Netanyahu to sign pact with hardline party

Israel's prime minister-designate expected to formalise coalition deal with the ultranationalist Yisrael Beiteinu movement.

Israel's prime minister-designate Benjamin Netanyahu has been courting the Yisrael Beiteinu party in an effort to build a coalition.

TEL AVIV // Benjamin Netanyahu, the designated next prime minister of Israel, is expected to sign an agreement on Sunday with the hardline party that is set to be his biggest coalition partner, paving the way for him to usher in his new government as soon as next week. The pact with the Yisrael Beiteinu movement calls for its controversial ultranationalist leader, Avigdor Lieberman, to become Israel's next foreign minister, Israeli media reported yesterday. The appointment of a candidate who has been dubbed a "racist" and "fascist" as Israel's top diplomat may prompt political tensions with the US, the European Union and Middle East countries such as Egypt and Jordan, the only Arab nations with whom Israel has diplomatic ties.

"His appointment to the foreign ministry is strange and it will cause damage to Israel's diplomatic reputation and image that would take years to repair," said Ophir Pines-Paz, a top legislator of the left-of-centre Labor party. The accord with Yisrael Beiteinu also includes a commitment by Mr Netanyahu's right-wing Likud party to advance a law proposal demanded by Mr Lieberman that revokes social benefits from citizens charged with treason, according to the reports, which appears to target Israel's Arab citizens and parliamentary representatives, whom Mr Lieberman has often lashed out against.

Mr Netanyahu is scrambling to form a cabinet by the end of next week in order to avoid asking Israel's president, Shimon Peres, for a two-week extension to April 3. Mr Netanyahu is set to make a comeback to the premiership after already having served as prime minister in 1996-1999, and is seeking to sign agreements with at least three other ultrareligious and far-right parties early next week in his bid to cobble together a government with a narrow majority of Israel's 120-member parliament.

Yisrael Beiteinu, which won 15 seats in February's elections as Israel's recent Gaza military campaign attracted voters to Mr Lieberman's hardline stances, is set to become the second-biggest party in the governing coalition after Likud. The party's gain of the foreign portfolio is considered a huge achievement for its leader, an immigrant from former Soviet Moldova whose anti-Arab rhetoric made him an improbable candidate to become the nation's top diplomat just months before the elections.

The agreement with Likud is believed to also allow Mr Lieberman to appoint candidates of his choice to four other ministries - tourism, infrastructure, public security and justice. Mr Netanyahu has been criticised by both political rivals and members of his own party for allowing Mr Lieberman, who faces a police investigation over corruption suspicions, to have power over law-enforcement authorities and the court system of the public security and justice ministries.

The Likud leader will probably keep two other prominent portfolios, finance and defence, in his party's control. Mr Netanyahu, who served as finance minister from 2003-2005 and has been dubbed by one commentator as the "prophet of capitalism in Israel", is expected to double up as both premier and finance minister, a prospect likely to be welcomed by the country's business and investor community.

Mr Netanyahu's likeliest candidate for the defence ministry is Moshe Yaalon, a hawkish legislator who served as army chief of staff from 2002-2005 in the midst of the second Palestinian intifada and has been known for making some controversial public statements. In 2002, he was quoted by the left-wing Haaretz newspaper as describing the threat posed by the Palestinians to Israel as cancer-like and added that, as army chief, he was "applying chemotherapy" in the West Bank and Gaza Strip.

Mr Netanyahu still faces some challenges. A battle being waged for control of the housing ministry between an ultrareligious party and a pro-settler movement may cost Mr Netanyahu several parliamentary slots. The far-right National Union party, which draws much of its support from Jewish settlers residing in occupied Palestinian territory, is demanding control over the ministry, which is charged with developing Jewish settlements in the occupied West Bank and annexed East Jerusalem.

Partly to avoid a conflict with the US, which has criticised Israeli settlement expansion as an obstacle to reaching a two-state solution with the Palestinians, Mr Netanyahu is expected to reject National Union's demand and possibly leave the party out of his cabinet. [e-mail]