The Pensioners' Party threatened Thursday to vote against the addition of Yisrael Beiteinu to the coalition, unless promises made to the party regarding the 2007 state budget are implemented.

In a statement issued Thursday, the party threatened to vote against the new coalition in both the cabinet and Knesset votes.

The coalition crises broke out following a meeting between Finance Minister Avraham Hirchson and Pensioners' Party Chairman Rafi Eitan, Health Minister Yaacov Ben Izri and Pensioners' faction whip Moshe Sharoni.

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During the course of the meeting, it became clear that the cutbacks to pensioners' stipends would not be canceled in the 2007 state budget, despite the fact that the cancellation is included in the coalition agreement between the Pensioners' Party and Kadima.

The party submitted a list of demands to Prime Minister Ehud Olmert, including control of the Social Welfare Ministry, the cancellation of cuts in government stipends for pensioners, and an increase in the Health Ministry budget in areas that affect pensioners.

The threat marks a drastic change in the party's position, which had previously supported the addition of Yisrael Beiteinu and its chairman Avigdor Lieberman to the government.

The step comes due to a feeling within the Pensioners' Party that the prime minister is ignoring the party and taking it for granted, despite the fact that the party's ministers have supported the prime minister in crucial votes, such as the vote on Lieberman's proposal to change the system of government in Israel.

This is despite the fact that the Labor Party, which has been a more problematic coalition partner for Kadima, has received far more attention from the prime minister, and received a series of concessions in exchange for its support for the addition of Lieberman to the government.

Eitan, Ben Izri, and Sharoni met Thursday and decided to take a hard-line in their approach towards the prime minister.

Among other things, the three decided to cancel their meeting with Olmert's representatives, scheduled for Monday, and to meet instead with Labor Chairman Amir Peretz and Shas Chairman Eli Yishai in an attempt to form a united front on social issues in the 2007 state budget.

"The days in which Olmert was able to get our support with a phone call are over," said Pensioners' Party sources.

The Pensioner's Party has only two cabinet ministers and seven MKs, and therefore the party will be unable to prevent Lieberman from joining the government, given Labor ministers' decision Wednesday to vote in favor.

Peretz: New coalition could last up to one year if stalemate ends
Labor leader and Defense Minister Amir Peretz believes the coalition in its new format could perhaps last "even a year," but only if there's a political process to end the stalemate in which he is embroiled, he said in private conversations Wednesday.

If, as expected, Labor's central committee approves on Sunday staying in a coalition with Yisrael Beiteinu, the cabinet will ratify Avigdor Lieberman's inclusion in the government the following day.

Labor ministers decided in a meeting late Wednesday to support the inclusion of Lieberman into the coalition. The only minister to oppose the decision was Sports and Culture Minister Ophir Pines Paz.

Peretz convened his party's ministers in Tel Aviv earlier Wednesday and briefed them on the agreement he had struck with Prime Minister Ehud Olmert. He told the ministers that if no political process was initiated, the new government could not survive. It was also possible, he said, that even with a political process, Lieberman could disagree with him and resign from the coalition.

Peretz claimed that the mere presence of Lieberman in the coalition would help the Labor party sharpen its stance, and would give it "many times more" the motivation to stand its own and fulfill its promise to voters.

The prime minister and Peretz met at noon Wednesday and completed the negotiations that led Peretz to support Lieberman's joining the government, despite his declarations to the contrary. Olmert told Peretz his next step is to add United Torah Judaism to the coalition within the month, as he wishes to broaden the coalition even further.

Peretz came to Olmert's bureau at noon Wednesday. Cabinet Secretary Yisrael Maimon also attended the meeting. As agreed in advance, Peretz said he would recommend to his party's central committee that it approve Labor's remaining in the government and coalition. In exchange, Labor's Knesset faction chairman, MK Ephraim Sneh, would be appointed deputy defense minister, and Peretz would head a ministerial committee for the non-Jewish communities.

After the meeting, Peretz said he and Olmert had agreed on the need to lift the freeze on pensioners and child allowances and direct funds and benefits to the Arab community.

Peretz also said it was imperative to jumpstart the peace process, and insisted on the need to deal with the illegal outposts in the territories.

The statement issued after the meeting said the government would act according to its guidelines and the coalition agreements, and that Yisrael Beiteinu's inclusion would not change or infringe on them.

It was also agreed that Peretz's powers would not be undermined and that Labor would maintain its status as senior coalition partner.

If United Torah Judaism does not enter the coalition within a reasonable period, the Social Affairs portfolio will be given to a Labor minister in exchange for another portfolio, the statement said.

Labor members who object to Lieberman's joining the government Wednesday blasted Peretz's caving in to the move in exchange for what they called "meager" achievements. Labor's Arab MKs vowed to "settle accounts" with Peretz in the next Labor primaries, though many said they had no intention of leaving the party, despite earlier threats.

A number of Kadima MKs were also angry. MKs who had been promised a deputy minister position demanded that Olmert keep his promise. Olmert, however, does not intend to appoint additional deputy ministers and his aides said Sneh would be the only one.

MK Danny Yatom, one of the leading opponents of the partnership with Lieberman, said Wednesday that "the abyss between Labor and Yisrael Beiteinu is now bridged by a deputy minister's position."

Only MKs Avishai Braverman, Yatom, Nadia Hilou, Shelly Yachimovich and Raleb Majedele signed the letter, despite expectations that senior Labor officials were set to join the party's declaration of opposition.

"Sitting together with Lieberman [in government] would legitimize a perception that supports 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.