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Last update - 08:10 14/10/2008
Labor Party, Kadima sign coalition agreement
By Mazal Mualem, Haaretz Correspondent
Tags: Kadima, Labor, Tzipi Livni 

A coalition agreement to bring Labor into a cabinet headed by prime minister-designate Tzipi Livni was signed Monday after over 18 hours of talks and two days after a draft agreement was formulated between Labor Party chairman Defense Minister Ehud Barak and Livni.

Barak approved most of the clauses but asked for changes in clauses involving limiting initiatives by Justice Minister Daniel Friedmann.

However, Labor was said to be concerned that Shas will not join the Livni government, and Labor would thus find itself closeted in a narrow government and unable to function.
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As of Sunday, Barak had received no clear signal on Shas' intentions. Barak's associates said they were considering demanding that the coalition agreement with Kadima be conditioned on the formation of a broad government.

Barak said on Sunday that the most efficient way of dealing with the challenges ahead was "a government that was not a minority government in a partnership that was not short-term."

Livni met privately on Sunday with Shas chairman, Industry, Trade and Labor Minister Eli Yishai, to seek a solution to Shas' demand that practical negotiations over Jerusalem not be on the agenda with the Palestinian Authority. There was no progress over Shas' demands regarding increased child allowances.

Speaking on Sunday to Kadima's central council, she hinted that Shas would be harmed by a refusal to join the coalition, saying, "the people of Israel will not forgive those who try to destroy unity and lead to elections."

The Labor-Kadima draft agreement will be appended to the first coalition agreement Labor and Kadima signed after the 2006 elections.

Barak is to be given the title of deputy prime minister, and considered senior among the ministers. He will have to give up his demand to lead talks with Syria and make do with a clause granting Labor full partnership on both the Syrian and the Palestinian tracks, and a senior role in the negotiations.

All initiatives proposed in the wider cabinet and the inner cabinet are to be agreed on ahead of time with Labor, although by law Livni, as prime minister, can raise proposals at cabinet meetings.

Labor will have veto power over legislation proposals involving the justice system, but will not receive the additional representative it wanted on the Judicial Appointments Committee.

Barak also backed down on his demand to exceed the budgetary framework, although his demand to increase allowances to students and seniors will be met, and university tuition will be frozen.

On Sunday, the Likud rejected Livni's call on Likud chairman MK Benjamin Netanyahu to join the government. Netanyahu said Livni was "bypassing the will of the people" by avoiding elections.

Aides: Livni ready to steer Israel through financial crisis
Livni has a detailed plan for leading Israel through the global economic slowdown, but it would be irresponsible for her to make public announcements on the matter until she puts together a coalition over the next two weeks, her aides said on Sunday.

Livni has drawn fierce criticism for failing to provide details of her economic vision while she is negotiating with possible coalition partners. So far, the foreign minister and Kadima chairwoman has kept to general statements, saying it's important to keep the economy on an even keel and refrain from exceeding the budget - the same message advocated by Finance Minister Roni Bar-On, with whom Livni is in daily contact.

Bar-On has made it clear he will not increase next year's budget, and has hinted he will quit if Livni orders him to expand it. Livni, who is also in daily contact with Bank of Israel Governor Stanley Fischer, has so far not challenged Bar-On on the budget.

The finance minister broke his silence on the economic crisis last Friday when he appeared on a number of television stations, projecting an image of control and stability. He told Israelis the banks are not in trouble and the economy is in better shape than most other economies around the world because Israel kept to a strict budgetary discipline.

As outgoing prime minister, Ehud Olmert is not particularly involved in the repercussions of the global economic crisis. "There is no reason to worry," he told the cabinet. "The Israeli economy can overcome the possible effects of the crisis."

His advisers are saying Olmert played a major role in keeping the Israeli economy from crashing, since during his tenure as prime minister he insisted on passing the budget on time and sticking to the budget limits. Olmert says it is still too early for the government to intervene in the crisis.

Meanwhile, Labor Party chairman Ehud Barak is using the crisis to help him back down somewhat and make his economic demands in the coalition negotiations somewhat more flexible.

He led the vote against the budget in the cabinet during the summer, and has demanded increasing the 2009 budget for welfare and defense spending.

He also called last week for a state safety net for pension funds.

Yishai has been the other major player in coalition negotiations in the past few weeks. Despite the economic crisis, Yishai has continued to demand "family grants," his alternative to increasing child allowances. Yishai says exceeding the budget and increasing social spending is essential if the poor are to be spared disaster.

Yishai also proposed broadening the banks' capital base and guaranteeing the public's deposits as part of an emergency plan he presented Sunday that was meant to keep Israel from being hit by the economic crisis.

Related articles:
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  • ANALYSIS / A partnership based on mutual suspicion
  • Laborites: Economic crisis will spur Livni, Barak to form gov't
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      1.   As Usual Barak Sells Israel Out For His Own Ambitions 07:10  |  Shepherd 13/10/08
      2.   Shepherd #1... probably a case of sour-grapes... 09:46  |  Esther 13/10/08
      3.   Nu, let us already say "mazeltov".... 09:53  |  Esther 13/10/08
      4.   # The clean Likud? 10:40  |  A.M. 13/10/08
      5.   @Ether 11:29  |  Ralph 13/10/08
      6.   Ralph #5 12:23  |  Esther 13/10/08
      7.   Esther asking for a clean house is not a vote for likud 18:10  |  Simon 13/10/08
      8.   #3 - what is Livni`s chosen field? A black day for Israel! 18:26  |  redmike 13/10/08
      9.   Esther # 2 No Sour Grapes 18:27  |  Shepherd 13/10/08
      10.   Congratulation & GoodLuck in following with 18:51  |  Simon Mohammed 13/10/08
      11.   # 3 Sorry Esther, but I tend to disagree...... 19:34  |  Swiss (Dino) 13/10/08
      12.   Livni is being unethical 19:50  |  Josh 13/10/08
      13.   Esther, Swiss Dino again! 20:14  |  Goldenberg 13/10/08
      14.   dumb remark 21:23  |  losman 13/10/08
      15.   A government not of the people and not by the people 21:35  |  Arie 13/10/08
      16.   # 13 Goldenberg, I hope you don`t take it amiss..... 21:45  |  Swiss (Dino) 13/10/08
      17.   Nothing is clear. Just plain wriggling.! 23:20  |  Stephen. 13/10/08
      18.   the people of Israel will not forgive KADIMA 23:22  |  Avi 13/10/08
      19.   To Josh: Elections now? 00:21  |  Otto Rand 14/10/08
      20.   Barak will be DE FACTO prime minister 01:55  |  Sima 14/10/08
      21.   BARAK;YOU HAVE JUST SOLD OUT ISRAEL FOR POWER AND PRESTIGE; I 02:31  |  glenna 14/10/08
      22.   just to reiterate the situation, Likud, Shas no partners to peace 06:22  |  Smadar 14/10/08
      23.   In a democracy, the Supreme Court?s authorities should be limited 07:46  |  Jean Van Daem 14/10/08
      24.   #23 - correct and note all of Olmert`s recent comments 08:45  |  redmike 14/10/08
      25.   Yosh 10:03  |  A.M. 14/10/08
      26.   Sima 10:09  |  A.M. 14/10/08
      27.   Shepherd #9 10:59  |  Esther 14/10/08
      28.   Swiss #11 11:09  |  Esther 14/10/08
      29.   To Sherpherd # 1 - Good on you for some home-truths 11:48  |  Dolly 14/10/08
      30.   To # 4 A.M. - The Cleaner Kadima ...???with its 13:19  |  Dagma 14/10/08
      31.   To Otto Rand -- You are incorrect about the election schedule 13:22  |  Josh 14/10/08
      32.   #2 Ester Your comments to #1 Shepherd are all wrong 15:03  |  Dish It Out 14/10/08
      33.   will barak fiddle while israel burns ? 15:11  |  victor hardman 14/10/08
      34.   pocohontas and the fly in the ointment 15:14  |  victor hardman 14/10/08
      35.   To Josh @ 31 - This CONFLICT...... 19:08  |  Dagma 14/10/08
      36.   Esther probably works for Kadima 19:15  |  Kipperraes 14/10/08
      37.   Livni should help Israeli Arabs positions in government! Even ... 20:08  |  Ahmad 14/10/08
      38.   Laurel and Hardy`s next film 20:13  |  Ilan 14/10/08
      39.   And someone STILL believes Israel is a DEMOCRACY?!! 20:27  |  Yaakov K. 14/10/08
      40.   Pathetic backroom deal puts the lie to Israel`s "democracy" 22:30  |  Yaakov K. 14/10/08
      41.   EVERYONE THAT SIGNED ON WITH THEIR PIECE PARTNER LIVNI WILL LIVE 03:49  |  glenna 15/10/08
      42.   Kadima equals defeatist mentality and inept leftism 03:52  |  Yossi 19/10/08
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