proven wrong those who said that only political compromise could bring an end to the revolt--although much of the decline in Palestinian activity has coincided with the beginnings of Mideast peace talks.

The uncompromising comments from Shamir and Arens appeared to be aimed at easing the shock of their election defeat last month. Citizens reduced Likud’s share of the vote to less than 30%. Voters apparently did not agree with Shamir that a government that had left the country in a recession, had been reluctant to offer a long-term solution to the Palestinian conflict, had quarreled with Washington and had botched the chore of welcoming tens of thousands of Russian immigrants could be ranked among Israel’s greatest.

Shamir, 76, took over Likud’s leadership in 1983 after the surprise retirement of party icon Menachem Begin, who reeled from the controversies generated by Israel’s 1982 invasion of Lebanon. Likud plans a primary system to choose a new leader. It is not clear how long Shamir will stay on in the meantime.

Since the June 23 election, Shamir has been working half-days at the office and has told reporters that he is reaching the end of a “personal road.”

In the years leading up to Israel’s 1948 independence, the Polish-born Shamir belonged to the underground group known as Lehi, or the Stern gang, which was notorious for terrorist actions. With his passing, Israel is unlikely to be governed again by a direct representative of competing, pre-independence streams of Zionism.

In the early years of statehood, David Ben-Gurion, from the secular, socialist-leaning branch of Zionism, held unrivaled power. Begin, a rightist who belonged to the Irgun, a rightist Jewish underground movement, held power from 1977 to 1983.

And finally there was Shamir, whose seven-year stay as prime minister was second only to Ben-Gurion’s 13 years.

Both Begin and Shamir held the position that all the land from the Mediterranean Sea to the Jordan River, by historical right, belonged to Israel and that the Palestinians living there are foreign guests. Both leaders contended that only Israeli arms could fix the boundaries of the state.

Labor, heir to Ben-Gurion’s more flexible legacy, is willing to cede territory as long as Israel is assured of safe borders and peace with its neighbors.

The inability of Shamir to persuade the Israeli electorate to back his ironclad claim to what is called the Land of Israel contributed to his downfall. In comments made shortly after the election, he appeared to admit that failure, but he also said he thought the electorate would eventually accept the claim to all of the land as a “historical direction.”

Arens, in comments made that same day, suggested that the rationale was, in the end, unconvincing. “A part of the public does not see the slogan Greater Land of Israel as an adequate or sufficient response in grappling with the complexity of problems associated with the Palestinians,” said Arens, who has retired from public life.

Arens added later that Israel could give up the coastal Gaza Strip without substantially harming its territorial security.

Rabin, with a promise to accelerate peace talks, has been able to forge majority backing in the new Parliament without Likud and its right-wing allies. Most observers had expected a “hung” election, with Likud and Labor joining forces in a coalition.

Jerusalem-born Rabin, 70, in contrast to Shamir, is rooted in the generation of Labor state builders who, upon independence, took the lead in creating the permanent institutions of governing. He spent the first 20 years of Israel’s history in the army and led the country to a stunning victory in the 1967 Middle East War.

Upon retiring from the military, he was catapulted to the ambassadorship in Washington and later to the head of the Labor Party. He served as prime minister from 1974 to 1977, when he fell from power due to a banking scandal involving his family.

On Sunday, Rabin took a step toward formalizing his new term by presenting his Cabinet to the Labor Party for ritual approval. Chief among the appointees is Shimon Peres, considered a leading dove, to be foreign minister.

Rabin is keeping the defense portfolio for himself on the grounds that he will need full military coordination to make concessions of self-rule to the Palestinians.

Speaking of the election results, Rabin asserted that “the change created a new atmosphere among the public--a feeling of hope, of belief that it is possible to act differently, that it can be better.”

He repeated his pledge to “move the peace process forward, first and foremost with the Palestinians.”

Labor will rule with Meretz, a leftist party composed of many breakaway dissidents from Labor. Shas, a religious party representing Sephardic Jews, rounds out the Jewish majority for Rabin.

Turmoil in Shas over its decision to support Labor, long a secular-oriented party, could cloud the final outcome of today’s vote of confidence. Longtime spiritual mentors of Shas are bristling at the decision and pressuring members to at least abstain in today’s vote.