Union leaders at Israel Military Industries (IMI) are threatening to block the privatization efforts of both the company and one of its subsidiaries.

The Histadrut labor federation has set aside millions of shekels to cover the salaries of Ashot Ashkelon workers during an expected strike.

Ashot Ashkelon, a publicly traded subsidiary of IMI, was sold in July for NIS 17 million to a consortium of former MK Avraham Burg and TR Civilian Engineering. However, the Knesset Finance Committee has not discussed the collective agreement, which the Ashot union is demanding be signed before the deal is closed.

The reason for striking, according to Histadrut representative Rami Gueta and union head Peretz Matzarfi, is the Government Companies Authority's decision to complete the deal by calling an ad hoc shareholders meeting in the coming days.

Gueta and Matzarfi have called on Finance Minister Ehud Olmert "to find an agreeable solution" to all parties "regarding transfer of ownership in Ashot Ashkelon." They have threatened to pull out all the stops if the deal is completed unilaterally, in their words.

Meanwhile, the chair of the IMI union, Yitzhak Yehuda, said yesterday that the union would not allow privatization to proceed. Yehuda was responding to a decision by the ministers committee for privatization to immediately proceed with privatizing IMI.

"The union will present documents and opinions by economists that show IMI should not be sold to private interests, but should stay in government hands," Yehuda said. "We are preparing for a fight - through legal channels, the public, and work disruptions or strike - to prevent the sale."