As Prime Minister Ehud Olmert and Defense Minister Amir Peretz met Wednesday afternoon to finalize the terms which would keep the Labor Party in the government, a mere five of the Labor Party's 19 legislators signed a letter calling on the faction to oppose the inclusion of Avigdor Lieberman's Yisrael Beiteinu into the government coalition.

Only MKs Avishai Braverman, Danny Yatom, Nadia Hilou, Shelly Yachimovich and Raleb Majedele signed the letter, despite expectations that senior Labor officials would have joined in the party's declaration of opposition.

"Sitting together with Lieberman [in government] would legitimize a perception backing the expulsion of Arabs and would legitimize Lieberman as a leader; it would harbor a Netanyahu-style economic policy and a diplomatic deadlock that could lead to a military escalation," the letter, sent to Labor's central committee members, said.

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The Laborites who initiated the move expected senior Labor officials including party secretary Eitan Cabel, and Culture and Sports Minister Ophir Pines-Paz, who previously had been vocal in his rejection of Yisrael Beitenu's inclusion in the coalition, as well as MK Matan Vilnai.

In his meeting with Olmert Wednesday, Labor chairman Peretz promised to advise the Labor Central Committee to approve Lieberman's inclusion in the government.

In return, Olmert agreed to grant Labor two new cabinet positions - including the position of welfare minister, unless United Torah Judaism joins the coalition and takes on the position, as it was previously promised. Also, MK Ephraim Sneh will be appointed deputy defense minister, and Peretz will take on leadership of the new ministerial committee on non-Jewish affairs.

In a meeting on Tuesday night, Peretz agreed in principal to the addition of Yisrael Beiteinu, in exchange for guarantees of improved benefits for the Arab sector.

Party members from the Arab sector had threatened on Tuesday to quit the party if it voted in favor of including Lieberman's party into the coalition.

Balad head slams Peretz
Balad Chairman MK Azmi Bishara on Wednesday slammed Peretz for using the Arab rights issue as justification to remain in the government despite the addition of the rightist Yisrael Beitenu party and its leader Avigdor Lieberman.

Bishara criticized the reports of the creation of a new committee for Arab affairs, which Olmert offered Peretz as means to dissuade him from leaving the coalition.

"It is more than absurd that Arab citizens serve as the cover for adding Lieberman to the government," said Bishara. "[Lieberman] poses a direct threat on their status as citizens."

Bishara was referring to Lieberman's proposal to transfer certain Arab communities to Palestinian Authority control in exchange for the retention of West Bank settlement blocs.

"Instead of trying to save himself and his party, [Peretz] tries to legitimize Lieberman's entry into the government by heading a ministerial committee on Arab affairs, as though what the Arabs need is a ministerial committee and what Labor needs is Peretz as its chairman," added Bishara.

The Labor Party Central Committee is to meet Sunday to decide whether Labor should resign from the government, following the addition of Yisrael Beiteinu to the coalition.

Beilin: Meretz would welcome Labor rebels to opposition
Meretz chairman Yossi Beilin on Wednesday said he would be happy to join forces with Labor MKs who felt disgruntled over Peretz' decision to remain in the government.

"Certainly there would be room for collaboration between Meretz and such a group [of Labor MKs] to form a more significant opposition [in the Knesset]," Beilin told Army Radio.

Peretz had met with Beilin prior to his initial meeting with Olmert on Tuesday, in order to examine the possibility of forming a unified front on Lieberman.

The meeting took place, however, after Olmert and Lieberman had already signed an agreement finalizing Yisrael Beiteinu's inclusion, pending a Knesset vote.

Beilin said however his party and Labor would not be able to join forces in an attempt to bar Lieberman from joining the government.

The Meretz chairman said he and Peretz "have reached the conclusion this cannot happen because Labor is sitting in the government despite [the addition of] Lieberman, and this is an awful thing."

Beilin said that there had been preliminary talks regarding the inclusion of Meretz in the government, prior to the agreement with Yisrael Beiteinu, but they produced no results.

Olmert-Peretz meeting 'tense'
Although sources close to Olmeret and Peretz described the atmosphere as "positive," the meeting was tense. Peretz presented demands to Olmert and said he wanted to come to his party's central committee with an achievement that would lessen opposition to Lieberman.

Immediately after the meeting with Olmert, Peretz consulted with his close associates, and with Minister Ophir Pines-Paz, who is leading the opposition to Lieberman together with MK Shelly Yachimovitch.

During the meeting with Pines-Paz, which lasted over an hour, Peretz said he had not yet decided what he would recommend to his colleagues.

Sources close to Olmert are concerned about the pending central committee vote. Although the committee is not expected to instruct Labor's ministers to resign, and they themselves are not interested in doing so, the concern is that last-minute maneuvers of those supporting resignation will lead to a turnaround.

Peretz doesn't want to end coalition partnership
Tensions have been rising over the past two days in Labor - once it became known that the agreement between Yisrael Beiteinu and Kadima had been finalized - between opponents to Lieberman's entry to the cabinet, spearheaded by Pines-Paz and Eitan Cabel, and those in favor, led by ministers Binyamin Ben-Eliezer and Shalom Simhon.

From remarks made at a meeting of representatives of the kibbutzim and moshavim, it could be understood that Peretz does not want to break up the partnership with Olmert. "Although there is a huge chasm between us and Yisrael Beiteinu, we have other considerations," Peretz said. "No one should guess for a moment what recommendation I'm going to make to the central committee. But the day I come and say I make my recommendation, everyone can be sure I have examined the issue from every possible angle."

Pines-Paz said at the same meeting: "I ask myself what Yitzhak Rabin would have said now about the Labor Party."

Agriculture Minister Shalom Simhon arrived at the meeting following a personal meeting with Olmert and said: "I looked him in the eye and I have the impression that the things the prime minister told me were said out of deep commitment to the government guidelines and the partnership with Labor. He told me he was very interested in the party remaining in the coalition because he very much appreciated Peretz's leadership..."

Peretz had been trying over the past few days to expand the coalition by bringing in Meretz and United Torah Judaism (UTJ). But a meeting with Yaakov Litzman of the UTJ led nowhere.

Peretz's Tuesday meetings seemed to show he hadn't given in easily to Lieberman's joining the coalition.

Tuesday afternoon Peretz and Lieberman were seen talking in the Knesset. The meeting appeared to be a chance one, but in fact it had been planned, and was intended to soften the atmosphere and to alleviate some of the tension between the two.