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The gods must have cursed Amir Peretz with hubris. He is convinced that he won the elections, despite the 19 Knesset seats he received, and therefore, he should be the one forming the government rather than Olmert, who only received 29 Knesset seats.

On election eve, he spoke of the abyss lying between himself and the right wing and the Likud, and said there was no chance he would team up with them. He called that "a cynical move, which would show contempt for the voters' choice and damage the major quality I have brought to politics: credibility and ideology."

Now that he has caught the whiff of power, who cares about credibility, ideology or ending occupation. All that matters is those shiny cabinet seats. What's wrong with Bibi Netanyahu, Benny Elon and Zevulun Orlev anyway? Along with them, Peretz could "steal" the government, even if it totally violated the expressed will of the electorate.

Peretz's despicable attempt to form an alliance with Shas that would catapult the already exorbitant price demanded by Eli Yishai, is but one example of the difficulties facing Olmert if he forms a government with Labor, Meretz, the Pensioners Party, Shas and United Torah Judaism. Such a government may provide him with the required majority for a pullout, but not with the social-economic majority compatible with his worldview.

Olmert is not Netanyahu. He does not have Netanyahu's fervor for minimizing the government's role in the economy, competition, privatization and reforms. But Olmert is an advocate of a market economy, restricting the budget, competition and reforms. His ideology is completely different from that of Amir Peretz, Eli Yishai and Meretz. A government deals with social-economic issues all the time. It would not survive if the prime minister did not have a majority that supports his social-economic positions. He would be unable to pass the budget he desires nor carry out reforms he plans. The result would be economic deterioration and the government's collapse. Therefore, Olmert must form a government in which there would be a majority not only for his political positions, but also for his social-economic ones.

Shas means trouble in other ways as well. Since Aryeh Deri's departure, it has become a radical right-wing party. It objected to the pullout from Gaza, and now objects to pulling out of the West Bank. It has totally abandoned Sephardic Jewry's famous tolerance, and has adopted the religious fanaticism of Ashkenazi Jewry. As for social-economic issues, this is a party whose ideology is living without working. Its leaders have already declared that its goal is to reinstate children's allowances to their previous amount, guarantee income allowances and, of course, allowances for religious schools for married men.

Olmert knows this means retreating to the situation we had three years ago, when it was not worthwhile for many people to go to work, because the allowances were higher than wages. He knows that reinstating the children's allowances means providing an incentive for larger poor families. The result is more poverty and unemployment, a greater deficit and less growth.

Shas is also Kadima's biggest rival for votes. If it starts receiving huge budgets again, enabling its schools to provide a long school day, warm meals, free transportation and student allowances - it would continue to increase its electoral power at the expense of the ruling party. Ironically, the ruling party would provide Shas with the money for this.

There is a solution to the puzzle - not a simple one, but still possible. Don't bring Shas into the government. Bring Yisrael Beitenu instead.

This would benefit Olmert in two respects. On the one hand, he would evade all the problems Shas would make, its unreasonable demands and expected betrayal on the day of evacuating the territories - just as it betrayed Yitzhak Rabin and deserted him when he signed the Oslo Accords, and Ehud Barak when he went to Camp David. On the other hand, he would be bringing to the coalition a party whose leader, Avigdor Lieberman, sees eye to eye with him on economic issues.

Lieberman is all for a market economy. He believes in a restricted budget, competition, reforms and reducing taxes. He would give Olmert the required majority in the cabinet to pass a reasonable budget with a small deficit, while implementing the important plan to reduce poverty and encourage people to go to work.

The problem is that Yisrael Beitenu is a racist party. It does not accept that Arabs are equal members of the human race. Granted, Lieberman's transfer plan will never be implemented, but it is already increasing alienation among the Arabs, and arousing anger and desire for revenge against "the racist Jewish state." That means that Lieberman's entry into the government would have a high price, but in the complicated political reality that has been created, an alliance with him is preferable to one with Shas.