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The coalition agreement between Acting Prime Minister Ehud Olmert and Labor Party Chairman Amir Peretz prevents Labor from vetoing Yisrael Beiteinu leader Avigdor Lieberman as a partner in the government.

A senior Kadima official told Haaretz on Wednesday that, "No coalition partner can be vetoed as long as it accepts the governing principles on which Kadima and Labor will decide. Labor will not be able to rule anyone out for any other reason."

On Thursday afternoon, President Moshe Katsav will summon Olmert to ask him to form the next government, officially making the Kadima leader the prime minister-designate.

Kadima officials believe a way to include Yisrael Beiteinu in the coalition will eventually be found. They told Haaretz that Lieberman's condition of achieving international recognition of Israel's permanent borders does not contradict the convergence plan.

"Lieberman can stand on principle and demand international recognition for the convergence borders," Kadima leaders say. "It's a demand we can live with; it fits in with the imposition of Israeli sovereignty on the settlement blocs left in Israeli hands, as Yisrael Beiteinu demands."

After talks with Lieberman, the Kadima officials believe it is in the interest of both sides for him to join the coalition.

"Lieberman will improve his position," they explain, by leaving Likud and the National Union in the opposition and to the right.

And by bringing both Yisrael Beiteinu and Shas in, Olmert will obtain a flexible coalition of the left and right that will support measures identified with each side, as needed, while ensuring stability in the event that either Shas or Lieberman bolts from the government.