Sources close to the prime minister say that if MK Ami Ayalon is elected head of the Labor Party Tuesday, Ehud Olmert will offer him the Finance Ministry instead of the Defense Ministry, assuming that Ayalon will want the treasury for his ally Avishay Braverman. If Ayalon accepts his proposal, Olmert is planning to give the defense portfolio back to Shaul Mofaz.

Olmert's people said that if Ehud Barak becomes Labor chairman, the treasury will not be offered to Labor at all. "We won't make a laughingstock of ourselves. After all, there's not the slightest chance that Barak will prefer the treasury over defense."

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However sources in Labor said Sunday that Ayalon would not pass on the defense portfolio. Ayalon's associates said they hoped Olmert would agree to give Labor control of both the finance and the defense ministries. But Olmert's bureau said Sunday that if the finance ministry is on the table, it will be in place of defense.

Olmert is planning to invite Labor's newly elected chairman to meet with him this weekend to discuss the security situation, before his departure the U.S. While Olmert is abroad he will leave the coalition talks between Labor and Kadima in the hands of cabinet secretary Israel Maimon and his deputy chief of staff, Ovad Yehezkiel. MK Haim Ramon will apparently be taking an unofficial part in the talks.

Ramon is expected to be part of Olmert's new cabinet, although it is unclear which of two portfolios he will be given: finance, or minister in the Prime Minister's Office with responsibility for negotiations with the Palestinians.

If Barak is elected, he will invite Ayalon to join the cabinet with him. Sources in Labor said SUnday that if Barak and Ayalon reach an agreement on cooperation, Barak would offer Ayalon the second-most senior portfolio, education, which is now held by Yuli Tamir, a Peretz supporter.

Sources in Labor said Sunday that in coalition talks between Olmert and Barak, the latter would demand a stop to the "wild behavior of the justice minister toward the justice system," through the establishment of a shared Labor-Kadima mechanism intended to prevent the deterioration of the justice system.

The Barak campaign noted that it had gained the support of MK Sheli Yachimovich, who supported Peretz in the first round, and who is a symbol of the social front. In a letter to supporters, Yachimovich wrote "both Ayalon and Barak have a socioeconomic world view far from mine. But the political arena is a hard place and a year is not enough experience to lead a party. I am aware of all Barak's mistakes, but between the two of them I choose the one who will be best for the state and the party."

In the face of Barak's continued reiteration of the message that only he can beat Likud chairman Benjamin Netanyahu in a general election, Ayalon's campaign quotes polls that suggest that he is the man who can bring Labor the highest number of Knesset seats. Sources in the Ayalon campaign said Peretz was campaigning very hard for Ayalon, "beyond what we had thought."

Over the weekend and Sunday, Culture and Sports Minister Ghaleb Majadele campaigned with Ayalon in the Arab sector, in a effort to boost Ayalon's poor showing in the first round among this population.