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The seven members of the Pensioners' Party met on Thursday and decided to urge President Moshe Katsav to call on Kadima leader Acting Prime Minister Ehud Olmert to form the new government.

Meanwhile, Meretz is slated to urge Katsav to call on Labor Party Chairman MK Amir Peretz to form the next government. MK Ran Cohen, head of Meretz's coalition negotiation team, announced Thursday afternoon the party made the decision after Peretz promised Cohen he would not bring Likud, National Union or Yisrael Beiteinu into the government.

The pensioners, whose party is named Gil, also put together their coalition negotiation on Thursday. Chairman Rafi Eitan said Gil has not yet begun talks with any other parties. Number three on the Gil list, Moshe Sharoni, said they would said to first see what they were offered by Kadima before presenting their own demands.

Kadima announced Thursday that any party that doesn't urge Katsav to call on Olmert to form the new government is liable to find itself outside the new governing coalition.

Labor, Shas form 'social package'The leaders of Labor and Shas on Thursday afternoon formulated "a social package" they will present to Acting Prime Minister Ehud Olmert as part of their joint demands during coalition negotiations with the Kadima party victorious in Tuesday's election.

Meanwhile, Yisrael Beitenu Chairman Avigdor Lieberman said Thursday that he was not ruling out the possibility of backing a unilateral withdrawal from the West Bank, provided the plan met Israel's security needs.

The Labor-Shas package, put together by Peretz and Shas leader MK Eli Yishai, includes three primary points: legislation ensuring pensions for every citizen, increase in the size of old-age pension and increase of the minimum wage.

Shas emphasized, however, there was no official coordination between the two parties vis-a-vis their social platforms.

At the conclusion of his meeting with Peretz at Labor headquarters in Tel Aviv, Yishai told reporters, "We have much in common with the Labor Party, as well as between us and the Pensioners. The people of Israel spoke its part regarding social issues. We were invited for a meeting and we came to hear Labor's positions."

Yishai did not reject the possibility Shas would recommend Katsav place responsibility for forming the government on Peretz.

"Shas does not have a prefered candidate for prime minister so long as Rabbi Ovadia Yosef does not have his say," Yishai said. "At the moment, we are not dealing with this."

"We are holding talks following elections with clear results," Peretz said after his meeting with Yishai. "Israel wants a different socio-economic agenda. Shas is a proponent of peace and agrees with us on the importance of protecting human dignity. We have many joint issues."

Labor and Shas are seeking to enlist the Pensioners' Party in the social struggle. Army Radio reported figures from the Pensioners were to meet Thursday with Peretz and Yishai.

Labor's No. 2, MK Isaac Herzog said earlier Thursday that he finds it hard to imagine his party will not be part of Kadima's coalition.

Speaking on Israel Radio, Herzog said he thinks that Kadima will create "an enormous spin in an attempt to mitigate the tension, but reality is different. Israeli voters chose a social parliament, and Kadima must internalize that reality has changed."

Referring to rumors that some in Kadima are contemplating a coalition without Labor, Herzog said "in the current setup, an unnatural coalition cannot be assembled."

"Labor is a very important element in parliament. Undoubtedly, the government guidelines will include our social guidelines [if Labor joins]," Herzog said.

When asked if Labor would be willing to concede the coveted finance portfolio, Herzog hinted that Labor could demonstrate some flexibility.

"Negotiators must be held, but it's very clear the Amir Peretz' post must be particularly senior, and that Labor's status in government should reflect its true political weight," he said.

Lieberman may support West Bank pulloutLieberman said Thursday that he was not ruling out the possibility of backing a unilateral withdrawal from the West Bank, provided the plan met Israel's security needs.

"We are not ruling out any partner, it all depends on the [government's] guidelines," Lieberman told Israel Radio. "We will not be part of any government that does not handle security issues."

Olmert stressed in the run-up to Tuesday's elections that anyone who joins a Kadima-led coalition must accept the plan for unilateral withdrawal in the West Bank.

Senior Kadima official Roni Bar-On had told Israel Radio earlier Thursday that the party does not rule out a coalition formation that includes Yisrael Beitenu, which won a surprising 12 seats in the election, should the rightist party support the plan to evacuate the majority of West Bank settlements.

Lieberman emphasized that his decision on joining a government that seeks to implement a withdrawal from the West Bank would be based on the particulars of such a plan.

"What I want to know is whether we'll have permanent borders or not, how we address the demographic issue ... we have not yet seen a document [detailing these issues], we have not yet seen an offer," he said.

"At present there is no solution for Qassam or Katyusha rockets," Lieberman said, referring to the missiles fired by Palestinian militants in the Gaza Strip since Israel's withdrawal last year.

"Disengaging cannot be the aim of any government. The aim is to improve on national security and boost our international standing."

Bar-On told the radio that it would be possible for Yisrael Beitenu to be part of a Kadima government if it supported the withdrawal.

"If Lieberman accepts our diplomatic plan, I cannot see why he cannot be part of a coalition," Bar-On said.

When asked if Kadima would consider asking the Likud Party, led by Benjamin Netanyahu, to join government, Bar-On also said he did not rule out such an option.

Kadima to keep finance portfolioKadima has no intention of giving away the finance portfolio, sources close to Olmert said Wednesday, but added that the education and defense ministries could be assigned elsewhere as part of a coalition agreement.

If there was no choice, the sources said, the Defense Ministry could go to the Labor Party. The Olmert associates made no commitment about the education portfolio, which Ariel Sharon had promised Kadima official Uriel Reichman, saying, "We'll wait and see how it develops in negotiations."

"A combination of the social laws and the portfolios that the partners - especially the Labor Party - will demand pose difficulties on the way to the coalition, but everything is solvable," one of the sources said.

But senior Labor lawmaker Yuli Tamir said Thursday that Labor wanted the finance portfolio so it could carry out its plan to reverse the deep welfare cuts of recent years.

"There is no doubt that our demand for the Finance Ministry is a legitimate one and part of our world view," Tamir told Army Radio. She would not say if getting control of the ministry was a red line for Labor joining the government.

Olmert prefers a government made up of Kadima (28 seats), Labor (20), the ultra-Orthodox (13 from Shas and 6 from United Torah Judaism) and the Pensioners Party (7), the Olmert associates said. They rejected both the Likud and the far-right Yisrael Beiteinu as possible coalition partners.

Meretz has not been ruled out, but it is likely to remain outside the coalition, the sources said. "We can bring Meretz in if Shas quits on the eve of the implementation of the convergence plan," they said.

Olmert plans to spend his first year as prime minister dealing with social issues. His aides said Wednesday that Olmert doesn't need Labor or Shas to spur him on, since he had planned to contend with those issues as soon as he took office.

Shas wants interior, communications, housing and health Shas will demand the communications and housing portfolios, on top of the interior ministry, as its condition for joining the coalition.

Senior Shas officials claim they want the portfolio so the party can forge closer ties with the telecommunications industry.

Knesset sources say giving the communications portfolio to Shas would assist its campaign to restrict porn broadcasts and block access to erotic calls from cellular and regular phones. It would also enable the party to set rules regarding the distribution of televised sermons, such as the weekly sermon delivered by its spiritual leader, Rabbi Ovadia Yosef.

Besides the communications brief, Shas also wants to head the Housing and Construction Ministry, so it can restore a grant once given to newlyweds to buy apartments in certain areas. The main brief Shas wants, however, is the Interior Ministry.

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